S&P rates new Trump notes B-, existing notes on positive watch

Standard & Poor's assigned a B- rating to Trump Casino Holdings LLC's planned offering of $470 million first mortgage notes due 2010 and put the existing Trump Atlantic City debt on CreditWatch with positive implications. Trump Casino Holdings has a stable outlook.

Existing debt affected includes Trump Atlantic City's $1.2 billion 11.25% first mortgage notes due 2006, $75 million 11.25% first mortgage bonds due 2006 and $25 million 11.25% first mortgage bonds due 2006, all rated CC.

S&P said it expects to raise Trump Atlantic City's senior secured debt to CCC+ from CC on completion of the note sale.

The positive CreditWatch reflects the "healthy operating environment in Atlantic City during the last several months, and the improved performance of TAC's two properties, Trump Taj Mahal and Trump Plaza," S&P commented.

The CreditWatch also reflects the anticipated refinancing of some parent company debt, which is expected to alleviate pressure to upstream capital to service this obligation, S&P added.

However there is limited further rating upside due to high debt leverage, tight liquidity and the expectation of additional competition and new amenities in the market during the next two years, S&P said.

S&P puts Premcor on positive watch

Standard & Poor's put Premcor Refining Group Inc. and Premcor USA Inc. on CreditWatch with positive implications, changing it from the previous CreditWatch with developing implications.

Debt affected includes Premcor Refining's $150 million 9.5% senior notes due 2004, $100 million term loan, $100 million 8.375% notes due 2007, $100 million floating-rate senior notes due 2004, $150 million 8.625% senior notes due 2008, $75 million floating-rate senior notes due 2005, all rated BB-, its $175 million 8.875% senior subordinated notes due 2007 rated B, and its $500 million senior secured bank loan due 2003, rated BB.

Premcor USA debt affected includes its $175 million 10.875% notes due 2005 rated B and its $63 million 11.5% senior cumulative exchangeable preferred stock rated B-.

Moody's downgrades Remington

Moody's Investors Service downgraded Remington Products LLC, including its $180 million of senior subordinated notes, cut to Caa2 from B3. Moody's does not rate Remington's existing bank facilities. The outlook is negative.

Moody's said the downgrade completes a review begun in December 2001. At the time, Moody's said it was concerned about Remington's margin deterioration from operational and logistical issues, its volatility of earnings and high inventory exposure due to material seasonality and external competitive pressure and possible constraints to flexibility from high leverage in a tight economic environment.

Moody's said these challenges are manifest in the charges totaling $26.4 million taken by Remington to support its business and remedy problems in inventory management, product mix realignment and warehouse and handling systems corrections.

From 2000 to 2001, debt rose to $213 million from $203 million, cash fell to $4.1 million from $10.3 million and cash interest expense went to $24.2 million from $22.0 million, Moody's noted.

S&P puts Cogentrix on positive watch

Standard & Poor's put Cogentrix Energy Inc. on CreditWatch with positive implications. The company previously had a positive outlook. Ratings affected include Cogentrix's $100 million 8.1% senior notes due 2004, $100 million 8.75% notes due 2008 and $255 million 8.75% senior notes due 2008, all rated BB+.

S&P said its action follows news that Aquila Inc. will acquire the company. Aquila, with a corporate credit rating of BBB, was put on CreditWatch with negative implications.

The rating agency noted that on completion of the acquisition Cogentrix's debt will be guaranteed by Aquila.

On balance the acquisition will have a negative effect on Aquila's credit profile, S&P said.

"While the addition of Cogentrix's high-quality generating asset portfolio with little exposure to electricity market swings will marginally improve Aquila's overall business risk, the transaction is expected to have a negative effect on the company's coverage ratios and other credit protection measures," S&P commented.

S&P downgrades Consolidated Container

Standard & Poor's downgraded Consolidated Container Company LLC and put it on CreditWatch with negative implications. Previously the outlook was negative. Ratings affected include Consolidated Container's $185 million 10.125% senior subordinated notes due 2009, cut to CCC from B-, and its $90 million revolving credit facility due 2005, $150 million term A loan due 2005 and $235 million term B loan due 2007, all cut to B- from B+.

S&P said its action reflects continued weakness in Consolidated's financial performance and constrained financial flexibility.

The rating agency said it has heightened near-term concerns that Consolidated Container will suffer a deterioration in liquidity due to possible violation of financial covenants in its recently amended revolving credit facility.

Consolidated Container is required to achieve minimum EBITDA of $35 million for the period January through May of 2002, which may not be achievable without a significant improvement to operating results, S&P said.

In addition, other financial covenants tighten in the second half of 2002, and the company faces a sizable debt amortization schedule, the rating agency added.

S&P raises LaBranche outlook

Standard & Poor's raised its outlook on LaBranche & Co. Inc. to positive from stable. The company's corporate credit rating is BB+.

S&P upgrades Home Interiors

Standard & Poor's upgraded Home Interiors & Gifts Inc. and maintained its stable outlook on the company. Ratings affected include Home Interiors' $149 million 10.125% senior subordinated notes due 2008, raised to CCC+ from CCC, and its $30 million revolving credit facility due 2004, $55 million term loan A due 2004 and $107 million term loan B due 2008, all raised to B from B-.

S&P said its action reflects Home Interiors' enhanced financial flexibility, the result of improved profitability and cash flow generation achieved through the retention of experienced sales representatives, a better merchandise assortment and strong order fulfillment rates.

Nonetheless, Home Interiors has a high level of business risk associated with its direct sales business model and its aggressive debt leverage, S&P said.

During the important Christmas season, sales rose 10.1% in the fourth quarter and EBITDA margin expanded to 19.0% from 11.0% in the fourth quarter of 2000, S&P said, attributing the improvement to the retention of experienced displayers and improved manufacturing and logistics.

Moody's downgrades Tricom

Moody's Investors Service downgraded Tricom, SA including lowering its $200 million 11.375% guaranteed senior unsecured notes to B3 from B1. The outlook is negative.

Moody's said it cut Tricom because the company's recent financial performance has fallen short of Moody's previous expectations.

Tricom's operating performance to date has been negatively impacted by lower international settlement and outbound toll rates (partially offset by increased traffic volume), higher operating costs associated with new initiatives, including its Central American strategy, and increased competitive pressures, Moody's said.

As a result, the company reported relatively flat revenue growth over the past several quarters as well as a deterioration in EBIDA performance over the same period. (Moody's uses EBIDA since Tricom is required to pay taxes to the Dominican Republic government based on a fixed percentage of adjusted revenues as opposed to earnings before taxes), the rating agency commented.

For the quarter ended December 31, 2001, Tricom reported revenue of approximately US$67 million or an increase of about 6.3% over the fourth quarter 2000, while EBIDA declined over 23% for the same period.

The negative outlook reflects Moody's view that Tricom faces considerable challenges including the integration of its recent acquisition of Telecable Nacionale, and its success in marketing a bundled product to this new customer base, as well as the ramping up of its operations in Panama, ongoing competitive pressures from Codetel and various new entrants, and the company's reliance on short-term borrowings.

Moody's cuts Seehafen Rostock

Moody's Investors Service downgraded Seehafen Rostock Umschlagsgesellschaft including lowering its €50 million 9.875% senior unsecured notes due 2009 to B3 from B1 and kept it on review for further downgrade.

Moody's said that based on information in Seehafen Rostock's audited accounts for the year ending Dec. 31, 2001 the company has "almost certainly" breached one or more of the financial covenants in its 9.875% notes.

Seehafen Rostock will need to seek waivers of these breaches and if it is to avoid future breaches will need to seek amendments to the financial covenants, the rating agency said.

Moody's said it understands from management that it will not be requesting holders of the notes to accept a lower interest rate or postponements of repayment instalments. It is most likely that noteholders will be asked to agree a material relaxation of financial covenants.

"The reaction of note holders to any such proposal is uncertain at this time and such uncertainty creates a higher probability of default than was the case previously," 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.