Moody's downgrades Fedders notes to Caa1 from B2

Moody's Investors Service downgraded Fedders North America Inc's $250 million of debt, including cutting its $150 million of 9 3/8% guaranteed senior subordinated notes due August 2007 in two series to Caa1 from B2 and its $100 million senior secured revolving credit facility to B1 from Ba2. The outlook is stable.

Moody's said the downgrades are in response to Fedders' "weakening operating performance and sharply worsened credit protection statistics."

But the rating agency added that it still recognizes Fedders' "significant presence in the room air conditioner market and its established relationship with major retail chains. The stable outlook reflects enduring pricing pressure on room air conditioners, partly offset by the company's aggressive cost-cutting measures."

Moody's noted that for the fiscal year to Aug. 31, 2001 Fedders reported a 2.5% decline in sales from fiscal 2000, while pro forma cost of goods sold increased 5.5%. Gross margin dropped "sharply" to 19% from 25% last year.

S&P downgrades Hayes Lemmerz, still on negative watch

Standard & Poor's downgraded Hayes Lemmerz International Inc. and kept its ratings on CreditWatch with negative implications where they were placed Sept. 5. About $2 billion of debt is affected. Among the ratings cut are the company's senior secured debt, lowered to B- from B+ and its subordinated debt, cut to CCC from B-.

S&P said the action reflects its concerns about "the company's future operating performance, near-term liquidity, and the magnitude of restatements related to ongoing investigations into accounting errors."

On Sept. 5, Hayes Lemmerz announced it would restate certain historical financial statements to correct accounting errors and to write down the value of impaired assets. S&P said it is "increasingly concerned that the magnitude and scope of the restatement will exceed original expectations. It is unclear what level of earnings and cash flow generation are achievable for the company."

S&P added that access to Hayes Lemmerz's bank credit facilities remains restricted following financial covenant violations, which could lead to "increased liquidity pressures in the near term, limiting the company's ability to take necessary steps to improve its operating performance."

S&P puts Louisiana-Pacific on negative watch

Standard & Poor's said it put Louisiana-Pacific Corp. on CreditWatch with negative implications. Included are Lousiana-Pacific's BBB- senior secured bank loan rating, BB senior unsecured debt rating and its BB- subordinated debt rating.

The rating agency said its action is the result of worsening economic and wood product market conditions during the past month. As a result, it said, "the company's already weak financial profile could deteriorate further despite significant cost-cutting initiatives."

If a planned senior secured credit facility does not close, as planned, shortly credit quality would be negatively affected, S&P said.

S&P revises Integrated Electrical outlook to stable from positive

Standard & Poor's said it revised its outlook on Integrated Electrical Services Inc. to stable from positive. Affected is about $291 million of debt, including its BB- subordinated debt and BBB- senior secured debt.

S&P said the revision follows Integrated Electrical's announcement that due to the weakening economy and the terrorist attack of Sept. 11 it now expects diluted earnings of 8 cents to 9 cents for the fourth quarter as opposed to previous guidance of 30 cents to 32 cents per diluted share.

S&P commented: "As a result of weakening fundamentals, the potential for higher ratings has diminished in the intermediate term."

S&P cuts Remington Products outlook to stable from positive

Standard & Poor's cut its outlook on Remington Products Co. LLC to stable from positive. It affirmed the company's B corporate credit rating and CCC+ subordinated debt rating, affecting $240 million of debt.

S&P said the revision reflects "challenging conditions in the retail industry, which could limit the potential for an upgrade over the intermediate term. Furthermore, the company's financial results for fiscal 2001 are expected to be below Standard & Poor's expectations given the anticipated soft holiday selling season, combined with one-time costs related to the company's business in the U.K."

S&P cuts Texas Petrochemicals outlook to negative

Standard & Poor's cut its outlook on Texas Petrochemicals Corp. to negative from stable and affirmed ratings on the company including the B subordinated debt rating.

S&P said the change is a result of "deteriorating credit quality measures due to weaker-than-expected operating and financial performance. Profitability and cash flow have been negatively impacted by weak demand in key products such as butadiene, lower pricing, and the negative effects of operational outages. The shortfall in earnings could make it more difficult for the company to strengthen credit protection measures in the near term."

The rating agency added that Texas Petrochemicals has a "below-average" business position as a mid-tier petrochemical producer.

S&P says U.S. Industries still on positive watch

Standard & Poor's said its rating for U.S. Industries Inc. remains on CreditWatch with positive implications awaiting definitive progress on at least part of the sales of non-core assets.

Sales would enhance U.S. Industries' prospects for meeting "substantial" quarterly amortization of senior debt required under the restructured bank facilities, which mature in November 2002, S&P said.

Among the units up for sale are Ames True Temper lawn and garden tools, Lighting Corp. of America commercial and residential lighting products and Rexair premium vacuum cleaners.

S&P said U.S. Industries' scheduled cumulative payments are $75 million by Dec. 31, 2001; $200 million by March 31, 2002; $450 million by June 30, 2002; and $600 million by Oct. 15, 2002.

Ratings covered include CCC+ on USI American Holdings, Inc.'s and USI Global Corp.'s senior secured debt.

Fitch upgrades Caithness Coso's short notes to BBB

Fitch upgraded Caithness Coso Funding Corp.'s $110 million senior secured notes due 2001 to BBB from BB and took them off Rating Watch Evolving. It left unchanged the BB rating of Caithness Coso's $303 million senior secured notes due 2009 and kept them on Rating Watch Evolving.

The long maturity notes are "largely dependent upon the long-term credit quality of Southern California Edison," Fitch said.

Fitch added that the upgrade of the short notes reflects the improved financial prospects of SoCalEd as a result of the recent announcement that the California Public Utilities Commission reached a settlement resolving SoCalEd's Filed Rate Doctrine lawsuit and the agreement this summer between SoCalEd and participating qualifying facilities (QFs), including the Coso partnerships.

Moody's downgrades RAB Holdings, RAB Enterprises, negative outlook

Moody's Investors Service downgraded approximately $200 million of debt issued by R.A.B. Holdings, Inc. and its wholly owned subsidiary R.A.B. Enterprises, Inc. The outlook is negative. Ratings affected include the company's $109.6 million bank loan, cut to B3 from B2, its $61.5 million 10.5% senior notes due 2005, reduced to Caa2 from Caa1 and Holdings' $25 million 13.0% senior notes due 2008, cut to Ca from Caa3.

Moody's said the downgrade is in response to the company's "leveraged financial condition, constrained liquidity position, and substantial operating challenges. Moody's expects that cash flow will remain tight over the medium term."

It added that the negative outlook reflects Moody's view that R.A.B. could experience difficulties complying with covenants in the amended bank agreement and that, given the current financing environment for highly leveraged companies, the company could find it difficult to refinance the bank loan until it shows meaningful operating progress.

S&P downgrades Trenwick America

Standard & Poor's downgraded Trenwick America Corp. Among the ratings affected are the $110 million of 8.82% subordinated capital income securities (SKIS), lowered to BB from BBB- and the company's $75 million 6.7% notes due 2003, lowered to BBB- from BBB+.

The ratings were removed from CreditWatch negative.

S&P said the ratings reflect "weak operating performance at the core operating companies over the past few quarters, coupled with significant declines in capital adequacy following the second-quarter 2001 reserve strengthening and pro forma for Sept. 11 losses."

While acquisitions have spread the business geographically and improved diversification, S&P said "earnings have been adversely affected by the need to cancel unprofitable business and overall weaker-than-expected operating performance."

S&P added that it took the ratings off CreditWatch because management has "successfully demonstrated that contingent capital facilities should mitigate unexpected deterioration from Sept. 11 loss events."

S&P cuts Kellstrom convertibles to D from CCC-

Standard & Poor's downgraded Kellstrom Industries, Inc. Among issues affected are Kellstrom's $54 million of 5.75% convertible subordinated notes due 2002 and its $75 million of 5.5% convertible subordinated notes due 2003, both cut to D from CCC-, and its $220 million five-year secured credit facility due 2003, cut to CC on CreditWatch negative from CCC+, also on CreditWatch negative.

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