Moody's puts Ineos on upgrade review

Moody's Investors Service put Ineos Group Holdings plc on review for possible upgrade including its €260 million 10.50% senior notes at B2 and Ineos Holdings Ltd.'s €875 million senior secured credit facilities at Ba3.

Moody's said the review is in response to Ineos' strong operating and financial performance over the last 18 months in what has been a challenging economic environment and the revision of the group's bank financial covenants for the years 2003-2004.

Ineos' substantial de-leveraging has translated into a [net debt/ (EBITDA-capex)] ratio of 4.1x at year-end 2002 versus pro forma 6.9x as of Dec. 31, 2000, Moody's said.

The group has achieved significant cost savings in the Phenol and Silicas divisions, whilst restructuring expenditure has remained under control at €44 million since July 2001.

Moody's also recognized Ineos' strong asset quality and the relatively low cost position of the group, the very good capacity utilization rates experienced by the group (as demonstrated by the Oxide and Fluor divisions which have reached their maximum capacity utilization at year-end 2002 and in the first quarter of 2003) as well as reasonable product diversification (although Phenol and Acetone represent 53% of turnover).

Moody's rates Stone Energy liquidity SGL-2

Moody's Investors Service assigned an SGL-2 speculative-grade liquidity rating to Stone Energy Corp. and confirmed the company's Ba3 senior implied rating.

Moody's said the SGL-2 rating reflects the company's good liquidity position both at present and as expected for the coming year through the first quarter of 2004.

Moody's anticipates Stone's planned capital spending needs for the next 12 months will be sufficiently covered with cash flow from operations and its committed bank line. In addition, Stone should remain comfortably within its maintenance covenants, ensuring accessibility over the coming four quarters.

Moody's rates Norske Skog Canada notes Ba2

Moody's Investors Service assigned a Ba2 rating to Norske Skog Canada Ltd.'s new $150 million senior unsecured notes and confirmed its existing ratings including Norske Skog Canada Finance Ltd.'s senior secured bank credit facility at Ba1, Norske Skog Canada Ltd.'s senior unsecured notes at Ba2 and Pacifica Papers' senior unsecured notes at Ba2. The outlook is stable.

Moody's said the ratings consider the company's high financial leverage as it experiences near-trough pricing in the newsprint and pulp markets, its narrow product focus in a commodity industry with volatile pricing and the associated volatility in the company's earnings, its moderate size in relation to its core competitors, and a lack of geographic diversification.

The ratings also consider its good financial liquidity, including a $C350 million credit facility (the facility be largely undrawn following the note offering), its solid position in newsprint and directory papers, its increasing production of higher margin coated groundwood papers, and its relationship with Norske Skog A.S (30.6% ownership), Moody's added.

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