Moody's downgrades Millar Western

Moody's Investors Service downgraded Millar Western Forest Products Ltd. including lowering its $160 million of senior notes to B3 from B2. The outlook is negative.

Moody's said it cut Millar Western primarily because of continuing weak pricing, lower than expected earnings for the company's pulp and lumber products and ongoing volatility of the company's results.

Millar Western will also not have the benefit in 2002 of the one-time $20 million gain from a payment received from the Province of Alberta for power privatization, which was included in cost of goods sold in 2001, Moody's said.

S&P lowers Granite, on negative watch

Standard & Poor's downgraded Granite Broadcasting Corp. and put the company on CreditWatch with negative implications. Ratings affected include Granite's $175 million 10.375% senior subordinated notes due 2005, $110 million 9.375% senior notes due 2005 and $175 million 8.875% senior subordinated notes due 2008, all lowered to CC from CCC-; its $150 million 12.75% cumulative exchangeable preferred stock, lowered to C from CC and its bank debt, lowered to CCC from CCC+.

S&P said its action follows Granite's announcement it may be unable to make May and June bond interest payments if the $230 million sale of San Jose, Calif. TV station KNTV does not close in a timely fashion.

Even after the station sale, Granite will still be under intense financial pressure from weak cash flow and very high debt levels, S&P said.

Moody's downgrades Completel

Moody's Investors Service downgraded Completel Europe NV, including lowering its $120.5 million 14% senior discount notes due 2009 and €120 million 14% senior notes due 2010 to Ca from Caa3. The outlook is negative.

Moody's said it cut the ratings after Completel said it is seeking to restructure its debt.

The rating agency said it has increased the severity of the expected to bondholders given Completel's "considerable funding requirements and uncertain asset values."

Fitch upgrades Edison International, SoCalEd

Fitch Ratings upgraded Edison International and Southern California Edison, raising Edison International's senior unsecured debt to B from CC and its trust preferreds to CCC from C and Southern California Edison's senior secured debt to BB from CCC, its senior unsecured debt to BB- from CC, its preferred stock to B from C and its subordinated debt to BB from CCC. The outlook is positive.

Fitch said the upgrade follows actions taken by the California Public Utilities Commission to implement its settlement agreement with Edison International and SoCalEd and the payment of $5.5 billion of SoCalEd's past-due obligations on March 1.

Although an appeal by The Utility Reform Network is pending, Fitch said court action overturning the settlement on appeal is a relatively improbable outcome although further court review is incorporated in the current ratings.

The positive outlook reflects the likelihood that the settlement agreement will remain in force, strengthening financial ratios at SoCalEd and, to a lesser degree, Edison International, Fitch said.

Edison International's "very high financial leverage and weak interest coverage measures continue to overshadow the dramatic recovery projected" for SoCalEd, the rating agency said.

Fitch puts CE Generation on positive watch

Fitch Ratings put CE Generation LLC's $400 million secured bonds due 2018 on Rating Watch Positive. The bonds are currently rated BB.

Fitch said the change is largely the result of the improved credit quality of Southern California Edison, the purchaser of a significant portion of CE Generation's output.

S&P puts DT on negative watch

Standard & Poor's put DT Industries Inc. on CreditWatch with negative implications including its $130 million revolving credit facility due 2002 at B-.

S&P downgrades Completel

Standard & Poor's downgraded CompleTel Europe NV and put the ratings on CreditWatch with negative implications. Affected ratings include Completel's $75 million zero coupon bonds due 2009 and €200 million 14% bonds due 2010, both lowered to C from CC.

S&P rates new Resorts International notes B

Standard & Poor's assigned a B rating to Resorts International Hotel and Casino Inc.'s proposed $175 million first mortgage notes due 2009. The outlook is stable.

S&P said its ratings reflect Resorts International's "narrow business focus, small cash flow base, competitive market conditions, construction risks associated with the planned expansion, and weak credit measures."

Positives include "the property's niche market position, recent improved operating results, and the expectation that the proposed hotel tower will further improve operations due to the high demand for hotel rooms in the market," the rating agency added.

Revenues are approximately $240 million and EBITDA (earnings before interest, taxation, depreciation and amortization) is $30 million, S&P said.

Despite being one of the oldest and smallest properties in Atlantic City, N.J., operating performance over the past few years has significantly improved because of new property-level management that refined marketing programs, lowered slot hold percentage and a focus on day-trip customers rather than bus patrons, S&P commented.

S&P rates new United Auto notes B

Standard & Poor's assigned a B rating to United Auto Group Inc.'s planned offering of $225 million senior subordinated notes due 2012.

S&P upgrades Foamex

Standard & Poor's upgraded Foamex LP and assigned a B rating to its proposed $200 million senior secured notes due 2009. S&P also rated the company's proposed $125 million senior secured revolving credit facility and new term loan E at BB-. Ratings upgraded include Foamex's existing bank debt, upgraded to BB- from B, and its $150 million 9.875% senior subordinated notes due 2007 and $100 million 13.5% senior subordinated notes due 2005, both upgraded to B- from CCC+.

S&P said the change recognizes Foamex's improved financial profile following the proposed transactions as well as ongoing efforts to strengthen operations and reduce debt during the past few years.

Foamex has an average business risk profile, as the largest North American producer of flexible polyurethane foam, and a very aggressive financial profile, S&P continued.

While Foamex is an industry leaders in auto trim foam, carpet cushion and foam for furniture and bedding applications and has a strong niche technical foams business with more attractive margins and growth, the company is still vulnerable to consumer spending trends and the level of activity in the housing and automotive sectors, S&P said.

Despite a weaker economy, but aided by falling raw material costs, management has restored operating profit margins to the low double-digit area through a series of ongoing restructuring initiatives aimed at improving operating efficiencies and promoting better operating and financial discipline at the company, S&P added.

Fitch downgrades Omnova to junk

Fitch Ratings lowered the senior secured debt of Omnova Solutions Inc. to BB+ from BBB-, removed them from Rating Watch Negative and assigned a stable outlook.

Fitch said it cut Omnova because of the company's weakened financial position and credit statistics and a concern that improvement in financial performance may not be sufficient to justify an investment-grade rating.

Total debt - balance sheet debt plus accounts receivable-backed commercial paper - has remained high and EBITDA declined slightly in 2001, keeping leverage and interest coverage weak, Fitch said.

Although earnings and credit statistics are expected to improve in 2002, the resulting improvement could be modest if demand and margin improvements are not strong, Fitch cautioned.

S&P upgrades Telesystem

Standard & Poor's upgraded Telesystem International Wireless Inc.'s

$195 million 14% senior guaranteed notes due 2003 to B- from CCC+.

S&P lifts American Axle outlook

Standard & Poor's revised its outlook on American Axle & Manufacturing Holdings Inc. to positive from stable and confirmed its ratings including its corporate credit at BB.

S&P said the higher outlook reflects the potential for an upgrade if American Axle can continue to generate solid operating results during a period of significant industry challenges, win new business from new and existing customers and generate free cash flow.

If the company's leverage continues to moderate and it continues to make progress with customer and platform diversification efforts while sustaining operating performance at or above current levels, the ratings are likely to be raised, S&P said.

The rating agency said American Axle has a solid niche market position, a high value-added product portfolio and good R&D capabilities, offset by risks associated with a high dependence on General Motors Corp. sport utility vehicles and light trucks, exposure to cyclical and competitive end markets and an aggressive albeit moderating financial risk profile.

Debt to EBITDA was close to 6.0 times in 1998 but has declined significantly and is now about 2.9 times, S&P added.

S&P rates new Magnum Hunter notes B

Standard & Poor's assigned a B rating to Magnum Hunter Resources, Inc.'s upcoming offering of $250 million senior unsecured notes due 2012.

S&P confirms Avista, outlook still negative

Standard & Poor's confirmed Avista Corp.'s BB+ corporate credit rating and kept the outlook at negative.

S&P said the outlook is negative because Avista's financial profile is "very weak" for the rating even though it will benefit from approval by the Washington Utilities and Transportation Commission of an agreement to allow it to recover substantial power cost deferrals in 2000 and 2001.

S&P said any further rating action will depend on the WUTC's decision regarding the pending rate case, the company's ability to demonstrate that business risk is tapering and that the financial profile can improve to levels commensurate with those of the rating category.

S&P cuts Schuff outlook

Standard & Poor's revised its outlook on Schuff International Inc. to negative from stable and confirmed the company's ratings including its corporate credit at B+.

S&P said it lowered the outlook because of Schuff's "weakened financial profile amid challenging industry fundamentals in the commercial and industrial construction sectors."

Significantly weaker than expected operating performance in the fourth quarter led to covenant violations which required waivers, S&P noted.

Credit measures are expected to weaken in the near term due to anticipated soft markets during the first half of 2002, Standard & Poor's added, noting Schuff is currently amending its 2002 covenant requirements in its bank credit agreement.

Moody's rates new Foamex notes B3, upgrades bank debt, raises outlook

Moody's Investors Service assigned a B3 rating to Foamex LP and Foamex Capital Corp.'s planned offering of $200 million of senior secured notes due 2009 and a B2 rating to its new $125 million senior secured revolving credit facility due 2005 and $31.6 million senior secured term E Loan due 2005. It also upgraded Foamex's existing senior secured term loans B, C, and D to B2 from B3 and confirmed the company's $150 million 9.875% senior subordinated notes due 2007 and $105 million 13.5% senior subordinated notes due 2005 at Caa2. The outlook was raised to positive from stable.

Moody's said the outlook change recognizes the improvement in Foamex's financial performance since 1999 and its efforts in addressing past operational and reporting deficiencies.

"This positive trend, however, is balanced by the continued weak end-market demand, rising chemical raw material costs, and the new management team's unproven track record," Moody's added.

Moody's upgraded the bank debt because of the enhanced collateral support in the amended facility because of the reduction in the size.

Overall, Foamex's ratings reflect significant indebtedness and high financial leverage, a weak balance sheet, sensitivity to cyclical end-markets and uncertainties over progress in rectifying past internal control and reporting deficiencies, Moody's said.

Positives include the company's leading market position, its established customer relationships, manufacturing capability and distribution network, improvement in its financial performance in recent years and its improved funding and liquidity profile as a result of this refinancing. the rating agency added.

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