S&P puts RH Donnelley on watch

Standard & Poor's put R.H. Donnelley Inc. on CreditWatch with negative implications. Ratinsg affected include R.H. Donnelley's $150 million 9.125% senior subordinated notes due 2008 at B+ and its $100 million senior secured revolving credit facility due 2004, $75 million tranche A loan due 2004, $125 million tranche B loan due 2005 and $100 million tranche C loan due 2006, all at BB.

S&P said the action follows the announcement that R.H. Donnelley Corp., the holding company of R.H. Donnelley Inc., will acquire the directory publishing business of Sprint Corp. for $2.23 billion in cash.

While the Sprint transaction will significantly expand Donnelley's operations, it will substantially raise debt levels, S&P said. Pro forma debt to estimated 2002 EBITDA is in the high 5 times area, compared with less than 2x for the 12 months ended June 2002.

Moody's puts Dole on review

Moody's Investors Service put Dole Food Co, Inc. on review for possible downgrade, affecting $900 million of debt including its senior unsecured debt and credit facility at Ba1.

Moody's said the review is in response to the unsolicited offer by Dole's Chairman and chief executive officer to acquire the 76% of the company that he does not own.

The outcome of the review will depend on whether or not a transaction is consummated, and if so, the post-transaction organizational and capital structure, Moody's said.

The transaction, if it occurs, could result in Dole significantly increasing its leverage in order to finance the transaction, and could place downward pressure on the ratings, Moody's said.

S&P puts Dole on watch

Standard & Poor's put Dole Food Co. Inc. on CreditWatch Negative. Ratings affected include Dole's $175 million 7.875% debentures due 2013, $300 million 7% senior notes due 2003, $300 million 6.375% notes due 2005 and $400 million 7.25% notes due 2009, all at BBB-.

S&P said the watch placement follows the announcement that the company has received an unsolicited proposal from David H. Murdock, the company's chairman of the board and CEO, to acquire all of the outstanding shares of common stock of Dole Food Co. not already owned by Mr. Murdock or his family for $29.50 per share in cash.

S&P said it will monitor developments, review any other potential offers for the firm, and resolve the CreditWatch once the ultimate owner and capital structure are decided.

Moody's rates Jefferson Smurfit subordinated notes B3

Moody's Investors Service assigned a B3 rating to the proposed €250 million of subordinated notes due 2013 to be issued by MDP Acquisitions plc, an indirect parent of Jefferson Smurfit Group plc.

The rating is in addition to the ratings assigned by Moody's to various entities within Jefferson Smurfit's corporate structure on Sept.

The outlook is stable.

Moody's rates Resource America notes B3

Moody's Investors Service assigned a B3 rating to Resource America, Inc.'s planned senior notes and confirmed the company's existing ratings including its existing senior unsecured bonds at Caa1. The outlook is stable.

Relative to the rating, it appears that Resource America has been making progress in executing a prudent growth strategy, and has demonstrated an increased degree of focus in its real estate and energy businesses, Moody's said. Also, within Resource America's real estate portfolio, mortgages carry favorable loan-to-value ratios.

The company's earnings appear durable while maintaining acceptable leverage levels for the B3 rating. Moody's said it expects Resource America will continue to cautiously manage its growth, especially in its newly formed leasing organization.

S&P cuts Vantico

Standard & Poor's downgraded Vantico Group SA and kept it on CreditWatch with negative implications.

Ratings lowered include Vantico's €250 million 12% bonds due 2010, cut to CCC- from CCC+.

S&P rates Jefferson Smurfit subordinated notes B

Standard & Poor's assigned a B rating to the proposed €250 million 15.5% subordinated callable notes due 2013 to be issued by MDP Acquisitions plc, indirect parent of Jefferson Smurfit.

S&P put Alcatel on watch

Standard & Poor's put Alcatel on CreditWatch with negative implications.

Ratings affected include Alcatel's €304.90 million 5.75% bonds due 2004, €304.90 million 6.375% bond due 2003, €1.12 billion 4.375% bonds due 2009, $500 million floating rate notes due 2010, €152.45 million zero coupon notes due 2006, €228.67 million 5.625% notes due 2007, €500 million 5% notes due 2004, €600 million floating rate notes due 2003, €1 billion 5.875% notes due 2005, SGD40 million 4% notes due 2004, €1.2 billion 7% notes due 2006 and €2.08 billion bank loan due 2005, all at BB+.

S&P cuts Amatek

Standard & Poor's downgraded Amatek Industries Pty. Ltd., removed it from CreditWatch with negative implications and assigned a stable outlook.

Ratings lowered include Amatek's $115 million 12% notes due 2008 and $81 million 14.5% notes due 2009, both cut to CCC+ from B.

Moody's raises VakifBank

Moody's Investors Service upgraded Turkiye Vakiflar Bankasi (VakifBank)'s foreign currency bonds to Ba2 from B1, affecting $196 million of debt.

Moody's said the upgrade is a result of a change in Moody's long-standing approach to rating the foreign currency bonds of debt issuers that now permits ratings of bonds and notes of some issuers to exceed their country ceilings for long-term debt.

The upgrade incorporates the importance of VakifBank in the Turkish banking system, the high likelihood of Turkish government support for the bank in the event of need, the low-to-moderate probability of a foreign currency payment moratorium by Turkey and the correspondingly low likelihood that these debt obligations would be caught up in any payment moratorium, Moody's said.

Moody's raises La Quinta oulook

Moody's Investors Service raised its outlook on La Quinta Properties Inc. to stable from negative, affecting $900 million of securities including its senior unsecured notes at Ba3.

Moody's said the revision reflects the company's substantial progress in deleveraging and improving its credit profile, even in the face of a continued difficult operating environment.

La Quinta's management team has successfully executed its strategy to sell the company's healthcare portfolio, deleverage, and refocus its business on operating and owning its portfolio of La Quinta limited-service hotel properties, as well as growing this brand through franchising activities, Moody's said. La Quinta has recently completed a multi-year $2 billion disposition program of its healthcare assets and the proceeds have been used for debt reduction.

Despite declines in operating performance, La Quinta's credit statistics have materially improved due to its reduced leverage. Leverage, as measured by Debt and Preferred Stock to Total Gross Assets, has declined to 32% at the end of the second quarter of 2002 from 49% at year-end 1999, Moody's said. Fixed charge coverages, including interest and preferred stock dividends has increased from 1.9x at year-end 1999 to 2.2x at the end of second quarter of 2002, even as the company continues to absorb deteriorating operating performance of its lodging portfolio.

Moody's said it anticipates that company's credit statistics will continue to show modest improvement through the end 2002, reflecting additional debt repayments in the third quarter of 2002, and that the company will be able to successfully refinance it $225 million undrawn bank credit facility and over $100 million of fixed income securities that come due in 2003.

S&P cuts SatMex

Standard & Poor's downgraded Satelites Mexicanos, SA de CV and maintained a negative outlook.

Ratings lowered include Satelites Mexicanos' $390 million 10.125% notes due 2004, cut to CCC- from CCC+, and its $223 million secured credit facility due 2003, cut to CCC+ from B.

Fitch cuts Sequa

Fitch Ratings downgraded Sequa Corp.'s senior unsecured debt to BB- from BB+ and revised the outlook to negative from stable.

Fitch said the action reflects Sequa's weakened financial performance over the past 18 months resulting in credit protection measures that are more consistent with the new rating category. As of June 30, 2002, Sequa had $709 million of debt outstanding which, for the 12 months ending June 30, 2002, translated into a leverage ratio, as defined by Debt-to-EBITDA, of 5.4 times and interest coverage of 2.1x. These levels are more reflective of the new rating category.

The rating change also reflects the cyclical nature of each of Sequa's businesses, particularly commercial aerospace, and the underfunded status of its defined benefit pension plans, Fitch said.

The revised outlook reflects the risk associated with the current economic down cycle, particularly as it relates to the commercial airline industry, the source of a significant portion of Sequa's revenues and operating income, Fitch added.

Nonetheless Sequa's rating is supported by its solid liquidity position, the absence of near term debt maturities, the benefits from the 2001 restructuring initiatives, and the company's participation in various defense programs which could benefit from the favorable military spending environment, Fitch said.

Moody's confirms Riverwood, off upgrade review

Moody's Investors Service confirmed Riverwood Holding, Inc.'s ratings and ended its review for possible upgrade, affecting $1.8 billion of securities. Ratings affected include Riverwood International Corp.'s senior secured bank facilities and term loans at B1, senior unsecured notes at B3 and senior subordinated notes at Caa1. The outlook is stable.

Moody's said its action is in response to the much reduced likelihood that Riverwood will complete its proposed initial public offering in the near future. Proceeds from the IPO had been expected to go towards debt reduction.

S&P cuts American Plumbing

Standard & Poor's downgraded American Plumbing & Mechanical Inc. and removed the company from CreditWatch with negative implications. The outlook is negative.

Ratings lowered include American Plumbing's $125 million 11.625% senior subordinated notes due 2008, cut to CCC+ from B- and its $90 million revolving credit facility due 2002, cut to B+ from BB-.

S&P cuts Borden Chemical

Standard & Poor's downgraded Borden Chemical Inc., removed the ratings from CreditWatch with negative implications and assigned a negative outlook. Ratings lowered include Borden Chemical's $250 million 7.875% debentures due 2023, $200 million 9.20% debentures due 2021, $150 million 9.25% debentures due 2019 and $200 million 8.375% debentures due 2016, all cut to BB- from BB+. The corporate credit rating was lowered to BB from BB+.

S&P said the downgrade reflects lower profitability stemming from adverse business conditions and the likelihood that needed improvement to the financial profile could take longer than anticipated.

S&P added that it recognizes the recent completion of a $175 million revolving credit facility, which provides sufficient liquidity to support the company's operations.

S&P said it cut the senior unsecured long-term issues by two notches to reflect their position in the debt structure as they are in a disadvantaged position of these issues relative to the new bank facility due to the security granted under the bank facility.

The company's financial profile is somewhat stretched, with total debt to EBITDA above 4 times, S&P said. Cash flow protection measures have been under pressure due to the earnings weakness, but are expected to modestly improve with better earnings as economic conditions improve. Over the long run, funds from operations to total debt should average about 20%, up from the low teens percentage area.

EBITDA interest coverage is substandard at near 2.5 times compared with the appropriate 3.5x area, S&P added.

S&P raises GulfMark outlook

Standard & Poor's raised its outlook on GulfMark Offshore Inc. to stable from negative and confirmed its ratings including its senior unsecured debt at BB-.

S&P said the action follows a review of GulfMark's financial results and the status of its new-vessel program.

The negative outlook on Gulfmark had reflected concerns over the speculative nature the company's $185 million new-vessel program and the availability of funds for the program, S&P said. Since the negative outlook was announced, GulfMark issued equity ($58 million in March 2002), repaid $44 million in debt, put on contract the two vessels delivered in the first quarter of 2002, and most recently, finalized a new $100 million secured credit facility to help finance the new vessel construction.

S&P said the improvements to Gulfmark's liquidity and capital structure help to minimize its concerns over the new-vessel program's financing.

S&P rates Applied Extrusion loan B+, on developing watch

Standard & Poor's assigned a B+ rating to Applied Extrusion Technologies Inc.'s new $50 million revolving credit facility due 2005, upgraded its $275 million 10.75% notes due 2011 to B from B- and continued the CreditWatch with developing implications.

S&P said the upgrade to the notes is in response to the establishment of the smaller-size bank facility.

The developing watch continues from July 8 when it was begun following the announcement that Applied Extrusion has hired a financial advisor to evaluate options to maximize shareholder value, S&P said.

The ratings reflect a below-average business risk profile, very aggressive debt leverage, and limited financial flexibility, S&P said. The company enjoys a leading share of the OPP market (estimated at 25%) and benefits from a low-cost position. Still, the market is highly competitive and subject to swings in raw material costs, namely polypropylene resins. Overcapacity has significantly weakened pricing flexibility during the past few years. Although end markets include relatively recession-resistant applications, such as labels on beverage bottles and containers, and food packaging, the company's narrow product mix is a limiting factor, and customer concentration is high.

A sluggish domestic economy and intensified competitive pressures have caused lower-than-expected volume growth (in the low-single digit area) in 2002 resulting in capacity utilization levels in the mid- to high-80% area, as compared to previously expected improvement to the mid-90% area, S&P said. In addition, an inventory buildup necessitated selective shutdowns of its production lines in the fourth quarter of 2002.

Further, competitive pressures are likely to constrain the company's ability to fully pass through increased raw material costs to customers in the near term, adversely affecting profitability levels, S&P added.

S&P puts WestPoint Stevens on watch

Standard & Poor's put WestPoint Stevens Inc. on CreditWatch with Negative implications including its $525 million 7.875% senior notes due 2005 and $475 million 7.875% senior notes due 2008, both at CCC+.

S&P said the watch placement is in response to WestPoint Stevens' announcement of additional restructuring initiatives and its downward adjustment of revenues for 2002 due to weaker than expected K-Mart Corp. sales. These actions have resulted in amendments to the company's bank agreement. Furthermore, expected lower asset utilization in the third and fourth quarters will result in additional pressure on margins.

S&P said it will monitor the situation and meet with management to review the company's operating and financial outlook.

S&P rates FMC notes BB+, loan BBB-

Standard & Poor's assigned a BB+ rating to FMC Corp.'s planned $300 million senior secured notes due 2009 and a BBB- to its $250 million senior secured revolving credit facility due 2005. It also downgraded FMC's existing notes including its $200 million 6.375% senior notes due 2003, $100 million 7.75% senior debentures due 2011, $45 million 7.32% medium-term notes series A due 2007, $70 million 6.75% medium-term notes due 2005, $100 million 7% medium-term notes due 2008 and $100 million 7.125% senior notes due 2002 to BB+ from BBB-. The corporate credit rating was confirmed at BBB- and the outlook cut to negative from stable.

S&P said the downgrade reflects noteholders' diminished recovery prospects in a default and liquidation scenario, pro forma for completion of the refinancing plan that will provide the holders of bank obligations with a first-priority claim on assets.

The proposed refinancing plan will solidify FMC's liquidity position and provide ample capacity to meet scheduled obligations, even if industry conditions remain depressed, S&P said. In addition, FMC's management team is committed to financial policies that will support improvement to key credit protection measures. This commitment was evidenced by the $101 million second-quarter equity offering to raise funds for debt reduction.

The ratings for FMC reflect an average business profile derived from leading positions in diverse industrial, agricultural, and specialty chemicals businesses, and moderate financial policies that support credit quality, S&P added.

FMC's business positions within its industrial chemicals segment tend to be bolstered by leading market shares and low-cost production economics that result in better-than-average profit margins, S&P commented. In the more specialized and niche areas, FMC generally competes on the basis of higher-value-added products that benefit from favorable industry characteristics, such as decent growth, stronger customer relationships, and premium pricing based on the performance of differentiated products.

FMC is expected to generate EBITDA margins in the mid-teens percent area on average over the course of the business cycle, S&P said. The company's 2001 restructuring and impairment charges (related primarily to the phosphorus and lithium operations) significantly diminished the capital base and further underscore the necessity to improve the financial profile. Still, moderate financial policies should limit share repurchases, capital spending, and acquisition activity until key financial ratios are improved. Accordingly, the ratio of funds from operations to total adjusted debt is expected to trend toward the appropriate 30% range over the next few years, from below 20% (pro forma for the proposed refinancing plan, net of cash held in reserve for debt reduction, and adjusted to capitalize operating leases).

Fitch puts AmeriServ on watch

Fitch Ratings put AmeriServ Financial, Inc. on Rating Watch Negative. Ratings affected include AmeriServ's senior long-term rating of BB+ and AmeriServ Capital Trust I's trust preferreds at BB.

Fitch said the watch placement follows AmeriServ's announcement of a capital and earnings improvement program, including a 66% reduction of its dividend to $0.09/year, and $4 million in anticipated incremental (pre-tax) earnings ($3.5 million from cost savings and $500,000 from revenue enhancement) for fiscal-year 2003.

The implementation of this strategic plan will result in a third-quarter 2002 loss and perhaps a loss for fiscal 2002 as the company experiences higher credit costs and additional mortgage servicing rights impairments associated with increases in prepayment speeds due to lower mortgage interest rates, Fitch said.

Fitch added that net income for the first six months of 2002 amounted to a lackluster $1.1 million, including $664,000 in mortgage servicing impairment charges.

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