Fitch says new Alcatel convertible positive

Fitch Ratings said the new €1 billion convertible issue by Alcatel is a positive development as proceeds will be used primarily to partially repurchase the three outstanding bond issues maturing in 2004 and 2005.

The new issue follows Alcatel's €645 million mandatory convertible issue in December and Fitch said the two deals highlight Alcatel's willingness and capacity to access capital markets despite the difficult conditions in its markets.

Fitch's senior unsecured rating of BB- with a negative outlook continues to reflect the refinancing risk associated with these and other longer dated issues, continued deterioration of business environment and ongoing costs of restructuring.

Liquidity stood at €7.6 billion in first quarter, including cash balances of €6.2 billion and available bank facilities of €1.4 billion.

S&P upgrades Offshore Logistics

Standard & Poor's upgraded Offshore Logistics Inc. including raising its $100 million 7.875% senior notes due 2008 to BB+ from BB and $80 million 6% convertible subordinated notes due 2003 to BB- from B+. The outlook is stable.

S&P said the upgrade reflects Offshore Logistics' improved financial profile since over the past six years its has increased its fleet size by 16% while reducing debt leverage to 40% from 48% in 1998 and expectations that the company's discretionary cash flow will be less volatile as a result of the consolidation of the helicopter-service industry.

Offshore Logistics' financial condition should strengthen in fiscal 2004 because of rate increases implemented in the Gulf of Mexico over the past two years and a potential recovery in the company's Gulf of Mexico activity levels, S&P said.

Offshore Logistics' leverage is somewhat aggressive with total debt-to-total book capital as of Dec. 31, 2002 was about 34%, although this calculation excludes a potential pension liability of between $75 million and $90 million, S&P said. Over the course of an industry cycle, EBITDA interest coverage is expected to average about 6.0x, with trough coverage of about 4.0x and peak coverage of about 8.0x. Through an industry cycle, funds from operations to total debt should average about 35%, with a cyclical trough in the mid-20% range.

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