Moody's upgrades Anteon

Moody's Investors Service upgraded Anteon International Corp. including raising its $143 million secured credit facility upgraded to Ba3 from B1 and $75 million 12% senior subordinated notes due 2009 to B2 from B3. The outlook is stable.

Moody's said the upgrade is in response to Anteon's improved financial condition, primarily a result of its successful initial public offering in March. Approximately $75.5 million of net proceeds were used to significantly reduce financial leverage.

The ratings also acknowledge the company's satisfactory margins, strong returns, and good liquidity, Moody's said.

Reliance on external sources of committed financing will likely prove unnecessary given Anteon's relatively stable internally generated cash flow, Moody's said although it added that it expects the company to maintain orderly access to committed financing.

Industry trends toward outsourcing and increasing federal spending continue to be favorable, the rating agency added.

Limiting the ratings are Anteon's relatively small size (approximately $750 million in revenues versus some competitors over $1 billion) and its historically acquisitive growth strategy, Moody's said. It also described the balance sheet as relatively weak given the absence of tangible equity.

S&P raises Advanced Accessory outlook

Standard & Poor's raised its outlook on Advanced Accessory Systems LLC to stable from negative and confirmed its ratings including its senior secured debt at B and Advanced Accessory Systems Capital Corp.'s subordinated debt at CCC+.

S&P said the revision reflects reduced near-term liquidity concerns stemming from better-than-expected sales and operating profits for the first half of 2002.

By mid-August 2002, the company had sufficient free cash flow to pay down all of the debt maturities coming due for the full year, about $11 million, S&P said.

The rating agency added that it expects Advanced Accessory's continuing operations to generate sufficient cash to pay down 2003 debt maturities totaling $12 million, assuming market conditions remain stable or improving.

By year-end 2003, the company expects to have paid off all outstanding senior debt of about $26 million, S&P added.

S&P says Tesoro unchanged

Standard & Poor's said Tesoro Petroleum Corp.'s ratings and outlook are unchanged on the announcement it will sell a refined petroleum products pipeline system to Williams Energy Partners LP for $110 million. S&P rates Tesoro's corporate credit at BB with a stable outlook.

The transaction, expected to close in mid-October, is part of Tesoro's $500 million debt-reduction plan targeted for completion by the end of 2003, S&P noted.

Moody's cuts Fairpoint

Moody's Investors Service downgraded Fairpoint Communications, Inc. including lowering its $68 million senior secured term loan due 2006, $75 million senior secured term loan due 2007 and $85 million senior secured revolving credit facility due 2004 to B2 from B1 and its $75 million senior subordinated floating-rate notes due 2008, $125 million 9.50% senior subordinated notes due 2008 and $200 million 12.50% senior subordinated notes due 2010 to Caa1 from B3.

Moody's said the action completes a review begun in October 2001 and follows Fairpoint's filing of second quarter 2002 financial statements.

The ratings incorporate the result of Fairpoint's recent exit from its CLEC business, called Fairpoint Communications Solutions Corp., and the associated financial restructuring, Moody's said.

Despite the effective removal of the Solutions overhang resulting from the restructuring, Fairpoint's core RLEC business remains highly leveraged with only modest cash flow growth prospects, Moody's said.

Fairpoint's RLEC cash flow growth has been traditionally driven by acquisition-related activity, however with no significant acquisitions since September 2001, Fairpoint's business has taken on a slower, more organic growth profile, Moody's said.

For the second quarter 2002, the company's RLEC operations recorded a 1% sequential revenue growth and a 3.8% sequential EBITDA decline, reflecting seasonality, flat access line growth, a decrease in traffic volumes and the impact of the soft economy on Fairpoint's rural subscriber base, the rating agency said.

Moody's cuts Iusacell

Moody's Investors Service downgraded Grupo Iusacell including cutting its senior unsecured ratings to Caa2 from B1 and Grupo Iusacell Celular's senior unsecured rating to B3 from Ba2. The outlook is negative.

Moody's said the downgrade is in response to uncertain additional support from Verizon Communications, its largest shareholder, and Vodafone, its second largest; an inconsistent operating strategy which has resulted in a sustained market share loss mainly to Telcel; a challenging competitive environment (potentially more so given Telefónica de Espana's recent acquisition of Pegaso); andreduced financial flexibility given Moody's belief that the company will generate negligible free cash flow going forward and has nearly completely drawn down its committed bank lines.

Moody's said it assigned a negative outlook because it expects Grupo Iusacell's credit metrics will continue to deteriorate as a result of intense competition and the economic slowdown in Mexico.

Moody's said it views any additional financial support from Verizon Communications as highly uncertain noting its demonstrated willingness to stop supporting underperforming investments such as Genuity.

While Moody's recognizes that Iusacell has stronger cash flow characteristics than Genuity, Iusacell is financed on a non-recourse basis, and continued financial support from Verizon cannot be assured, Moody's said.

Grupo Iusacell's financial flexibility is limited. The company reported cash reserves of around $45 million as of the end of the second quarter, $22 million of which was its operating cash balance, and had lines of credit amounting to $25-30 million in remaining availability. Grupo Iusacell's financial flexibility could be under intense pressure if, for any reason, it fails to meet its target of operating at free cash flow break even in 2002, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.