Moody's rates Wyndham's notes, loan Caa1

Moody's Investors Service assigned a Caa1 rating to Wyndham International Inc.'s senior secured notes and senior secured credit facilities. In addition, a senior implied rating of Caa1 and a senior unsecured long-term issuer rating of Caa3 were assigned. The outlook is stable.

More specifically, the Caa1 rating is for $750 million senior secured notes due 2008, $278 million senior secured revolver due 2006, $1.084 billion senior secured term B due 2006 and $181 million senior secured term B2 due 2006. Proceeds from the note offering will be used to repay bank debt. The new notes will be secured by a pledge of $140 million inter-company notes from each of the subsidiaries that are guarantors under the bank agreement.

"The similarity of the bank facility, new secured notes, and Wyndham's senior implied rating reflects the significance of the company's secured debt relative to the total capital structure," Moody's said. "It also takes into account that while there is a significant amount of third party, non-recourse mortgage debt related to specific assets, Moody's believes there is a considerable amount of direct collateral value available to the secured bank debt and secured note noteholders. The Caa3 senior unsecured long-term issuer rating acknowledges weak recovery prospects for potential unsecured note holders."

Negative factors influencing the ratings include high leverage and dependence on continued asset sales and on further improvement in the industry to lower debt, Moody's said.

Positive factors affecting the ratings include the company's diverse portfolio of hotel assets and gradual improvement in operating results following Sept. 11, 2001, Moody's said.

The stable outlook reflects near-term financial flexibility due to the proposed refinancing, limitations on capital expenditures due to bank covenants and improvement in the lodging sector.

S&P puts Yell on positive watch

Standard & Poor's put Yell Group Ltd. on CreditWatch with positive implications.

Ratings affected include Yell Finance BV's notes at B and Yell Group Ltd.'s bank loan at BB-.

S&P puts Preem on watch

Standard & Poor's put Preem Holdings AB on CreditWatch with negative implications.

Ratings affected include Preem's €305 million 10.625% notes due 2011 at BB-.

Fitch upgrades PacifiCare

Fitch Ratings upgraded PacifiCare Health System, Inc.'s bank and senior secured debt ratings to BB from BB- and its senior unsecured debt rating to BB- from B+. The outlook is stable.

Fitch said it raised PacifiCare in response to the "significant improvement" in its capital structure following the successful sale of $500 million 10.75% senior notes due June 2009, the reduction in outstanding bank debt and the extension in the maturity of the company's remaining bank debt.

PacifiCare used $370 million of the note proceeds to reduce outstanding bank debt, which satisfied the conditional requirement in its bank agreement to extend the maturity of its existing facility by two years to Jan. 3, 2005, Fitch said. In addition, PacifiCare used $85 million of proceeds to fund a restricted cash collateral account which the senior credit agreement allows to be used to repurchase or retire the $85 million of 7% senior notes due September 2003.

Fitch estimated PacifiCare's pro forma financial leverage is approximately 40% and expects it to drop to approximately 38% at year end 2002.

Moody's rates Trico B2

Moody's Investors Service assigned a B2 rating to Trico Marine Services, Inc.'s $250 million senior unsecured notes due 2012 and confirmed the company's senior implied rating at B1. The outlook is stable.

Moody's said Trico's ratings are limited by high sector cyclicality, particularly in the Gulf of Mexico; Trico's significant debt levels relative to an industry trough; and ongoing capital demands to build/acquire new generation vessels, which will compete with debt reduction.

Trico expects to take delivery of five new vessels in 2002 which will require an outlay of $45 million, the rating agency noted.

There also has been significant industry investment in new vessels, which could pressure the market as new vessels are deployed, particularly if market demand does not pick up as expected, Moody's said.

Supporting the ratings are Trico's diversified fleet, operating in two of the world's most important offshore basins - the Gulf of Mexico (54% of revenues) and Norwegian sector of the North Sea (40% of revenues) - as well as other active international areas, such as Brazil and West Africa; its long track record and established position as a leading provider of supply boats in the Gulf of Mexico; its significant market position in the North Sea; and the expectation that stronger market demand in the second half of 2002 could step up cash flow generation and temper leverage pressures from its newbuild additions, Moody's said.

The ratings also take into account that one of Trico's two new PSVs has a three year contract beginning in June, when it is expected to be delivered, Moody's added.

S&P keeps WorldCom on watch

Standard & Poor's said it is keeping WorldCom Inc. on CreditWatch with negative implications following the company's announcement it will eliminate the MCI Group tracking stock and the related dividend. WorldCom's corporate credit rating and senior unsecured debt is at BB.

The elimination of the dividend will result in annual savings of $284 million, which will bolster near-term liquidity, S&P noted.

However, WorldCom will need to negotiate a longer-term credit facility or other source of funds to assuage S&P's concerns regarding liquidity needs beyond the intermediate term.

The company has indicated that positive negotiations are continuing with lenders on implementing an approximately $5 billion secured credit facility with maturity in 2005 or 2006. The negotiations are anticipated to be completed by the end of June 2002.

The potential positive credit effect of such a longer-term facility will depend on the terms of that agreement, S&P said. In particular, if financial covenants of such a facility effectively and materially constrain drawdowns, then the additional liquidity gained from such a new facility would be limited.

Despite the recent resolution of the accounts receivable securitization issue and assuming that a new bank facility is put into place on favorable terms, a material degradation in operating cash flow would jeopardize WorldCom's financial condition, S&P added.

S&P lowers Dresser outlook

Standard & Poor's lowered its outlook on Dresser, Inc. to stable from positive and confirmed the company's ratings including its senior secured bank loan at BB- and senior subordinated debt at B.

S&P said it reduced Dresser's outlook because of the unlikelihood that ratings will be raised in the near term.

S&P said its previous outlook anticipated a higher level of debt reduction than is probable given current business conditions.

Dresser has a very strong competitive business position, consistent profitability and cash flow generation, and an experienced management team, S&P said.

However, these strengths are offset by high financial risk due to substantial debt leverage incurred in its 2001 recapitalization and the uncertainty associated with the timing and magnitude of future debt reduction, S&P said.

S&P says rate hike has no effect on Nevada Power

Standard & Poor's said a temporary one cent per kilowatt hour rate increase in June for Nevada Power Co. will not have a materially positive impact on the company's liquidity situation.

The order by the Public Utilities Commission of Nevada will bring in an additional $16 million in June for the cash-strapped utility but will not provide any additional revenues to the company. It will merely accelerate the collection of the $485 million rate increase for power and fuel purchase expenses approved in March, S&P said.

In fact, the acceleration will probably result in Nevada Power receiving slightly lower carrying charges for collecting the $485 million over three years, S&P added. However, the increase does provide some additional cash to fund power purchases during the critical month of July.

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