S&P puts RH Donnelley on watch

Standard & Poor's put R.H. Donnelley Inc. on CreditWatch with negative implications. Ratings affected include R.H. Donnelley's $150 million 9.125% senior subordinated notes due 2008 at B+ and its $100 million senior secured revolving credit facility due 2004, $75 million tranche A loan due 2004, $125 million tranche B loan due 2005 and $100 million tranche C loan due 2006, all at BB.

S&P said the action follows the announcement that R.H. Donnelley Corp., the holding company of R.H. Donnelley Inc., will acquire the directory publishing business of Sprint Corp. for $2.23 billion in cash.

While the Sprint transaction will significantly expand Donnelley's operations, it will substantially raise debt levels, S&P said. Pro forma debt to estimated 2002 EBITDA is in the high 5 times area, compared with less than 2x for the 12 months ended June 2002.

Moody's puts Dole on review

Moody's Investors Service put Dole Food Co, Inc. on review for possible downgrade, affecting $900 million of debt including its senior unsecured debt and credit facility at Ba1.

Moody's said the review is in response to the unsolicited offer by Dole's Chairman and chief executive officer to acquire the 76% of the company that he does not own.

The outcome of the review will depend on whether or not a transaction is consummated, and if so, the post-transaction organizational and capital structure, Moody's said.

The transaction, if it occurs, could result in Dole significantly increasing its leverage in order to finance the transaction, and could place downward pressure on the ratings, Moody's said.

S&P puts Dole on watch

Standard & Poor's put Dole Food Co. Inc. on CreditWatch Negative. Ratings affected include Dole's $175 million 7.875% debentures due 2013, $300 million 7% senior notes due 2003, $300 million 6.375% notes due 2005 and $400 million 7.25% notes due 2009, all at BBB-.

S&P said the watch placement follows the announcement that the company has received an unsolicited proposal from David H. Murdock, the company's chairman of the board and CEO, to acquire all of the outstanding shares of common stock of Dole Food Co. not already owned by Mr. Murdock or his family for $29.50 per share in cash.

S&P said it will monitor developments, review any other potential offers for the firm, and resolve the CreditWatch once the ultimate owner and capital structure are decided.

Moody's rates Jefferson Smurfit subordinated notes B3

Moody's Investors Service assigned a B3 rating to the proposed €250 million of subordinated notes due 2013 to be issued by MDP Acquisitions plc, an indirect parent of Jefferson Smurfit Group plc.

The rating is in addition to the ratings assigned by Moody's to various entities within Jefferson Smurfit's corporate structure on Sept.

The outlook is stable.

S&P put Alcatel on watch

Standard & Poor's put Alcatel on CreditWatch with negative implications.

Ratings affected include Alcatel's €304.90 million 5.75% bonds due 2004, €304.90 million 6.375% bond due 2003, €1.12 billion 4.375% bonds due 2009, $500 million floating rate notes due 2010, €152.45 million zero coupon notes due 2006, €228.67 million 5.625% notes due 2007, €500 million 5% notes due 2004, €600 million floating rate notes due 2003, €1 billion 5.875% notes due 2005, SGD40 million 4% notes due 2004, €1.2 billion 7% notes due 2006 and €2.08 billion bank loan due 2005, all at BB+.

S&P cuts SatMex

Standard & Poor's downgraded Satelites Mexicanos, SA de CV and maintained a negative outlook.

Ratings lowered include Satelites Mexicanos' $390 million 10.125% notes due 2004, cut to CCC- from CCC+, and its $223 million secured credit facility due 2003, cut to CCC+ from B.

Moody's confirms Riverwood, off upgrade review

Moody's Investors Service confirmed Riverwood Holding, Inc.'s ratings and ended its review for possible upgrade, affecting $1.8 billion of securities. Ratings affected include Riverwood International Corp.'s senior secured bank facilities and term loans at B1, senior unsecured notes at B3 and senior subordinated notes at Caa1. The outlook is stable.

Moody's said its action is in response to the much reduced likelihood that Riverwood will complete its proposed initial public offering in the near future. Proceeds from the IPO had been expected to go towards debt reduction.

S&P cuts American Plumbing

Standard & Poor's downgraded American Plumbing & Mechanical Inc. and removed the company from CreditWatch with negative implications. The outlook is negative.

Ratings lowered include American Plumbing's $125 million 11.625% senior subordinated notes due 2008, cut to CCC+ from B- and its $90 million revolving credit facility due 2002, cut to B+ from BB-.

S&P cuts Borden Chemical

Standard & Poor's downgraded Borden Chemical Inc., removed the ratings from CreditWatch with negative implications and assigned a negative outlook. Ratings lowered include Borden Chemical's $250 million 7.875% debentures due 2023, $200 million 9.20% debentures due 2021, $150 million 9.25% debentures due 2019 and $200 million 8.375% debentures due 2016, all cut to BB- from BB+. The corporate credit rating was lowered to BB from BB+.

S&P said the downgrade reflects lower profitability stemming from adverse business conditions and the likelihood that needed improvement to the financial profile could take longer than anticipated.

S&P added that it recognizes the recent completion of a $175 million revolving credit facility, which provides sufficient liquidity to support the company's operations.

S&P said it cut the senior unsecured long-term issues by two notches to reflect their position in the debt structure as they are in a disadvantaged position of these issues relative to the new bank facility due to the security granted under the bank facility.

The company's financial profile is somewhat stretched, with total debt to EBITDA above 4 times, S&P said. Cash flow protection measures have been under pressure due to the earnings weakness, but are expected to modestly improve with better earnings as economic conditions improve. Over the long run, funds from operations to total debt should average about 20%, up from the low teens percentage area.

EBITDA interest coverage is substandard at near 2.5 times compared with the appropriate 3.5x area, S&P added.

S&P raises GulfMark outlook

Standard & Poor's raised its outlook on GulfMark Offshore Inc. to stable from negative and confirmed its ratings including its senior unsecured debt at BB-.

S&P said the action follows a review of GulfMark's financial results and the status of its new-vessel program.

The negative outlook on Gulfmark had reflected concerns over the speculative nature the company's $185 million new-vessel program and the availability of funds for the program, S&P said. Since the negative outlook was announced, GulfMark issued equity ($58 million in March 2002), repaid $44 million in debt, put on contract the two vessels delivered in the first quarter of 2002, and most recently, finalized a new $100 million secured credit facility to help finance the new vessel construction.

S&P said the improvements to Gulfmark's liquidity and capital structure help to minimize its concerns over the new-vessel program's financing.

S&P rates Applied Extrusion loan B+, on developing watch

Standard & Poor's assigned a B+ rating to Applied Extrusion Technologies Inc.'s new $50 million revolving credit facility due 2005, upgraded its $275 million 10.75% notes due 2011 to B from B- and continued the CreditWatch with developing implications.

S&P said the upgrade to the notes is in response to the establishment of the smaller-size bank facility.

The developing watch continues from July 8 when it was begun following the announcement that Applied Extrusion has hired a financial advisor to evaluate options to maximize shareholder value, S&P said.

The ratings reflect a below-average business risk profile, very aggressive debt leverage, and limited financial flexibility, S&P said. The company enjoys a leading share of the OPP market (estimated at 25%) and benefits from a low-cost position. Still, the market is highly competitive and subject to swings in raw material costs, namely polypropylene resins. Overcapacity has significantly weakened pricing flexibility during the past few years. Although end markets include relatively recession-resistant applications, such as labels on beverage bottles and containers, and food packaging, the company's narrow product mix is a limiting factor, and customer concentration is high.

A sluggish domestic economy and intensified competitive pressures have caused lower-than-expected volume growth (in the low-single digit area) in 2002 resulting in capacity utilization levels in the mid- to high-80% area, as compared to previously expected improvement to the mid-90% area, S&P said. In addition, an inventory buildup necessitated selective shutdowns of its production lines in the fourth quarter of 2002.

Further, competitive pressures are likely to constrain the company's ability to fully pass through increased raw material costs to customers in the near term, adversely affecting profitability levels, S&P added.

S&P puts WestPoint Stevens on watch

Standard & Poor's put WestPoint Stevens Inc. on CreditWatch with Negative implications including its $525 million 7.875% senior notes due 2005 and $475 million 7.875% senior notes due 2008, both at CCC+.

S&P said the watch placement is in response to WestPoint Stevens' announcement of additional restructuring initiatives and its downward adjustment of revenues for 2002 due to weaker than expected K-Mart Corp. sales. These actions have resulted in amendments to the company's bank agreement. Furthermore, expected lower asset utilization in the third and fourth quarters will result in additional pressure on margins.

S&P said it will monitor the situation and meet with management to review the company's operating and financial outlook.

S&P rates FMC notes BB+, loan BBB-

Standard & Poor's assigned a BB+ rating to FMC Corp.'s planned $300 million senior secured notes due 2009 and a BBB- to its $250 million senior secured revolving credit facility due 2005. It also downgraded FMC's existing notes including its $200 million 6.375% senior notes due 2003, $100 million 7.75% senior debentures due 2011, $45 million 7.32% medium-term notes series A due 2007, $70 million 6.75% medium-term notes due 2005, $100 million 7% medium-term notes due 2008 and $100 million 7.125% senior notes due 2002 to BB+ from BBB-. The corporate credit rating was confirmed at BBB- and the outlook cut to negative from stable.

S&P said the downgrade reflects noteholders' diminished recovery prospects in a default and liquidation scenario, pro forma for completion of the refinancing plan that will provide the holders of bank obligations with a first-priority claim on assets.

The proposed refinancing plan will solidify FMC's liquidity position and provide ample capacity to meet scheduled obligations, even if industry conditions remain depressed, S&P said. In addition, FMC's management team is committed to financial policies that will support improvement to key credit protection measures. This commitment was evidenced by the $101 million second-quarter equity offering to raise funds for debt reduction.

The ratings for FMC reflect an average business profile derived from leading positions in diverse industrial, agricultural, and specialty chemicals businesses, and moderate financial policies that support credit quality, S&P added.

FMC's business positions within its industrial chemicals segment tend to be bolstered by leading market shares and low-cost production economics that result in better-than-average profit margins, S&P commented. In the more specialized and niche areas, FMC generally competes on the basis of higher-value-added products that benefit from favorable industry characteristics, such as decent growth, stronger customer relationships, and premium pricing based on the performance of differentiated products.

FMC is expected to generate EBITDA margins in the mid-teens percent area on average over the course of the business cycle, S&P said. The company's 2001 restructuring and impairment charges (related primarily to the phosphorus and lithium operations) significantly diminished the capital base and further underscore the necessity to improve the financial profile. Still, moderate financial policies should limit share repurchases, capital spending, and acquisition activity until key financial ratios are improved. Accordingly, the ratio of funds from operations to total adjusted debt is expected to trend toward the appropriate 30% range over the next few years, from below 20% (pro forma for the proposed refinancing plan, net of cash held in reserve for debt reduction, and adjusted to capitalize operating leases).

Fitch puts AmeriServ on watch

Fitch Ratings put AmeriServ Financial, Inc. on Rating Watch Negative. Ratings affected include AmeriServ's senior long-term rating of BB+ and AmeriServ Capital Trust I's trust preferreds at BB.

Fitch said the watch placement follows AmeriServ's announcement of a capital and earnings improvement program, including a 66% reduction of its dividend to $0.09/year, and $4 million in anticipated incremental (pre-tax) earnings ($3.5 million from cost savings and $500,000 from revenue enhancement) for fiscal-year 2003.

The implementation of this strategic plan will result in a third-quarter 2002 loss and perhaps a loss for fiscal 2002 as the company experiences higher credit costs and additional mortgage servicing rights impairments associated with increases in prepayment speeds due to lower mortgage interest rates, Fitch said.

Fitch added that net income for the first six months of 2002 amounted to a lackluster $1.1 million, including $664,000 in mortgage servicing impairment charges.

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