S&P upgrades Avado notes

Standard & Poor's upgraded Avado Brands Inc. including two series of notes. The outlook is negative. Ratings affected include Avado's $125 million 9.75% senior notes due 2006 and $100 million 11.75% senior subordinated notes due 2009, both raised to CC from D.

S&P said the action follows Avado's payment of interest on its 11.75% senior subordinated notes. The payment was originally due on June 15.

S&P added that Avado has limited liquidity, a highly leveraged capital structure, weak operating performance and participates in the highly competitive restaurant industry.

Cash flow protection measures are weak, S&P added. EBITDA covered interest expense only about 1.1 times and leverage is high, with total debt to EBITDA of about 7.0x.

S&P rates new Doane Pet notes B-, still on watch

Standard & Poor's assigned a B- rating to Doane Pet Care Co.'s planned $200 million senior unsecured notes due 2008 and said the remaining ratings remain on CreditWatch with negative implications including its senior secured bank loan at B+ and subordinated debt at B-.

However once the proposed note deal is completed S&P expects to remove Doane Pet from watch and confirm the existing ratings.

The proposed note issue is expected to reduce the company's annual debt amortization requirements and provide relief under tight bank covenants, S&P said.

S&P said Doane Pet is on watch because its credit protection measures have fallen below the rating agency's expectations and the company has limited cushion under its bank loan financial covenants.

S&P says no change to Advantica

Standard & Poor's said Advantica Restaurant Group Inc.'s ratings and outlook are unchanged following the company's announcement it sold its subsidiary FRD Acquisition Co. for $32.5 million. S&P gives Advantica a corporate credit rating of B- on CreditWatch with developing implications.

S&P said the divestiture is positive because it improves the company's liquidity position but Advantica still needs to refinance its revolving credit facility due Jan. 7, 2003.

S&P lowers Preem

Standard & Poor's downgraded Preem Holdings AB and removed it from CreditWatch with negative implications. The outlook is stable.

Ratings lowered include Preem's €305 million 10.625% notes due 2011, cut to B from BB-.

S&P lowers Petroplus

Standard & Poor's downgraded Petroplus Funding BV and removed it from CreditWatch with negative implications. The outlook is stable.

Ratings lowered include Petroplus' €225 million 10.5% notes due 2010, cut to B+ from BB-.

S&P keeps most US Airways ratings on watch developing

Standard & Poor's said US Airways Inc.'s ratings remain on CreditWatch with developing implications except those on which it has defaulted.

The announcement follows condition approval from the Air Transportation Stabilization Board for a $900 million loan guaranty on a planned $1 billion credit facility.

ATSB approval is conditioned on successful conclusion of concessionary contracts with labor groups (tentative agreements have been reached with the pilots and flight attendants), cost savings from selected aircraft lease and debt restructurings (which are in the process of negotiations), and providing more compensation (e.g., warrants) to the U.S. government for providing the guaranty, S&P noted.

Ratings on CreditWatch will be raised if these conditions are met and the loan guaranty granted, S&P said.

Ratings will be lowered (and US Airways will very likely file for bankruptcy) if the conditions are not met and the loan guaranty application rejected, S&P added.

Moody's puts Amerco on review

Moody's Investors Service put Amerco on review for possible downgrade. The action affects $800 million of debt including Amerco's senior unsecured notes and medium-term notes at Ba1.

Moody's said it began the review because of concerns over the weakened financial performance of the company's Republic Western insurance subsidiary, and the need for Amerco to file for an extension to complete the audit of its financial statements and release consolidated financial results.

Moody's also noted that Amerco recently closed a new $205 million bank credit facility, which is reduced in size from the company's previous facility, and that the company intends to make greater use of capital markets transactions as part of its funding strategy.

Moody's said its review will look at the business and financial prospects at Republic Western going forward; the adequacy of regulatory capital at the insurance subsidiary and the implications for Amerco of any potential actions to support its subsidiary.

The review will also assess the outlook for Amerco's core truck rental business as well as the financial impact of any adjustments following the full consolidation of the operations of Storage Acquisition Corp., an affiliated company which holds certain real estate used in Amerco storage operations.

S&P raises Tri-Union notes to CCC-

Standard & Poor's raised Tri-Union Development Corp.'s $130 million 12.5% senior secured notes due 2006 to CCC- from D. The outlook is negative.

S&P said its action follows an agreement with note holders to accept additional promissory notes in lieu of payment for $8.1 million of interest due June 1, 2002.

Tri-Union was forced to defer the $8.1 million June 1 interest payment on the notes due to insufficient funds on hand, S&P noted. At that time a D rating was assigned to the notes and the company.

S&P added that concerns remain about Tri-Union's ability to meet future debt and interest payments given its large debt load and dependence on asset sales to meet financial commitments.

S&P said it believes that there is a high probability that Tri-Union will be unable to honor its current obligations on a timely basis.

S&P may change Westar outlook

Standard & Poor's said it may change its negative outlook on Westar Energy Inc. (formerly Western Resources) to stable or even positive once debt is pared down. The corporate credit rating for Westar is BB+.

S&P made its comments after Westar received approval from the Kansas Corporation Commission to sell its $971 million (45%) investment in ONEOK Inc., providing that net proceeds are used to reduce debt.

S&P said that although the sale would result in substantial tax payments available proceeds of the nearly $740 million to repay debt would restore balance to Westar's liberally leveraged capital structure.

Disposal of the ONEOK stock would reduce the level of steady dividends, but S&P said the deleveraging is a more critical near-term goal in supporting the company's creditworthiness.

S&P lowers Poindexter

Standard & Poor's downgraded J.B. Poindexter & Co. Inc. including cutting its $100 million 12.5% senior notes due 2004 to B- from B. The outlook is negative.

S&P said the action is in response to financial performance well below the rating agency's previous expectations.

Cash generation continues to weaken, with EBITDA declining more than 66% to $2.3 million in the first quarter of 2002, compared with $6.8 million in the first quarter of 2001, S&P noted.

Those figures result in total debt to EBITDA of 5.4 times, versus S&P's previous expectations of total debt to EBITDA in the 3x to 4x range.

Financial leverage is not expected to improve in the near term because many of Poindexter's markets are soft, S&P said.

Additionally, Poindexter faces significant refinancing risk during the next 24 months as its $85 million senior unsecured notes and $40 million bank credit facility mature.

S&P withdraws Fairfield ratings

Standard & Poor's withdrew its ratings on Fairfield Manufacturing Co. Inc. at the request of the company.

S&P had previous rated Fairfield's subordinated debt at CCC and its preferred stock at CCC-.

S&P puts Panda on watch

Standard & Poor's put Panda Funding Corp.'s $105 million 11 5/8% unsecured bonds due 2012 on CreditWatch with negative implications.

S&P said the placement reflects concern that Panda Funding's Rosemary project could lose its qualifying facility (QF) status designation if the demand for its steam production continues to decline.

Panda Funding is an intermediate holding company that relies on the dividend distributions from its Rosemary Project and Brandywine Project to service its debt. The Rosemary Project represents about 25% of cash flow, with the balance coming from Brandywine, S&P said.

Rosemary, a 180-MW cogeneration facility located in North Carolina, sells power to Virginia Electric and Power Company ('A'/Stable/--) under a long-term power purchase agreement (PPA) and steam to WestPoint Stevens (WPS, 'B'/Negative/--). Though power sales generate most of the revenues, the project must sell steam to maintain its QF status for the PPA to be binding, S&P said.

Demand for Rosemary's steam production has declined in the past two years and the risk of further curtailment is a distinctive possibility given that WestPoint Stevens faces severe foreign competition in the textile industry, S&P added.

S&P rates Swift & Co.'s loan BB; notes B+

Standard & Poor's rated Swift & Co.'s proposed $550 million senior secured credit facilities at BB, $400 million senior unsecured notes due 2009 at B+ and corporate credit rating at BB. The outlook is stable.

The credit facilities will consist of a $350 million revolver due 2007 and a $200 million term loan B due in 2008. Security is the stock of all borrowers and all stock and assets of borrowers and their wholly-owned domestic subsidiaries. Proceeds from the term B and the notes will be used to help fund the $1.2 billion acquisition of ConAgra Foods Inc.'s meat processing business.

Ratings reflect relatively high debt levels offset by the company's number 3 position in both the U.S. beef and pork processing industries, a diverse customer base and high barriers to entry, S&P said.

Pro forma for the acquisition, lease adjusted total debt to EBIDTA will be about 2.9 times and EBIDTA coverage of interest expense is expected at around 3.0 times.

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