S&P changes watch on ATA to negative

Standard & Poor's changed the CreditWatch on ATA Holdings Corp. and ATA Airlines Inc. to negative from developing including ATA Holdings' $100 million 10.5% senior notes due 2004 and $125 million 9.625% senior notes due 2005 at CC and ATA Airlines' passthrough certificates at B, B-, CCC+, CCC and CCC-.

S&P said the revised CreditWatch reflects the company's announcement that it has filed an exchange offer for its $175 million senior unsecured notes due August 2004 and $125 million senior unsecured notes due December 2005. Successful conclusion of the exchange offer, which is voluntary for bondholders, plus other actions to defer near-term cash obligations, should alleviate somewhat ATA's liquidity problems.

The company's financial restructuring is due to insufficient cash to make its 2004 debt and lease payments and the inability to obtain additional near-term financing, S&P noted. If the company is successful with its exchange offer, ratings could be upgraded modestly. If it is unsuccessful, ratings would be lowered, potentially to SD or D, if ATA is unable to provide for full repayment of its obligations.

S&P cuts Oglebay Norton

Stand downgraded Oglebay Norton Co. including cutting its $100 million 10% senior subordinated notes due 2009 to D from C and $118 million term loan due 2003 and $232 million senior secured loan due 2003 to D from CC.

S&P said the downgrade follow Oglebay's failure to pay interest on its 10% senior subordinated notes within its 30-day grace period as stipulated under its bond indenture.

Although Oglebay had the ability to make its $5 million interest payment on August 1 with approximately $10 million of borrowing availability under its revolving credit facility, Oglebay's management chose to forego the payment. As a result of the company's covenant waiver expiration, Oglebay will not have access to its revolving credit facility until amendments with senior lenders are reached.

Weak demand throughout most of Oglebay's end markets, together with rising healthcare, interest and energy costs have significantly weakened Oglebay's financial position and liquidity, S&P said. Moreover, Oglebay's debt levels are at an all time high of $462 million (adjusted for operating leases) while free cash flow generation remains negligible.

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