S&P rates Flender notes B-

Standard & Poor's assigned a B- rating to Flender Holding GmbH's proposed €250 million senior secured notes. The outlook is stable.

S&P said Flender's ratings reflect its very aggressive financial profile, as total debt will be high at about €530 million following a recapitalization transaction that the company is expected to complete within the next few months.

But it also reflects its fair financial flexibility and leading positions within a variety of niche industrial markets.

EBITDA is expected to remain relatively flat at about €120 million, but debt levels are likely to decline gradually, S&P said. Flender is expected to generate free cash flow of about €20 million per year on average in the foreseeable future.

S&P expects that total debt to EBITDA will strengthen modestly within the 4.0x-4.5x range. EBITDA to net cash fixed charges are expected to improve gradually, but to remain within the 2.75x-3.25x range.

S&P puts Schuff on watch

Standard & Poor's put Schuff International Inc. on CreditWatch negative including its $100 million 10.5% senior notes due 2008 at B-.

S&P said the actions follow Schuff's announcements that operating income declined about 80% in the first half of 2003 from the year-earlier period, that backlog had declined to less than $97 million and that its nominal liquidity may erode further in the second half of the year as it anticipates a rise in working capital.

On a trailing 12-month basis, credit protection measures were very weak, with EBITDA to interest coverage of about 1x, and total debt to EBITDA of 8x, S&P said.

Schuff provides construction services and fabricated steel products to highly cyclical industrial and commercial markets. The protracted weakness in these sectors, combined with intense pricing pressures, has resulted in poor operating results.

Furthermore, although the company notes that it is seeing some recovery within certain markets, it will continue to need to work through poor-margin backlog.

Moody's upgrades Bio-Rad, rates notes Ba3

Moody's Investors Service upgraded Bio-Rad including raising its senior implied rating to Ba2 from Ba3 and assigned a Ba3 rating to its planned $200 million senior unsecured subordinated notes. The outlook is positive.

Moody's said the upgrade reflects Bio-Rad's much improved financial performance, the result of its strong franchise, solid research and development capabilities and significant recurrent revenues; its bright future prospects; and its significantly reduced debt burden.

The rating action also reflects the company's exposure to foreign exchange fluctuations, its dependence on government funding and the possibility that it will make additional acquisitions over the rating horizon.

The positive rating outlook reflects Moody's belief that Bio-Rad will continue to increase revenues at a high-single and cash flows at a mid-single digit rate over the rating horizon, reinvesting free cash flow to fuel growth, either internal or the result of modest, strategic acquisitions, Moody's said.

Moody's expects EBITDAR/interest+rent of about 4x by the end of 2004, the result of stronger cash flow and, more importantly, lower interest expense. Likewise, Moody's anticipates total adjusted debt/EBITDAR of about 2.0x and total adjusted debt/adjusted book capital of about 45% within the next year to 18 months.

S&P cuts Summit Properties notes

Standard & Poor's downgraded Summit Properties Partnership LP senior unsecured notes to BB+ from BBB- and confirmed its corporate credit rating. The outlook is stable.

S&P said the downgrade of the senior unsecured debt the closing of a new $200 million secured credit facility due 2008, which is secured by nine formerly unencumbered properties.

While market conditions will likely remain challenging in certain of Charlotte, N.C.-based Summit's core markets, recently developed communities have shown improved leasing trends, near-term capital needs are manageable, and there will be modest cost benefits associated with the new revolver, S&P said.

As a result, Summit's debt and fixed-charge coverage measures, which have been near the minimum acceptable for the current rating, should begin to see gradual improvement.

S&P raises Vicar Operating outlook

Standard & Poor's raised its outlook on Vicar Operating Inc. to positive from stable and confirmed its ratings including its secured bank loan at B+ and subordinated debt at B-.

S&P said the outlook revision reflects both the company's improving operating performance and measures taken to improve its capital structure.

Vicar's ratings reflect its improving but still relatively weak financial profile. However, this weakness is mitigated by the company's position as the leading operator of animal hospitals and veterinary diagnostic laboratories, S&P said.

Although all high-interest-rate debt and preferred stock has been repaid, and though total debt has been reduced with a combination of cash flow and proceeds from equity transactions, Vicar remains highly leveraged, S&P said. Funds from operations to lease-adjusted debt of about 17% and EBITDA interest coverage of 2.5x as of March 31, 2003 (versus 14% and 1.3x, respectively, as of March 31, 2002), are consistent with the rating, given the company's concentration in the veterinary field and the attendant exposure.

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