Moody's upgrades Six Flags, rates loan Ba2

Moody's Investors Service assigned a Ba2 rating to Six Flags Theme Parks Inc.'s $1.05 billion credit facilities, which will be used to refinance the company's current $1.2 billion bank facilities. In addition, the senior unsecured debt was upgraded to B2 from B3 and its preferred stock was raised to B3 due to the simplification of the company's capital structure through the repayment of $295 million of intermediate holding company debt, Moody's said. The issuer rating and senior implied rating are both affirmed at B1. The outlook is stable.

Ratings reflect concerns over high total leverage, limited asset coverage and the expectation that the company will continue to acquire, upgrade and integrate theme park properties, Moody's said.

Support for the ratings comes from the company's leading market position, diversity of properties, strong brand name, limited direct competition and positive long-term operating trends, Moody's said.

S&P says no change to Matria

Standard & Poor's said Matria Healthcare Inc.'s all-stock acquisition of MarketRing.com will not result in changes to Matria's ratings or outlook. The company's corporate credit rating is at B+ and its outlook is stable.

S&P said the acquisition gives Matria the proprietary web-site portal technology that it had previously licensed and now uses with its TRAX disease management system.

The acquisition should help Matria facilitate planned technology upgrades that will help contain costs, S&P said.

Still, Matria remains challenged to manage its operations, further reduce operating expenses, and improve performance, and it will continue to be vulnerable to uncertain changes in medical practices, S&P added.

Moody's rates Extendicare's loan Ba3; notes B2

Moody's Investors Service assigned a B2 rating to Extendicare Health Services Inc.'s planned $150 million senior unsecured notes due 2010 and a Ba3 to its new $100 million senior secured revolver due 2007 and confirmed the company's $200 million 9.35% senior subordinated notes due 2007 at B3, senior implied rating at B1 and senior unsecured issuer rating at B2. The outlook is stable.

Following the company's refinancing, Moody's will withdraw the following ratings: $200 million senior secured revolver due 2003 and $200 million senior secured term A due 2003 at B1 and $200 million senior secured term B due 2004 at B1.

Negative factors influencing the ratings include high leverage, modest interest coverage, potential Sept. 30, 2002 sunset of certain Medicare add-on payments, difficult labor environment, poor general and professional liability market and competitiveness and regulation of the industry, Moody's said.

Positive influences include, moderately improving operating trends, material reduction in leverage, favorable demographic trends and experienced management team, Moody's said.

The stable outlook reflects the anticipation that the company's continued focus on improving operations will improve operating trends and that the company will generate excess cash flow which will be used to reduce debt, Moody's said.

For fiscal year 2002, total debt/book capitalization is expected to be above 70% and adjusted leverage is expected to be above 5 times. Coverage for the same period is anticipated in the range of 1.5 times.

S&P rates Extendicare's loan BB-; notes B-

Standard & Poor's assigned a B- rating to Extendicare Health Services Inc.'s planned $150 million senior unsecured notes due 2010 and a BB- to its new $100 million senior secured credit facility due 2007. The rating on the existing bank loan is withdrawn. In addition, the company's corporate credit rating of B and subordinated rating of CCC+ was affirmed. The outlook remains negative.

Ratings reflect "the nursing home chain's large size and reasonable geographic diversity, offset by concern related to third-party payor pressures and the firm's thin credit-protection measures," S&P said.

Funds from operations to lease-adjusted debt are under 10% and EBITDA coverage of fixed charges may only average about 2 times, despite debt reductions.

The negative outlook reflects the concern that although refinancing addresses near-term debt maturities there is thin credit protection and ongoing risks with reimbursement risks, S&P said.

Fitch takes Conseco off watch, lowers insurance units

Fitch Ratings confirmed Conseco Inc.'s corporate ratings and removed them from Rating Watch Negative with the exception of all its insurance subsidiaries but Manhattan National Life Insurance. The insurer financial strength ratings on these units was cut to BB from BBB-. The outlook for all ratings is negative. Ratings confirmed include Conseco's senior debt at CCC+ and trust preferred securities at CCC and Conseco Finance Corp.'s senior debt at CCC.

Fitch said it lowered Conseco's insurer financial strength ratings because of a decline in statutory capital adequacy of insurance companies on a consolidated basis.

The confirmation of Conseco's senior debt and preferred stock ratings and removal from Rating Watch Negative follows resolution of near-term concerns about principal repayments and the unqualified audit opinion received on the year-end 2001 financial statements, Fitch said.

For Conseco Finance, the ratings also reflect its good relations with its banks and the significantly reduced outstanding debt exposure during the last three months, Fitch said.

However the negative outlook is in response to the company's dependence on secured funding facilities, the lack of unencumbered assets on the balance sheet and uncertain direction of credit quality, Fitch said.

During the second half of 2001, and to a lesser extent the first quarter of 2002, Conseco Finance more actively utilized loss mitigation strategies (payment extensions, forbearance, rate modifications, default transfer of equity) to reduce the stress put on its customers from the economic downturn, Fitch noted. These policies are intended to defer foreclosure and ultimate charge-offs on outstanding manufactured housing and subprime home equity loans. However, Fitch said it is uncertain if these policies will ultimately generate lower loss results, or simply delay actual loss recognition.

Moody's rates Hilb, Rogal and Hamilton loan Ba3

Moody's Investors Service assigned a Ba3 rating to Hilb, Rogal and Hamilton Co.'s senior secured bank loan, which consists of a $30 million term A, a $130 million term B and a $100 million revolver. Security for the loan is capital stock of all direct and indirect subsidiaries.

Ratings are supported by solid operating performance with consistently improving margins, Moody's said.

The proposed acquisition of Hobbs Group would strengthen and improve the company's client profile, enhance Hobb's risk management and executive capabilities and enhance revenues, Moody's added.

Negative influences include, substantial financial leverage and integration risks associated with the aggressive acquisition strategy.

The rating outlook is stable. "HRH's operating earnings and ability to generate cash to pay sizable earnouts and strengthen its balance sheet will figure prominently into the ratings going forward," Moody's said.

S&P cuts American Lawyer

Standard & Poor's downgraded American Lawyer Media Holdings Inc. Ratings affected include American Lawyer Media Holdings' $63.27 million 12.25% senior discount notes due 2008, cut to CC from CCC-, and American Lawyer Media Inc.'s $175 million 9.75% senior notes due 2007, cut to CCC from CCC+. The rating on American Lawyer Media Inc.'s bank loan, previously B-, was withdrawn. S&P also removed the ratings from CreditWatch with negative implications where they were placed on Sept. 6, 2001. The outlook is negative.

S&P said the downgrade is in response to American Lawyer's continued weak operating performance, thin interest coverage and increasing cash interest requirements in 2003.

The company has implemented a number of cost containment initiatives. However, EBITDA declined 42.5% during the quarter ended March 31, largely because of declining advertising revenues for the company's publications, a result of the weak economy, S&P said.

Advertising revenues, which account for about 55% of total sales, fell 18% in the three months ended March 31, reflecting reduced regional classified and national display advertising. EBITDA coverage of total interest expense was marginal at about 0.8 times for the 12 months ended March 31. Coverage of cash interest was thin at roughly 1.1x.

In addition, the 12.25% senior discount notes require mandatory annual cash interest of $7.8 million beginning in June 2003, S&P noted.

Moody's cuts Vertis outlook, rates notes B2

Moody's Investors Service assigned a B2 rating to Vertis, Inc.'s planned offering of $250 million senior unsecured notes due 2009 and lowered the outlook to negative from stable, affecting its $635 million secured credit facility at B1 and prospective $327 million senior subordinated notes (subordinated bridge loan) at (P)B3.

Moody's said the negative outlook reflects the absence of cushion under existing credit statistics to absorb operating missteps and/or deterioration in financial performance while remaining at current rating levels.

The significant increase in senior funded debt, pro-forma for the proposed $250 million unsecured notes issuance, exacerbates the downward pressure on the ratings - especially on the prospective senior subordinated rating, Moody's said.

Failure to achieve and to sustain margin improvements in the near term would further pressure the ratings, the rating agency added.

Also, any disposition of the mezzanine debt would trigger a review of ratings, Moody's said.

Stabilization in the ratings would likely require material reduction in financial leverage as well as cumulative improvement in interest coverage and free cash flow as a percentage of total consolidated debt, the rating agency said.

At the same time, the confirmation acknowledges the company's performance under extreme economic conditions, namely prolonged downturn exacerbated by the devastating effects of the Sept 11 terror attacks and subsequent terrorist events, Moody's said.

Moody's rates J.C. Penney's loans Ba1, cuts notes

Moody's Investors Service assigned a Ba1 rating to J.C. Penney Company Inc.'s new $1.5 billion senior secured credit facility and downgraded its notes.

The rating for the loan is based on strong asset coverage due to the store's quality and catalog inventory and the low level of expected usage, Moody's said. The rating outlook is stable.

In addition, Moody's confirmed the Ba2 senior implied rating and lowered the company's senior unsecured debt, medium-term notes and issuer rating to Ba3 from Ba2 and convertible subordinated notes to B1 from Ba3.

Moody's said it lowered the notes because asset coverage for senior unsecured note holders and other unsecured creditors is diminished by the granting of security to the banks.

Penney's operating performance has begun to show improvement as the company begins to achieve benefits from its turnaround initiatives, Moody's said.

Changes at the department stores have included the move to a centralized merchandising organization and improved assortments, selection and in-store display. Eckerd is benefiting from a new pricing strategy and a redesign of its stores which has reemphasized key categories in the front-end, non- pharmacy segment of the business, the rating agency added.

As a result of these initiatives, operating profit through the first quarter of 2002 has risen by 36% over the prior year. This comes after several years of declining trends that culminated in significant operating losses in the second half of 2000. Moody's said it expects that Penney's will continue to improve is profitability and cash flow generation and that credit metrics will show improvement with each passing quarter.

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