Moody's rates Hines Nurseries notes B3, loan B1

Moody's Investors Service assigned a B3 rating to Hines Nurseries, Inc.'s proposed $175 million senior notes and a B1 to its proposed $185 million senior secured credit facilities. The outlook is stable.

Moody's said the rating reflects Hines' its leading national market position, as well as its combined high leverage and potential earnings volatility and customer concentration in the highly competitive and seasonal commercial nursery industry.

The ratings reflect Hines' significant financial leverage of approximately 4.66x adjusted EBITDA for the 12 months to June 2003, which heightens the risk of earnings volatility due to the highly seasonal and weather-sensitive nature of its business, Moody's said.

Over half of Hines sales, and nearly all of its earnings and cash flows, are generated during the second quarter. Extreme or non-typical weather patterns or economic pressures during this key season could restrain consumer spending in this somewhat discretionary category and materially impact Hines' financial condition.

Additional risks include the highly fragmented and competitive nature of the industry (with many commodity-like products) and the considerable concentration of Hines' retail distribution, which together provide ongoing pressure on sales and margins.

The ratings are supported by Hines' shift from an acquisition strategy to one focused on organic growth, integration and debt reduction, Moody's added. The company's long operating history, strong customer relationships, proven service capabilities and reputation for quality and innovation position it well to benefit from the continued migration of sales in the category to big box and mass retailers.

Further, the company's national footprint limits its exposure to weather-related concerns that may arise in certain regions.

S&P says URS unchanged

Standard & Poor's said URS Corp.'s ratings are unchanged including its corporate credit at BB- with a stable outlook following the company's announcement that net income for the third quarter was approximately $17 million, that it anticipates $225 million of EBITDA in fiscal 2003, down from prior guidance of $230 million, and that it anticipates $1.90 in earnings per share in 2004, compared to $1.75 per share in 2003.

During the third quarter, URS was able to pay down about $60 million in debt ($110 million to date during 2003), because of fair profitability and good working capital management.

S&P said it expects that management will continue to focus on using free cash flow to strengthen its credit profile in the near-to-intermediate term. Therefore, although total debt (adjusted for the present value of operating leases) to EBITDA should be slightly over 4x at year-end 2003, URS should be able to approach S&P's expectations of debt leverage around 3.5x and funds from operations to total debt of 15%, in the next five quarters.

S&P says Houston Exploration unchanged

Standard & Poor's said Houston Exploration Co.'s ratings are unchanged including its corporate credit at BB with a stable outlook on the company's announcement that it will acquire 92 billion cubic feet equivalent of additional properties in the shallow-water Gulf of Mexico region for $155 million.

The transaction - to be funded with bank debt and cash - has a relatively high purchase price on a dollar per bcfe basis, S&P said. However, Houston Exploration will continue to benefit from a moderate capital structure that will have total debt per barrel of oil equivalent of roughly $2.35, assuming the company borrows $115 million under its credit facility.

Cash flow measures will remain very strong, with EBITDA interest coverage at a lofty 40x and total debt to EBITDA at roughly 1x, S&P noted. Furthermore, aggressive hedging of the acquired properties reduces commodity price risk associated with the volatile natural gas segment.

S&P says Trico unchanged

Standard & Poor's said Trico Marine Services Inc.'s ratings are unchanged including its corporate credit at B with a negative outlook following the announcement that Trico has completed the sale of a North Sea anchor handling towing and supply (AHTS) vessel for proceeds of about $35.5 million.

Although the AHTS sale and the previously announced sale of Trico's Brazilian new-build vessel are positive events, S&P said it had already factored these transactions into its current ratings and outlook.

S&P said it believes Trico's debt leverage remains extremely high and added that significant deleveraging needs to occur before it would consider a positive revision to its outlook or ratings on Trico.

Moody's confirms AMI Semiconductor, rates loan B1

Moody's Investors Service confirmed AMI Semiconductor, Inc. including its $200 million guaranteed senior subordinated notes due 2013 at B3 and assigned a provisional B1 rating to its proposed $125 million guaranteed senior secured term loan due 2008 and $75 million guaranteed senior secured revolving credit facility due 2006. The outlook is stable.

Moody's said the action follows the company's announcement that it intends to amend its current bank credit facility in conjunction with a proposed initial public offering of $475 million of its parent AMI Holdings, Inc.

Moody's said the B1 ratings on the proposed amended bank facilities are based on the facilities' increased size and on Moody's belief that the collateral granted is not adequate to warrant notching the amended facilities above the B1 senior implied rating.

The company's other ratings reflect Moody's acknowledgement of the company's improving performance in its Aug. 14 press release and because Moody's has viewed the company's redeemable preferred stock, which will be redeemed in the IPO, as equity equivalents.

Pro forma for the transaction, debt to EBITDA for the 12 months to June 28, 2003 would be about 2.8x, up slightly from the actual 2.6x, and debt to capitalization would be about 59%, essentially unchanged, Moody's said. It should be noted, however, that pro forma trailing 12 months EBITDA coverage of cash interest would be a solid 4.4x and that the company will have greater flexibility with regard to principal prepayment going forward.

S&P says Edison Mission unchanged

Standard & Poor's said Edison Mission Energy's ratings are unchanged including its corporate credit at BB- with a negative outlook after the company said it retired its $275 million bank facility due Sept. 16, 2003 with a portion of the proceeds from Sunrise Power Co. LLC's $345 million financing.

S&P said it had concluded earlier that Edison Mission Energy would have sufficient cash availability to repay debt if it chose not to extend the facility.

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