Moody's puts Nextel on downgrade review

Moody's Investors Service placed Nextel Communications and Nextel Finance Co.'s ratings on review for possible downgrade due to upcoming increased cash requirements. The Nextel Communications' ratings being reviewed include its senior implied at Ba3, senior unsecured at B1 and preferred stock at B3. The Ba2 rating for Nextel Finance Co.'s senior secured credit facilities is also under review.

Currently, according to Moody's, Nextel has $3.4 billion in cash and $1.5 billion in revolving credit. However, Nextel's term loans begin to amortize in the fourth quarter and the revolver size will shrink. Also, interest payments on three outstanding note issues commence in 2003 and two of the three preferred stock issues are scheduled for dividend payments soon.

"To meet these increasing cash requirements, Nextel will have to continue grow EBITDA at a rapid pace which will prove challenging in the very competitive and maturing wireless marketplace," the Moody's release said.

Moody's downgrades Teleglobe, still on review

Moody's Investors Service downgraded Teleglobe Inc. and kept the company on review for possible further downgrade. The action affects $1.2 billion of senior unsecured debt, all lowered to B2 from Ba3.

Moody's said the action reflects its continuing concern about the commitment of Teleglobe's parent, BCE Inc. to supporting the company in the absence of a significant improvement in its operating performance.

BCE does note guarantee Teleglobe's debt and without additional support from BCE Teleglobe's ability to meet its obligations is highly uncertain, Moody's said.

On April 8, BCE announced it has undertaken a review of all of its strategic alternatives regarding Teleglobe, including, but not limited to, a reassessment of its ongoing funding under Teleglobe's current business plan and the possibility of renegotiating or restructuring Teleglobe's debt. While this does not preclude a renegotiation of Teleglobe's debt at par, Moody's said it believes this announcement highlights the very significant risk of a restructuring of debt at a meaningful discount to par.

Moody's puts American Cellular on downgrade review

Moody's Investors Service placed American Cellular's ratings on review for possible downgrade. Affected ratings include its senior implied and $1.35 billion secured credit facility Ba3 and its $450 million 9.5% senior notes due 2009 and $250 million 9.5% senior notes due 2009 at B2.

Moody's said the ratings are being reviewed because of American Cellular's poor financial performance and the need for covenant relief on its credit facility from its lenders before the end of June.

"Given the underperformance of the company, the very high leverage with debt to EBITDA of approximately 10 times, the relative lack of support from AT&T Wireless, as well as the current valuations for rural cellular carriers, the likelihood of a multiple notch downgrade is high," Moody's said.

The review is expected to be completed within the next three weeks, according to Moody's.

Moody's raises Alliance Gaming outlook to stable

Moody's Investors Service raised Alliance Gaming Corp.'s outlook to stable from negative. Current Alliance ratings include its $25 million senior secured revolver due 2006 and $190 million senior secured term loan due 2006 at B1, its $150 million 10% senior subordinated notes due 2007 at B3, its senior implied rating at B1 and its senior unsecured long term issuer rating at B2.

Moody's said it raised the outlook due to the rebound in the gaming industry from the initial impact of Sept. 11. Also, it expects the company's EBITDA growth combined with moderate spending will allow for leverage maintenance consistent with a B1 senior implied rating. For the fiscal year ended Dec. 31, 2001, debt/EBITDA was approximately 3.6 times, the release said.

"Going forward, the ratings will be impacted by Alliance's ability to successfully introduce its evolution series platform (EVO platform)," the release said. "The company has a significant pipeline of EVO games that should be on casino floors by the end of 2003. While Moody's recognizes the expected benefit from both this new technology and favorable industry fundamentals, Alliance will need to demonstrate some degree of market success with the technology and product in order to maintain or improve its ratings."

S&P raises WCI outlook

Standard & Poor's raised its outlook on WCI Communities Inc. to positive from stable and confirmed the company's ratings including its $450 million secured credit facility due 2004 at BB- and its $350 million 10.625% senior subordinate notes due 2011 at B.

S&P said WCI's attractive land position in several important coastal areas of south Florida likely creates some meaningful barriers to entry and enhances the company's competitive position. WCI has also lowered the risk profile of its capital structure, with less overall leverage, improved credit statistics and less reliance on short-term bank financing, S&P noted.

WCI has shown solid profitability and recently completed a successful initial public offering, S&P added.

But it said the strengths are somewhat tempered by its luxury buyer focus, geographic concentration and the secured nature of its bank credit facility, the rating agency said.

Using $139 million in proceeds from the IPO in March, WCI repaid bank debt, lowering its debt leverage to 54% from 62%, S&P said.

Moody's rates JohnsonDiversey loan Ba3, notes B2

Moody's Investors Service assigned ratings to JohnsonDiversey Inc., the new company that will be created through the proposed merger of S.C. Johnson Commercial Markets Inc. and DiverseyLever. JohnsonDiversey's new ratings include its $250 million senior secured term A loan due 2008, $650 million senior secured term B/euro term loan due 2009, $200 million senior secured dollar/euro revolver due 2008 and $100 million senior secured yen revolver due 2008 at Ba3, its $500 million senior subordinated dollar/euro notes due 2012 at B2, a senior implied rating of Ba3 and a senior unsecured issuer rating at B1.

Ratings are supported by "the long and successful track records of the two predecessor companies," Moody's said. "Further support is found in the almost instant critical mass that will be manifest in the newly combined successor company with $2.6 billion in revenue, number 1 or 2 market position in all key markets with approximately $300-$320 million in initial adjusted EBITDA. The company will also enjoy the liquidity benefit of a $300 million revolver (only partially drawn at inception) and a $150 million asset securitization carve out available within 12 months of closing. Further support is predicated on management's indication of its intention to bring down leverage as quickly as is feasible," the Moody's said.

Negative factors weighing on the ratings include integration risk the carrying of leverage between 5.5 to 6.0x and an EBITDA interest burden yielding about 2.5x, (1.5x EBITA) coverage.

Moody's cuts Flag Ltd.

Moody's Investors Service downgraded Flag Ltd. and confirmed the ratings of Flag Telecom Holdings. Ratings affected include Flag Ltd.'s $430 million 8.25% senior notes due January 2008, lowered to Ca from Caa3, and FLAG Telecom's €300 million 11.625% global senior notes due March 2010 and $300 million 11.625% global senior notes due March 2010, both confirmed at Ca.

Moody's said its action follows Flag's announcement of a proposal to restructure its debt. If approved the restructuring would result in a recovery value to existing debt holders within the parameters of the new ratings.

Fitch downgrades Capex

Fitch Ratings downgraded foreign and local currency ratings of Capex SA to DD from C.

Fitch said its action follows Capex's default on interest payments on its floating rate note and trade facilities.

The default resulted from the absence of the required approval from the central bank to transfer the corresponding interest payments, Fitch said.

S&P rates new Standard Pacific notes B+

Standard & Poor's assigned a B+ rating to Standard Pacific Corp.'s new issue of $150 million senior subordinated notes due 2012.

S&P downgrades Elizabeth Arden senior notes

Standard & Poor's downgraded Elizabeth Arden Inc.'s senior notes, removed the company from CreditWatch with negative implications and assigned a negative outlook.

Ratings affected include Elizabeth Arden's $155 million 10.375% senior notes due 2007, cut to CCC+ from B- and its $160 million 11.75% notes due 2011, confirmed at B.

S&P takes Madison River off watch

Standard & Poor's removed Madison River Capital LLC from CreditWatch with negative implications and confirmed its ratings. The outlook is stable.

Ratings affected include Madison River's $250 million 13.25% senior notes due 2010 rated CCC+.

S&P: Gap sales has no impact on rating, outlook

Standard & Poor's that The Gap Inc.'s (BB+/Stable/B) report that comparable-store sales dropped 12% in March has no effect on its credit rating or outlook.

S&P had expected the company to be very challenged near term as consumers have responded poorly to Gap's merchandising offering for more than two years and the company has had to mark down a significant amount of merchandise.

Gap's strong cash flow generation still provides adequate credit support at the current rating level.

Although S&P still expects Gap will face difficulties through the first half of 2002, the future credit profile will be determined by the extent of these difficulties and the potential for recovery in the second half of the year.

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