Moody's downgrades Netia to Ca

Moody's Investors Service downgraded Netia Holdings SA to Ca from Caa1, concluding a review begun on Sept. 7 and affecting $861.5 million of debt. The outlook is negative.

Moody's said the downgrade reflects "Netia's failure to evidence additional financing to fund the business and service its debt obligations going forward," the continued underperformance of the business relative to Moody's expectations and "to a level which seriously questions the viability of the business, given the company's sizeable debt burden" and continued uncertainty over the strategic direction of the business and its ability to operate as a viable stand-alone entity.

For the nine months to Sept. 30, 2001, Netia generated EBITDA of $7.5 million on revenues of $93 million to support net financial expenses of $92 million, Moody's said. The company had unrestricted cash of $152 million and restricted cash of $26 million to meet operational/capital and interest requirements, the rating agency added.

Moody's estimates Netia is funded only into early 2002 although it could stretch cash into mid-2002. The rating agency questions the likelihood of shareholders or third parties providing additional funding and expects balance sheet restructuring is "inevitable."

S&P downgrades Carrier1

Standard & Poor's downgraded Carrier1 International SA's senior notes to CCC- from CCC. The new rating is on CreditWatch negative.

S&P cuts Fairfax Financial to junk

Standard & Poor's downgraded Fairfax Financial Holdings Ltd., cutting its various series of notes to BB+ from BBB-.

The rating agency also lowered TIG Capital Trust I's capital securities to B+ from BB- and TIG Holdings Inc.'s notes to BB from BB+.

Fitch cuts Fairfax to junk

Fitch lowered Fairfax Financial Holdings Ltd.'s senior debt to BB+ from BBB-. The outlook is stable and the ratings are removed from rating watch negative.

Fitch's action follows the company's announcement of gross reserve strengthening of $600 million in the third quarter of 2001, primarily emanating from its Crum & Forster and TIG Specialty (TIG) insurance units. Fitch added that $190 million of the charge is covered by indemnities provided to C&F at the time of its acquisition by Fairfax, and the net charge after indemnities and reinsurance is US$187 million.

Fitch said its downgrades primarily reflect its belief that "the reserving and balance sheet profiles at the statutory level of C&F and TIG have proven to be weaker than Fitch had anticipated at the time of acquisition. Loss reserve development at these companies has exceeded indemnities provided by former owners at the time of acquisition. Fitch believes the addition of TIG and C&F has weakened Fairfax's credit profile to levels reflective of the current ratings."

However Fitch noted the current books of business written by TIG and C&F under new management "appear to be much stronger than the books inherited by Fairfax as part of the acquisitions, with better underwriting controls and discipline. Fairfax and its subsidiaries should also be beneficiaries of the hard market resulting from the September 11 events. Fitch believes Fairfax's earnings outlook in 2002 and 2003 is much improved relative to prior years."

Moody's cuts Texon sr notes to Caa3 from Caa1

Moody's Investors Service downgraded Texon International plc's DM245 million of 10% senior notes to Caa3 from Caa1 and cut United Texon's bank debt to Caa1 from. The outlook is negative.

Moody's said its downgrade reflects concerns about the ability of the group to service its debt in the near term as a result of anticipated weak operating cashflow generation and a lack of liquidity cushion (£4.2 million as of June 30, 2001).

Moody's said its action also reflects "concerns about the weak economic environment in which Texon International operates and the impact this is likely to have on demand for shoes and the shoe components that Texon produces. Moody's expects continuous pricing pressure from lower cost producers and a potential decline in demand from the shoe industry to further undermine the group's ability to generate sufficient cash flows to make its interest payments."

Moody's puts Delphi Financial on review for upgrade

Moody's Investors Service put Delphi Financial Group, Inc. and its affiliates on review for possible upgrade, affecting $150 million of debt securities including Delphi's senior debt rated Ba1, Delphi Funding LLC's preferred stock rated Ba2.

Moody's said its review will focus on Delphi's expected capital structure going forward "in light of its significant reduction in financial leverage in the recent past, as well as the risk profile of the investment portfolio including the alternative investments held at the holding company level."

The rating agency added that the current rating reflects the established position of Delphi's primary life insurance company, Reliance Standard Life Insurance Co. in the group employee benefits market, as well as Delphi's ownership of Safety National Casualty Corp., an excess worker's compensation insurer.

Moody's commented: "Reliance Standard has maintained solid underwriting discipline, as demonstrated by its consistently strong combined ratio for its disability and other non-medical health businesses."

But the rating agency said the strengths are tempered by the group's exposure to mortgage-backed securities and junk bonds. Also, earnings in the disability line of business remain vulnerable to a continued economic downturn as well as to a very competitive market environment.

S&P downgrades Viasystems

Standard & Poor's downgraded Viasystems Group Inc., including lowering its bank loan rating to B= from B+ and its subordinated debt to CCC from B-. The outlook is negative.

S&P made the downgrade because of "deteriorating operating performance, driven largely by a severe downturn in demand in telecommunications and networking end markets, leading to very weak credit measures. The rating action incorporates the challenges of rationalizing operations as sales decline, responding to mounting pricing pressure in printed circuit board industry, and managing significant customer concentration."

S&P added that the ratings reflect "a highly leveraged financial profile partially offset by a customer base of leading original equipment manufacturers (OEMs) and expanding manufacturing capacity in low-cost locations in Asia."

In the third quarter, sales fell by more than one-third and profitability by almost three-quarters from the same period of 2000, S&P noted. "End-market demand in the communications industry remains weak, and therefore sales and profitability are likely to remain depressed over the near term."

Moody's rates new Triton notes B2, confirms existing ratings

Moody's Investors Service assigned a B2 rating to the new senior subordinated notes issued by Triton PCS, Inc. and confirmed the company's existing ratings, affecting $1.6 billion of debt and credit facilities. Ratings affected include the $100 million revolving credit facility, $175 million term loan A and $150 million term loan B, all rated Ba3, the $350 million of 9 3/8% senior subordinated notes due 2011 and

$512 million 11% senior subordinated discount notes due 2008, both rated B2.

Moody's said its ratings reflect "the company's consistently strong operating and financial results, conservative business strategy, and good liquidity, as well as the company's affiliation with AT&T Wireless (senior unsecured rating Baa2)."

By using proceeds of the new notes to permanently pay down bank debt Triton will extend the average life of its debt capital, providing a degree of additional financial flexibility, Moody's said.

It added: "While net subscriber additions in the third quarter were slightly below expectations, Moody's is comforted by Triton's focus on profitability rather than absolute subscriber growth. Triton remains committed to attracting only high value, creditworthy subscribers, primarily on a contract basis. These subscribers use their phones more often and are less likely to churn than more marginal, less creditworthy customers such as prepaid subscribers."

S&P rates new Triton notes B-, confirms existing ratings

Standard & Poor's assigned a B- rating to Triton PCS Inc.'s new senior subordinated notes and confirmed the company's existing ratings including its B- subordinated debt and BB- senior secured bank loan.

S&P said Triton's ratings reflect "consistent execution on its business plan, expected continued near-term improvement in cash flow measures, experienced management, and the prefunding of its business plan." The company also benefits from its strategic relationship with AT&T Wireless Services.

The rating agency added: "These factors are offset, somewhat, by high debt leverage, though this is anticipated to improve within the next two years."

S&P noted: "The company benefits from a good demographic profile of high-growth midsize markets and its focus on high-end users."

S&P cuts Phillips-Van Heusen outlook to stable from positive

Standard & Poor's cut its outlook on Phillips-Van Heusen Corp. to stable from positive. Affected rating include the BB rated senior unsecured debt and bank loan ratings and B+ subordinated debt ratings.

S&P said it made the revision because it expects the company's operating performance will be "under pressure due to the increasingly difficult retail environment, and that credit protection measures will not improve to the extent that would warrant an upgrade."

S&P commented: "The ratings on Phillips-Van Heusen reflect the company's participation in the highly competitive market for apparel and footwear products. However, the company has a solid group of well-known brand names, including Arrow, Izod, and Van Heusen in apparel and Bass in footwear. In recent years the company has made progress in closing unprofitable retail stores and manufacturing facilities, which has aided a recovery in financial protection measures."

S&P rates Tesoro Petroleum's new notes BB-

Standard & Poor's rated Tesoro Petroleum Corp.'s new issue of senior subordinated notes at BB-. It affirmed the company's existing ratings. The outlook is positive.

The rating agency said Tesoro's recent acquisition of a 55,000 barrel of oil per day refinery in Salt Lake City; a 60,000 bpd refinery in Mandan and related storage, pipeline, and retail assets from BP PLC strengthens the company's business position.

It noted that the new assets are "consistent with previously outlined plans to increase refining capacity in core markets and secure internal means of supplying Tesoro's growing network of Wal-Mart Stores Inc.-associated Mirastar gas stations."

S&P commented: "Although temporarily elevated debt levels partly offset immediate benefits, Tesoro has indicated its intent to rebalance its capital structure to the targeted 45% to 50% range within two years."

Tesoro could be upgraded when that happens, S&P added.

Moody's downgrades Columbus McKinnon

Moody's Investors Service downgrade Columbus McKinnon Corp., including its $200 million of 8½% senior subordinated notes due 2008, reduced to B3 from B2, and its $225 million senior secured credit facilities due 2003, cut to Ba3 from Ba2. The outlook is stable.

Moody's said the downgrade reflects Columbus McKinnon's "declining operating performance, weakened credit protection measures, and Moody's expectation of further weakness as the economic slowdown continues. The company has been negatively impacted by the slowdown in the manufacturing sector that has led to significant reductions in capital spending and much lower demand for the company's products and services."

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