S&P cuts Equistar

Standard & Poor's downgraded Equistar Chemicals LP, removed it from CreditWatch with negative implications and assigned a stable outlook. Ratings lowered include Equistar Chemicals' $150 million 7.55% debentures due 2026, $150 million 6.5% notes due 2006, $600 million 8.75% notes due 2009, $500 million senior notes due 2008 and $300 million 8.5% notes due 2004, all cut to BB from BB+ and its $500 million revolving credit facility due 2006 and $300 million term bank loan due 2007, cut to BB+ from BBB-.

S&P said the downgrade, "which was widely anticipated," follows Lyondell Chemical Co.'s announcement that it has completed the purchase of Occidental Petroleum Corp.'s 29.5% ownership interest in Equistar, raising Lyondell's ownership to 71.5%. Millennium Chemicals Inc. retains its 29.5% stake.

The completion of this transaction raises intermediate-term concerns related to Lyondell's increasing influence on the governance of Equistar, particularly to the extent that the transaction strongly suggests that Lyondell may move to gain full control of the venture sooner than previously anticipated, S&P said.

Full ownership by Lyondell would more directly link the credit quality of Equistar to that of Lyondell, S&P noted. In addition, the transaction has the immediate effect of removing the strongest owner from a financial profile standpoint.

The ratings recognize Equistar's average business position as a major petrochemical producer, and an aggressive financial profile, somewhat bolstered by sufficient near-term liquidity, S&P said.

S&P says Amkor unchanged

Standard & Poor's said Amkor Technology Inc.'s B corporate credit rating and stable outlook remain unchanged on news that its plan to sell 20 million shares in minority-owned Anam Semiconductor Inc. to Korea's Dongbu Group is postponed following Dongbu and Anam's inability to come to terms on a letter of intent to transfer technology and set purchasing rules with semiconductor wafer buyer Texas Instruments.

The sale of shares had been expected to generate $100 million in proceeds for bank debt repayment, modestly lowering Amkor's total $1.9 billion debt load, S&P noted.

It added that Amkor's liquidity, with $162 million in cash balances as of June 2002 and a $100 million unused revolving credit facility, remains adequate.

Additionally, S&P expects Amkor to remain within requirements for minimum EBITDA and liquidity levels and within maximum capital expenditure levels for the remainder of the company' amended bank facility covenant term expiring in December 2002.

S&P lowers Dayton Superior outlook

Standard & Poor's lowered its outlook on Dayton Superior Corp. to negative from stable. Ratings affected include Dayton Superior's senior secured bank loan at BB- and subordinated debt at B-.

S&P said the revision reflects weaker than anticipated non-residential construction markets and the expectation that the downturn is likely to last well into 2003.

These adverse conditions, plus margin pressure from rising steel prices, could further strain the Dayton Superior's financial profile despite aggressive cost cutting initiatives, S&P said.

A very aggressive capital structure - debt to EBITDA of 5.1 times - is expected to keep cash flow protection measures very weak, S&P noted. EBITDA interest coverage is currently 1.9x with funds from operations to debt below 5%, sub-par for the ratings.

If market conditions worsen in the second of half of 2002, the company could have difficulty meeting financial covenants that progressively tighten over the next few quarters, S&P added.

Fitch cuts GenTek

Fitch Ratings downgraded GenTek Inc. including lowering its senior secured bank facility to D from CCC and its senior subordinated notes to C from CCC-. The ratings remain on Rating Watch Negative.

Fitch said the downgrade follows the recent payment blockage of GenTek's scheduled Aug. 1 interest payment on the 11% senior subordinated notes; the violation of some credit facility financial covenants and default on the credit facility; and potential default on the senior subordinated notes.

GenTek's default on the credit facility came about when the company's independent auditors issued with the 2001 10K filing an explanatory paragraph with respect to GenTek's ability to continue as a going concern, Fitch said.

In addition, GenTek violated certain financial covenants related to the credit agreement at the end of the first quarter and second quarter of 2002, Fitch added.

More recently, GenTek's senior lenders issued a payment blockage notice pursuant to its senior credit facility preventing GenTek from paying interest due to the senior subordinated noteholders. If GenTek is not permitted to make the scheduled interest payment on or before Aug. 31 then it will default on the senior subordinated notes and these noteholders may accelerate payment of the outstanding principal and accrued interest. At that time, Fitch said it will downgrade the rating on the senior subordinated notes to D.

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