Moody's downgrades NTL

Moody's Investors Service downgraded NTL Inc. and kept the outlook at negative, affecting $20 billion of debt and preferred stock. Ratings affected include NTL Inc.'s senior unsecured ratings lowered to to C from Caa3, its preferred stock rating, lowered to C from Ca; NTL Delaware Inc.'s convertible subordinated notes lowered to C from Caa3; NTL Communications Corp.'s senior unsecured notes lowered to Ca from Caa2 and convertible subordinated notes lowered to C from Caa3; NTL (Triangle) LLC's senior unsecured notes lowered to Caa2 from Caa1; Diamond Cable Communications Ltd.'s senior unsecured notes lowered to Ca from Caa3; Diamond Holdings Ltd.'s senior unsecured notes lowered to Caa2 from Caa1; NTL Business Ltd.'s senior secured bank facility lowered to B2 from B1; Cablecom (Ostschweiz) AG's senior secured bank facility confirmed at B3.

Moody's said the downgrade follows NTL's announcement it has hired strategic advisors to assist in a restructuring of its balance sheet.

The rating agency already cut NTL on Nov. 29, 2001, saying it was increasingly likely that the company would be unable to grow into its highly leveraged capital structure.

The further downgrade reflects the increased certainty of a restructuring, as explicitly acknowledged by the company, and Moody's expectations of the resultant recovery prospects for NTL's creditors.

Although Moody's sees considerable value in NTL's core businesses, it says subordinated creditors will see their recovery reduced by the very high debt leverage and additional funding requirements, the significant amount of senior secured debt outstanding and the company's limited near-term ability to invest in the growth of its businesses.

Moody's revises Waste Management outlook to negative

Moody's Investors Service revised the ratings outlook for Waste Management, Inc. to negative from positive as a result of the company's announcement of a substantial share repurchase program of up to $1 billion annually. Moody's said it is concerned with both the timing and the size of the announced share repurchase, particularly given the impact to earnings of negative economic trends, as well as a history of charge-offs at the company and upcoming debt maturities.

These factors combined with low retained earnings and significant leverage are inconsistent with the achievement of an investment-grade rating, Moody's said. The company has given some indication of lower than expected returns due to weaker than planned internal growth in volume and an unfavorable shift in product mix. In addition, cost savings appear to be less than originally projected.

Fitch confirms Waste Management

Fitch Ratings confirmed Waste Management Inc.'s senior unsecured notes at BBB and convertible subordinated notes at BBB-. The outlook is stable.

Fitch's action follows Waste Management's announcement of a $1 billion share repurchase program, to be funded by free cash flow.

Fitch said Waste Management has a strong asset base and strong market positions in its core markets, allowing it to produce high levels of free cash flow. The successful execution of its asset divestiture program has resulted in substantial debt reduction.

Moody's downgrades Equistar, confirms Lyondell

Moody's Investors Service downgraded Equistar's and confirmed Lyondell Chemical Co. Ratings affected include Equistar's senior secured credit facility, lowered to Ba2 from Baa3, and its senior unsecured notes and debentures, lowered to B1 from Ba2; and Lyondell's senior secured debt rated Ba3, senior secured bank credit facility rated Ba3 and senior subordinate debt rated B2.

Moody's said its actions follow the announcement that Lyondell intends to acquire an additional 29.5% stake in Equistar from Occidental Chemical Corp., which would increase Lyondell's ownership in Equistar to 70.5%. Lyondell has agreed, in effect, to exchange Oxy's equity interest in Equistar for an equity stake in Lyondell.

Moody's said Lyondell's purchase of Occidental's equity interest in Equistar is "a strategic acquisition for Lyondell in the trough of the cycle."

The rating agency noted that since the formation of the current Equistar partnership, it has rated Equistar's debt higher than Lyondell's due to the majority ownership by higher rated companies. Equistar's financial management and policies have been consistent with these higher ratings.

Once Lyondell becomes the majority owner of the partnership, Moody's said it will view the partnerships as a subsidiary of Lyondell, even though Lyondell will not be consolidated into Lyondell's financial statements.

Fitch downgrades Williams Communications, still on watch

Fitch Ratings downgraded Williams Communication Group, Inc.'s senior unsecured rating to CCC- from CCC+, its convertible preferred stock to CC from CCC- and Williams Communications, Inc.'s senior secured credit facility to CCC+ from B. All ratings remain on rating watch negative.

Fitch said it is concerned about the company's slower than anticipated revenue ramp-up, EBITDA generation and improvement in credit protection metrics, coupled with continued sluggish demand for broadband services and depressed asset values securing the senior secured credit facility.

Resolution of the rating watch is waiting for the outcome of Williams Communications' discussions with its bank group on the company's capital structure and the credit facility's current covenant structure.

Fitch estimates WCG entered 2002 with $1.5 billion of available liquidity and Fitch expects that liquidity should be sufficient to satisfy obligations during 2002.

Fitch said it does not foresee demand for broadband services improving during 2002, which could stress revenue growth, EBITDA generation during this year and WCG's liquidity position entering 2003.

S&P downgrades United Pan-Europe

Standard & Poor's downgraded United Pan-Europe Communications NV and kept the ratings on CreditWatch with negative implications.

Affected ratings include United Pan-Europe Communications' $800 million 10.875% notes due 2009, €300 million 10.875% notes due 2009, $300 million 11.5% senior notes due 2010 and $600 million 11.25% senior notes due 2010, all cut to D from CC; its $252 million 11.25% senior notes due 2009, $200 million 10.875%, senior notes due 2007, $478 million 13.375% senior discount notes due 2009, $512 million 13.75% senior discount notes due 2010 and $401 million 12.5% discount notes due 2009, all cut to C from CC; its €101 million 11.25% senior notes due 2009, €100 million 10.875% senior notes due 2007 and €191 million 13.375% senior discount notes due 2009, cut to C from B; €200 million 11.25% senior notes due 2010, cut D to B; UPC Distribution Holding BV's €750 million reducing revolving credit facility due 2009, €2.75 billion delayed draw term due 2009 and $500 million term loan due 2009, all cut to C from CCC.

S&P puts NTL on negative watch

Standard & Poor's put NTL Inc. and its units on CreditWatch with negative implications.

Affected ratings NTL Inc.'s preferred stock at CCC- and subordinated convertible notes at CCC; NTL Communications Corp.'s notes at CCC; NTL Communications Ltd.'s bank loan at B; Diamond Cable Communications PLC's notes at CCC; Diamond Holdings PLC's notes at CCC; NTL Business Ltd.'s bank loan at B; NTL Triangle Ltd.'s debentures at CCC; and Cablecom (Ostschweiz) AG's bank loan at B-.

S&P downgrades Doe Run, on watch

Standard & Poor's downgraded Doe Run Resources Corp. and put it on CreditWatch with negative implications. Ratings affected include Doe Run's $180 million 11.25% senior notes due 2005 and $75 million floating rate senior notes due 2003, both lowered to C from CCC-, and its $50 million 11.25% notes due 2005, lowered to CC from CCC.

S&P's action follows the company's announcement of restructuring discussions with holders of its outstanding notes and that it is unlikely to make its March 15 interest payments.

Doe Run has experienced poor cash flows, increasing debt, and diminished financial flexibility for the past two years, due primarily to a difficult pricing environment for lead, zinc, and other metals, as well as to lower metal-treatment charges, S&P said.

S&P downgrades Evenflo

Standard & Poor's downgraded Evenflo Co. Inc. and kept it on negative outlook. Ratings affected include Evenflo's $110 million 11.75% senior notes due 2006, lowered to C from CCC-.

S&P said it lowered the ratings because of increasing concern about Evenflo's ability to meet its Feb. 15 senior unsecured debt interest payment following the expiry of the temporary increase in the company's bank availability and waivers of bank covenant compliance.

"During 2001, Evenflo's operating performance deteriorated due to product supply chain problems, that led to canceled customer orders, and to the weak retail environment," S&P said. "While new management implemented restructuring plans in an effort to improve operating efficiencies, Standard & Poor's does not expect Evenflo's financial performance and very constrained financial flexibility to improve in the very near-term, given the company's heavy debt load, internal operational challenges, and continued difficult retail environment."

S&P downgrades Renco Steel, WCI Steel

Standard & Poor's downgraded Renco Steel Holdings Inc. and its WCI Steel Inc. unit. The outlook is negative. Ratings affected include Renco's $120 million 10.875% notes due 2005, lowered to C from CCC+ and WCI Steel's $300 million 10% senior secured notes due 2004, lowered to B- from B.

S&P said the downgrade to Renco Holdings follows the company's announcement it does not have enough liquidity to make the Feb. 1 interest payment on its senior secured notes due 2005 and that it expects Renco Group Inc., the company's sole shareholder, to provide funds to make the interest payment before the expiration of the grace period that ends on March 1.

S&P said its downgrade of WCI reflects its "deteriorating financial flexibility due to persistent operating losses caused by weak steel prices and volumes resulting from the economic recession and high import levels."

S&P keep US Industries on positive watch

Standard & Poor's kept U.S. Industries Inc. and related companies on CreditWatch with positive implications. Ratings affected include the senior secured debt of U.S. Industries, USI American Holdings, Inc. and USI Global Corp. all rated CCC+.

S&P said its announcement follows continuing asset sales.

The rating agency noted U.S. Industries sold Ames True Temper lawn and garden tools for $165 million in January and raised $107 million from the sale of the 12.5% senior notes of Strategic Industries LLC, enabling it to pay down more than the $200 million of amortization payments due cumulatively through March 31, 2002, as required under its bank facilities.

But S&P said that unless the credit facilities are refinanced a major divestiture such as the planned sale of the Lighting Corp. of America is necessary in the next few months to allow US Industries to meet the $180 million due by June 30, 2002.

S&P cuts Autopistas Del Sol to D

Standard & Poor's lowered its foreign currency rating on Argentina-based Autopistas del Sol SA's senior unsecured $170 million series A and $210 million series B notes to D from CC.

S&P said its follows Autopistas' missed interest payments for $7.9 million on its series A notes and $10.8 million on its series B notes, both due Feb. 1.

The company could not meet the payments due to the combined impact of the devaluation of the peso and the "pesofication" of tolls had on its cash flow, S&P said. In addition, the deep economic crisis led to a steep decline in traffic.

Moody's assigns B3 to Six Flags $480 million notes

Moody's Investors Service assigned a B3 rating to Six Flags, Inc.'s $480 million senior notes due 2009. Noting that approximately $2.9 billion of the company's debt securities were affected by the action, Moody's also affirmed the company's existing ratings.

"The rating reflects concern over high total leverage and limited asset coverage ratios that result from the company's debt financed acquisition and upgrade strategy, and the expectation that Six Flags will continue to acquire, upgrade, and integrate regional theme park properties in the United States and abroad," Moody's stated.

According to the release the company stated that it intends to use the proceeds from its new senior notes to call $280 million of its 9.25% senior notes due 2006, and $170 million its 8.875% senior notes due 2006, Moody's also affirmed the company's existing ratings.

The release also noted that while the company's diverse portfolio of properties mitigate regional volatility, Six Flags' operating performance may be impacted by a protracted economic slow down or adverse national weather effects.

While Six Flags has a degree of discretion with respect to its capital budget, Moody's expects the Oklahoma City-based theme park company to continue to invest extensively in expanding its franchise including acquisitions, leaving it with limited free cash flow for debt reduction.

Moody's downgrades Kosa, BV, warns of further downgrade

Moody's Investors Service lowered the ratings of KoSa, B.V., and placed the ratings under review for possible further downgrade.

Noting that the action affected approximately $1.0 billion of "long-term debt," Moody's specified that issues affected include $250 million senior secured revolver maturing 2004, $477.1 million senior secured term loan A maturing 2004 and $236.8 million senior secured term loan B maturing 2006, all lowered to Ba3 from Ba1.

"The rating actions reflect the fact that the company is in default of its credit facility agreement financial covenants as of December 31, 2001, and it is seeking a waiver of the covenant defaults for the period through March 8, 2002 in order to permit time to finalize an amendment," the Moody's stated.

Moody's also stated its concerns about the company's continuing weak earnings trends and creditor protection measurements, the adverse effects of the economic slowdown on demand for the company's products, the company's plans to shut or reduce operations of some facilities, the non-recourse of the credit facility to Koch Industries, which acquired KoSa on Nov. 14, 2001. Further, Moody's release noted "the current lack of indication of whether Koch will provide capital support to the company, if needed."

Fitch downgrades Empresas ICA, still on watch

Fitch Ratings downgraded Empresas ICA Sociedad Controladora, SA de CV's senior unsecured long-term foreign currency and senior unsecured local currency debt ratings to B from BB- and kept it on Rating Watch Negative.

Fitch said its action reflects ICA's "limited financial flexibility, stressed credit protection measures, changing operating environment, increased competition and an uncertain regional economic outlook."

ICA's financial profile has been adversely affected by changes in the Mexican construction industry, under-performing regional concessions, contract disputes, the recession in Argentina, severance costs and completion of the Cantarell and Esti projects, Fitch said. These factors, along with a weakening domestic macroeconomic environment and delayed public spending, have hurt the company's profitability and limited its financial flexibility, the rating agency added.

Moody's downgrades Shiloh

Moody's Investors Service downgraded Shiloh Industries, Inc. including cutting its $290 million guaranteed senior secured bank revolving credit facility due 2004 to Caa2 from Ba3. The outlook is negative.

Moody's said the downgrade and negative outlook reflect Shiloh's "prolonged inability" to generate the operating cash flow necessary to satisfy its interest and principal debt service requirements, along its considerable ongoing capital investment needs.

Moody's also noted Shiloh's reported results year-to-date, the current recessionary economic environment and the expectations that Shiloh will report non-compliance with its bank covenants for the fiscal year ended Oct. 31, 2001.

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