S&P rates new Steel Dynamics notes B

Standard & Poor's assigned a B rating to Steel Dynamics Inc.'s planned offering of $200 million senior unsecured notes due 2009 and a BB- rating to its new credit facilities, made up of a $100 million term A loan due 2007, a $175 million term B loan due 2008 and a $75 million revolving credit facility due 2007.

S&P said Steel Dynamics' ratings reflects its low-cost position in the highly competitive minimill segment of the domestic steel industry and its aggressive financial policy.

The rating agency said it benefits from a low-cost production base, a somewhat diverse product mix and close proximity to its customers and suppliers.

Construction of a new $350 million 1.3 million ton steel structural and rail manufacturing facility in Whitley, Ind. has the inherent start-up risks of such a large project but S&P said Steel Dynamics' management has been successful bringing facilities on line quickly and relatively cheaply.

Because most sales are to the volatile spot market, the company is at a disadvantage but it has still maintained higher-than-average industry volumes and capacity levels because of its strategic location and lower gauge product, which can be used in higher margin, specialty applications.

S&P also said Steel Dynamics is well positioned to take market share from some of its struggling competitors, as customers are switching to healthier suppliers.

S&P upgrades Norampac

Standard & Poor's upgraded Norampac Inc. Ratings raised include Norampac's C$175 million term loan due 2003 and C$150 million operating credit facility due 2003, both lifted to BBB- from BB+, and its $150 million 9.5% notes due 2008 and C$100 million 9.375% notes due 2008, both lifted to BB+ from BB.

S&P said Norampac's ratings reflect its sound financial profile, with moderate debt levels and healthy credit measures.

The company has a below-average but improving business profile that includes a good cost and market position but limited geographic and product diversity, the rating agency added.

"Although prices will remain under pressure in the near term, the company has demonstrated its ability to maintain reasonable earnings and steady credit measures in the wake of both price deterioration and production downtime," S&P said.

"Furthermore, the recent acquisition of converting facilities improves Norampac's level of forward integration and increases penetration in the U.S. where the company is slowly expanding its small market share."

Moody's rates Iron Mountain credit facility Ba3, lowers outlook

Moody's Investors Service assigned a Ba3 rating to Iron Mountain Inc.'s planned new $250 million senior secured and guaranteed Term B credit facility due February 2008, confirmed the company's existing ratings and revised the outlook to negative from stable. Ratings confirmed include Iron Mountain's $405 million 8.625% guaranteed senior subordinated notes due 2013, $120 million 9.125% guaranteed senior subordinated notes due 2007, $250 million 8.75% guaranteed senior subordinated notes due 2009, $150 million 8.25% guaranteed senior subordinated notes due 2011 and $135 million 8.125% guaranteed senior unsecured notes due 2008, all rated B2.

Moody's said it lowered Iron Mountain's outlook because of its already high leverage for its rating category, with continued increases in total debt.

The bank financial covenant tests were loosened to provide for additional debt to fund growth and the basket for off-balance sheet synthetic leases under permitted indebtedness will increase from $205 million to $360 million, the rating agency noted.

Moody's also points out that Iron Mountain's recent strategic growth has been outside its core domestic product and into areas with either geographic or product diversity, resulting in a somewhat higher business risk.

"Continued growth without any meaningful deleveraging could lead to a downgrade," Moody's warned.

Moody rates new Von Hoffman notes B2

Moody's Investors Service assigned a B2 rating to Von Hoffman Corp.'s planned offering of $200 million senior unsecured notes due 2009 and a Ba3 rating to its proposed $75 million secured revolving credit facility due 2006. Moody's also confirmed the company's existing $100 million 10.375% senior subordinated notes due 2007 at B3. The outlook is negative.

Moody's said the ratings Von Hoffman's weak financial condition, primarily the result of the cumulative effect of soft year-over-year consolidated performance throughout fiscal 2001.

"Inventory corrections by its customers and increased competitive pricing continue to constrain performance and pressure margins," Moody's added.

It also noted that financial leverage is high, coverage of interest expense is tight and free cash flow is a modest percentage of total pro-forma debt.

Moody's said it sees execution of the proposed transactions as critical to the company's liquidity profile given the absence of a cushion under pre-restructuring covenants.

On the positive side, Von Hoffman has an established market position, its core educational publishing business has recurring revenues and demographic trends are favorable, Moody's said. Existing cost-cutting strategies have somewhat mitigated margin pressure.

Moody's raises Petco outlook to positive

Moody's Investors Service confirmed Petco Animal Supplies, Inc. and raised its outlook to positive from stable. Ratings affected include Petco's $195 million guaranteed senior secured term loan B due 2008 and $75 million guaranteed senior secured revolving credit facility due 2006, both rated B1, and its $200 million senior subordinated notes due 2011 rated B3.

Moody's said it changed Petco's outlook after the company's successful IPO, which gives it an alternative source of capital. Proceeds will retire high dividend PIK preferred stock, which is ranked below the subordinated debt, but whose accruing dividends increased the future obligations of the company.

The rating agency expects Petco to maintain a conservative financial policy and remain focused on debt reduction.

Petco has high leverage and modest fixed charge coverage, Moody's said, along with limited financial flexibility to respond to unexpected market conditions, operating and financial risks arising from the company's young store base and aggressive growth plans and faces competitive conditions.

Moody's added that it believes the similarity of products and services offered by the national competitors in this sector, and the growth of indirect competitors such as discounters and wholesalers, increases the challenge of maintaining customer loyalty.

But Petco benefits from a favorable market position, the growth in the population of pets, disciplined working capital management through a period of rapid growth, the potential for improved profitability from increased high margin service offerings which increase traffic to the stores and the potential to use the reconfigured e-commerce channel to increase business levels.

Moody's cuts Navigator Gas

Moody's Investors Service downgraded Navigator Gas Transport plc including lowering its $217 million 10½% first priority ship mortgage notes due 2007 to Ca from Caa2 but confirmed its $103.6 million 12% second priority mortgage notes due 2007 at C. The outlook remains negative.

Moody's said it cut Navigator's notes because of the on-going weak market for the transportation of petrochemical gases and derivative products.

Charter rates for Navigator's fleet of five semi-refrigerated gas/ethylene carriers are below $450,000 per month per vessel, well below the amount necessary to support interest payments, Moody's said.

To make interest payments, Navigator has had to draw on its $50 million standby letter of credit, the rating agency added.

Moody's believes the company will reach the capacity under this credit line after the June 2002 interest payment and that a restructuring will be required.

Moody's rates new Steel Dynamics notes B2

Moody's Investors Service assigned a B2 rating to Steel Dynamics Inc.'s planned offering of $200 million senior unsecured notes due 2009 and a Ba3 rating to its $350 million senior secured credit facility, made up of a $100 million term loan due 2007, a $175 million term loan due 2008 and a $75 million revolving credit facility due 2007. The outlook is stable.

Moody's said Steel Dynamics' ratings reflect adverse but improving steel market conditions, the company's high leverage and the risks inherent with the ramp-up and profitable operation of its new structural and rail mill.

A Dec. 31, 2001, Steel Dynamics' net leverage was 6.9 times EBITDA, reflecting extra debt for the high levels of capital spending for the Whitley County mill coincident with weak steel fundamentals over the last year, Moody's said.

Moody's added that Steel Dynamic's existing Butler mill has low costs and value-added products, making the company one of the most profitable steel producers in the U.S.

Moody's rates Express Scripts loan Ba1

Moody's Investors Service assigned a Ba1 rating to the proposed $350 million term loan B of Express Scripts, Inc. and confirmed the company's existing ratings including its $255 million senior credit facilities and its $250 million 9.625% senior notes due 2009, both at Ba1. The outlook is stable.

Moody's said the assignment and confirmation follow Express Scripts' announcement it has signed an agreement to acquire National Prescription Administrators, Inc.

The purchase will be financed by the new term loan B and $100 million from its $150 million revolver, 552,285 shares of its common stock and approximately $57 million of cash on hand.

Moody's said it expects Express Scripts' cash flow and operating performance to remain strong.

Although credit statistics will weaken after the acquisition, Moody's sees improvement in the intermediate term as the company uses its excess cash flow to reduce debt going forward.

For fiscal 2002, Moody's expect leverage (debt/EBITDA) and interest coverage (EBITDA/interest) to be slightly less than 2.0 times and 9.0 times, respectively, compared to 1.1 times and 11.0 times for 2001.

Moody's downgrades Buckeye

Moody's Investors Service downgraded Buckeye Technologies Inc. The outlook remains negative. Ratings affected include Buckeye's $150 million 8.5% senior subordinated notes due 2010, $150 million 8.5% senior subordinated notes due 2005 and $100 million 9.25% senior subordinated notes due 2008, all cut to Caa1 from B1.

Moody's said it cut Buckeye because of persistent large sequential declines in revenues, margins, cash flow generation and debt protection measurements.

The company has suffered from drops in the wood pulp prices and the supply of cotton linters, Moody's said.

Buckeye also suffers from a large underutilized fixed asset base and sizable finished goods inventory, "which suggests the continuation of margin pressure in the coming quarters."

Moody's said the negative outlook indicates the rating agency's concerns that there will be no near-term relief in the extended strain on margins and cash flow generation. The rating agency is also worried about Buckeye's tight liquidity and the upcoming maturities on two debt instruments.

Fitch downgrades Pacificare

Fitch Ratings downgraded Pacificare Health Systems, Inc.'s long-term issuer, senior debt and bank loan ratings to BB- from BB+ and revised the Rating Outlook to Evolving from Negative.

Fitch said its action reflects continuing concern about the refinance risk for PacifiCare's existing debt. Pacificare is now within 12 months of a major maturity.

The company has $768 million in outstanding debt - $680 million in bank debt due January 2003 and $88 million in senior notes due September 2003.

Fitch noted that the environment for debt refinancing has grown more difficult over the past several months due to the downturn in the credit cycle.

Pacificare has already extended its bank debt maturity from January 2002. The company said it has positive relations with its lenders but Fitch said it is concerned about the banks' willingness to further extend the maturity of the credit facility if the company is unable to refinance the debt.

S&P affirms General Growth

Standard & Poor's confirmed the ratings on General Growth Properties Inc. including its corporate credit rating at BBB- and its $337.5 million preferred income equity redeemable stock at BB. The outlook is stable.

S&P said the action follows General Growth's announcement it has agreed to acquire JP

Realty Inc. for $1.1 billion.

The rating agency said the transaction will have strategic benefits for General Growth while being "essentially credit-neutral."

General Growth already has a strong market position and benefits from portfolio diversification, although it has an aggressive financial risk profile, S&P said.

S&P downgrades Grupo Minero

Standard & Poor's downgraded Grupo Minero Mexico SA de CV and removed the company from CreditWatch with negative implications.

Ratings affected include the company's $375 million guaranteed notes series A due 2008 and $125 million guaranteed notes series B due 2028, $100 million secured export notes series B-1 due 2002, $200 million secured export notes series C due 2007 and $80 million secured export notes series D due 2011, all cut to CCC+ from BB-.

S&P lowers Time Warner Telecom outlook

Standard & Poor's lowered its outlook on Time Warner Telecom Inc. and Time Warner Telecom Holdings Inc. to negative from stable. The corporate credit rating on both is B+.

S&P cuts Formica to D

Standard & Poor's downgraded Formica Corp.'s ratings to D including its credit facilities previously rated CCC and its $215 million 10.875% senior subordinated notes due 2009, previously rated CC.

S&P rates new Tembec notes BB+

Standard & Poor's assigned a BB+ rating to Tembec Inc.'s new senior unsecured notes due 2012.

S&P rates new Sinclair notes B

Standard & Poor's assigned a B rating to Sinclair Broadcast Group Inc.'s new $300 million of senior subordinated notes due 2012.

S&P rates new Park Place notes BB+

Standard & Poor's assigned a BB+ rating to Park Place Entertainment Corp.'s new senior subordinated notes.

Moody's raises outlook on Caiua

Moody's Investors Service put a positive outlook on Caiuá Serviços de Eletricidade SA's euro medium-term notes rated B1, affecting $40 million of debt.

The action follows Moody's change to positive from stable in the outlook of Brazil's B1 foreign-currency country ceiling for bonds and notes.

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