S&P downgrades Dean Holding, affirms Dean Foods

Standard & Poor's downgraded Dean Holding Co., the successor to Dean Foods Co., and affirmed its ratings on Dean Foods Co., formerly Suiza Foods Corp.

Among the actions, S&P cut Dean Holding's senior unsecured debt to BB- from BBB and affirmed Dean Foods senior secured debt at BB+ and Dean Capital Trust's (formerly Suiza Capital Trust II) preferred stock at B+.

S&P withdrew its BB+ senior secured ratings on Dean Foods Co.'s $300 million revolving credit facility due 2004 and on Suiza Fluid Dairy Group LP's $1.6 billion senior secured credit facility due 2004.

The outlook is negative.

S&P said the senior unsecured rating is below the corporate credit and senior secured debt ratings because of the large size of the merged company's new $2.7 million senior secured bank facility.

The actions follow completion of the merger of Suiza Foods and old Dean Foods Co., S&P said. Combined they form the largest national dairy company in the U.S., with about a 35% market share and about $10 billion in revenues, on Dec. 21, 2001.

S&P said its ratings reflect the market position of the merged company, offset by an aggressive financial profile, a heavy debt amortization schedule, and the firm's acquisitiveness.

Also incorporated in the ratings is the operating risk of integrating the two firms' operations.

S&P cuts Globix to CC

Standard & Poor's downgraded Globix Corp.'s corporate credit and senior unsecured note ratings to CC from CCC. The outlook is negative.

S&P said it acted in response to Globix's announcement that it is in discussions with an informal committee of bondholders about a financial reorganization of the company through a pre-packaged bankruptcy filing.

S&P said its ratings reflect Globix's rapidly deteriorating credit profile and an unproven business model that has yet to achieve profitability.

S&P downgrades Polymer Group

Standard & Poor's downgraded Polymer Group Inc. and kept the ratings on CreditWatch with negative implications, where they were placed on March 14, 2001. Ratings affected include Polymer's senior secured debt, lowered to CCC from B-, and its subordinated debt, cut to CC from CCC.

S&P said its downgrade reflects heightened concerns about the company's near-term liquidity, onerous debt levels, and the mounting financial pressures related to its bank facilities.

Polymer has been operating under a waiver granted April 14, 2001 of the financial covenants in its bank facility, S&P said. The waiver is due to expire if not amended further on Dec. 29, 2001.

"Failure to renegotiate these terms would trigger a breach of certain financial covenants, including leverage and fixed charge coverage tests, resulting in a default of the terms of the bank facility," S&P said, adding that restructuring charges announced Nov. 5 will likely result in a further breach of a minimum net worth covenant.

S&P commented: "Polymer's initiatives to reduce debt during the current year through asset dispositions or other strategic actions have not been successful due to challenging credit market and economic conditions."

Moody's downgrades Mastec

Moody's Investors Service downgraded MasTec, Inc. including lowering its $100 million senior secured revolving credit facility to Ba1 from Baa3 and its $200 million 7.75% senior subordinated notes due 2008 to Ba3 from Ba1. The outlook is negative.

Moody's said the lower ratings reflect "the drop in capital spending in the telecommunications sector; the expectations that visibility remains poor going forward; and the prospects for a continued decline in the macroeconomic climate."

Supporting the ratings are relatively modest leverage, sufficient liquidity to weather the current downturn, including the conversion to cash of a $40 million tax receivable during the first half of 2002, and MasTec's long operating history and strong brand name, Moody's said.

In recent years MasTec has benefited from the rise in telecommunications spending but the recent failure of several customers required the company to increase its bad debt reserve by $145 million through the third quarter of 2001, Moody's noted. As a results, MasTec had to draw on its revolving credit facility.

This draw, along with declining operating cash flows over the past nine months, has diminished MasTec's financial flexibility going forward, the rating agency said.

Moody's downgrades Hartmarx

Moody's Investors Service downgraded Hartmarx Corp. Ratings affected include the company's $200 million senior secured revolving facility due 2003, lowered to B2 from Ba2, and its $34.7 million of 10.875% senior subordinated notes due 2002 lowered to Caa3 from B3. The outlook was cut to negative from stable.

Moody's said the downgrade follows Hartmarx's announcement of an offer to exchange all its outstanding 10.875% senior subordinated notes for new notes and cash.

The rating agency said it also lowered the ratings because of Hartmarx's "lack of liquidity and insufficient cash generation" evident in its recent extensions of debt maturities, increased leverage, high cash drain from working capital and insufficient fixed charge coverage.

"The ratings continue to reflect Hartmarx's exposure to fashion trends, lack of meaningful revenues and cash flow growth, and declining profits," Moody's continued, but added: "The ratings are supported by the company's efforts to expand its casual-wear business, diversify its distribution into moderate and discount channels, efforts to repay its debt and a broad portfolio of brands."

Moody's downgrades Captain D's

Moody's Investors Service downgraded Captain D's, Inc., including lowering its $135 million bank facility due March 31, 2002 to B3 from B2. The outlook is negative.

Moody's said it lowered Captain D's because of delays in permanently refinancing the bank facility. On Dec. 21, 2001, the bank syndicate agreed to extend the maturity 90 days to March 31, 2002 from Dec. 31, 2001, Moody's said adding that the company intends to finalize a transaction repaying the credit facility before the new maturity date.

Moody's said its negative outlook reflects a likely rating outcome if there are further delays refinancing the loan and operations are disrupted because of liquidity concerns. However, the rating agency said it believes the secured bank debt likely would achieve substantial recovery in a default scenario.

Moody's downgrades Air 2 US

Moody's Investors Service downgraded four classes of notes issued by Air 2 US, affecting $1.08 billion of debt. The series A notes were downgraded to A1 from Aa2, the series B notes to Ba1 from Baa1, the series C notes to B1 from Ba2, and the series D notes to Caa1 from B2.

Moody's said it lowered the ratings because of the increased likelihood of default by American Airlines and United Air Lines, the two lessees in the transaction; a difficult market environment for lease rates, should one of the lessees default on its obligations; the limited number of operators of A300-600s, which account for about half of the pool; and the potential for a lengthy remarketing period in the event of defaults by major US airlines that would negatively impact the revenues for the issuer.

In addition, the downgrades reflect the increasing business and financial risks faced by the airlines after the Sept. 11 terrorist attacks and the erosion of their financial profile from large cash losses over the last several months, Moody's said.

Moody's confirms Guitar Center

Moody's Investors Service confirmed Guitar Center Inc.'s ratings, ending a review started in July 2001. Affected debt includes Guitar Center's $66 million of senior unsecured debt at B1. The outlook is stable.

Moody's said the ratings reflect its expectation that Guitar Center's leverage measures will reverse previous improvements as growth and profitability remain lower than they had been through the early part of 2001.

"Guitar Center's sales responded negatively to the economic pressures that became evident after Sept. 11, as shown by the company's third quarter results and revised expectations for the full year," Moody's commented.

Moody's cuts Covanta to junk, still on review

Moody's Investors Service downgraded Covanta Energy Corp. to junk, affecting $250 million of debt. Among the actions, Covanta's senior unsecured debt was cut to Ba1 from Baa2 and its subordinated debt to Ba2 from Baa3. Moody's added that the ratings remain on review for downgrade pending the company's actions to improve its liquidity either through the sale of assets or by accessing the capital markets.

Moody's said it took the action because of Covanta's inability to sell its remaining entertainment and aviation services assets, continued delays in the collection of outstanding California utility receivables, and its inability to meet cash flow covenants under its bank revolving credit agreement. These covenants have been waived though January 2002.

The rating also incorporate the divestiture of most of Covanta's entertainment and aviation services businesses and reflects its regional concentration risk in California, as its independent power projects in the state represent 26% of its pre-tax cash flow, Moody's said. The rating agency is also concerned about Covanta's significant exposure to the Philippines, about 10% of 2001 pre-tax cash flow.

Future development efforts will be focused in the U.S., where, Moody's said, "sizable players with deeper pockets than Covanta compete in an increasingly merchant environment. Raising long-term capital to finance its moderate growth plan in the U.S. IPP sector will continue to be challenging."

Moody's puts Crompton on review for downgrade to junk

Moody's Investors Service put Crompton Corp.'s Baa3 rated senior debt and debentures on review for possible downgrade, affecting $1.2 billion of debt.

Moody's said the review follows recent amendments to Crompton's bank credit agreements. These grant a secured interest in some domestic personal property (not to exceed 10% of Crompton's consolidated net tangible assets) and covenant relief. The security interest is in addition to existing accounts receivable securitization programs, which total more than $300 million.

Moody's said it will examine the security interests and the relationship of secured debt to Crompton's total debt, the outlook for Crompton's key business lines, and prospects for completing its targeted asset sales.

S&P cuts ACT Manufacturing to D

Standard & Poor's downgraded ACT Manufacturing Inc.'s ratings to D after the company filed for Chapter 11. Affected ratings include ACT's senior secured debt, previously at CC, and its subordinated notes, previously at C.

S&P affirms Evercom

Standard & Poor's affired its ratings on Evercom Inc. and removed the ratings from CreditWatch. Affected debt includes Evercom's $115 million of 11% senior notes due 2007 rated CCC-.

S&P said it confirmed the rating after Evercom refinanced its bank facility in early December.

The company had previously indicated it might be out of compliance with bank covenants for the quarter ended Dec. 31, 2001.

"The refinancing of Evercom's facility mitigates concerns about its near-term liquidity, especially because the new facilities do not have amortization requirements until 2004," S&P commented.

S&P affirms Pemopro

Standard & Poor's affirmed its BB+ rating on Pemopro SA de CV's $205 million series C notes, its BB+ rating on Pemopro's A and B notes, each with $161 million outstanding, and its BB+ rating on Pemopro's $440 million senior secured tranche A bank loans, due March 2, 2003. The outlook is positive.

S&P said it believes Pemopro's project is on schedule under the revised agreement with Pemex and even if Pemex does not make available two plants on time S&P anticipates Pemex will give acceptance to the project.

S&P lowers various Argentinean companies

Standard & Poor's downgraded a number of Argentinean companies. The outlook for most remains negative.

S&P said its action follows the government's announcement of a moratorium on its foreign currency debt, more comprehensive foreign exchange controls and an extended bank holiday.

S&P noted that despite the new president's declaration that the peso and U.S. dollar will remain convertible, plans for a third currency underscore "the uncertainties related to the means of payment that will be used in Argentina."

The rating agency added: "The ability of Argentine companies to repay obligations denominated in foreign currency has been further weakened by extended foreign exchange controls."

Given the uncertainty over when and whether hard currency payments will be authorized, S&P said it cut foreign currency issuer ratings to CC for companies that have interest or principal due over the next three months and that do not have access to external resources to repay foreign debt. Most other foreign currency issuer ratings remain equal to the issuer's local currency rating, up to CCC+.

Ratings affected include:

--AES Ocean Springs Ltd. foreign currency credit rating lowered to CC from CCC- and remaining on CreditWatch negative;

--Aguas Argentinas SA foreign currency credit rating and $100 million senior unsecured bank loan due 2005 lowered to CC from CCC+ and remaining on CreditWatch negative;

--Arte Grafico Editorial Argentino SA foreign currency credit rating, $600 million senior unsecured medium-term notes program and $250 million unsecured bank loan lowered to CC from CCC+ and remaining on CreditWatch negative;

--Autopistas Del Sol SA $380 million notes due 2009 lowered to CC from CCC+ and remaining on CreditWatch negative;

--CableVision SA foreign currency credit rating, $1.5 billion senior unsecured medium-term note program, $275 million 13.75% medium-term notes due 2009 and $250 million 13.75% notes due 2007 all lowered to CC from CCC- and remaining on CreditWatch negative;

--Compania de Radiocomunicaciones Moviles SA $350 million senior unsecured medium-term note program lowered to CCC+ from B;

--Compania de Transporte de Energia Electrica en Alta Tension TRANSENER SA foreign currency credit rating, $100 million 8.625% medium-term notes series A due 2003 and $150 million 9.25% medium-term notes series B due 2008 lowered to CC from CCC+ and remaining on CreditWatch negative;

--Compania MEGA (Project MEGA) various series of notes lowered to CC from CCC+ and remaining on CreditWatch negative;

--Coto CIC SA foreign currency credit rating and $300 million senior unsecured medium-term

--CTI Holdings SA foreign currency credit rating lowered to CC from CCC and remaining on CreditWatch negative and $262.848 million 11.5% senior notes due 2008 lowered to C from CC;

--Empresa Distribuidora de Energia Norte SA foreign currency credit rating lowered to CC from CCC+ and remaining on CreditWatch negative; --Empresa Distribuidora de Energia Sur SA foreign currency credit rating lowered to CC from CCC+ and remaining on CreditWatch negative;

--Empresa Distribuidora Y Comercializadora Norte SA foreign currency credit rating and $250 million floating rate notes due 2003 lowered to CC from CCC+ and remaining on CreditWatch negative;

note program lowered to CC from CCC+ and remaining on CreditWatch negative;

--Metrogas SA foreign currency credit rating, $100 million 9.875% senior unsecured notes series A due 2003 and €110 million 7.375% senior unsecured notes series B due 2002 lowered to CC from CCC+;

--Multicanal SA foreign currency credit rating, $125 million 9.25% notes due 2002, $125 million 10.5% notes due 2007, $150 million 10.5% medium-term notes series C due 2018, $1.05 billion medium-term note program and $175 million 13.125% medium-term notes series E due 2009, all lowered to CC from CCC and remaining on CreditWatch negative,

--Transportadora de Gas del Norte SA foreign currency credit rating lowered to CC from CCC+ and remaining on CreditWatch negative;

--Transportadora de Gas del Sur SA foreign currency credit rating lowered to CC from CCC+ and remaining on CreditWatch negative.

S&P downgrades IT Group, still on watch

Standard & Poor's downgraded IT Group Inc. and kept its ratings on CreditWatch with negative implications. Ratings affected include the company's senior secured bank debt, cut to CCC- from B and its subordinated debt, cut to C from CCC+.

S&P said it lowered its ratings because of "heightened liquidity concerns" following the company's announcement that "it appears unlikely that satisfactory arrangements can be negotiated with its senior secured lenders for a longer term financial restructuring."

IT Group is exploring alternatives, including the sale of assets and a Chapter 11 filing.

S&P confirms WinsLoew Furniture, removes from watch

Standard & Poor's confirmed its ratings on WinsLoew Furniture Inc. and removed them from CreditWatch, where they were placed on Nov. 15, 2001. Affected ratings include WinsLoew's senior secured debt at B and subordinated debt at CCC+. The outlook is negative.

S&P said it took the action after WinsLoew announced its banks have amended its credit agreement to relax covenants.

The current ratings reflect WinsLoew's highly leveraged capital structure and its vulnerability to economic downturns, S&P said. However these factors are "somewhat" mitigated by the company's solid share in its key markets, the rating agency added.

S&P puts Covanta on watch, negative

Standard & Poor's has placed its BBB long-term corporate credit and unsecured debt ratings, as well as its BBB- subordinate debt rating on Covanta Energy Corp. on watch with negative implications following Covanta's announcement that it is reviewing options to strengthen short-term liquidity and to increase shareholder value.

Covanta Energy has not yet implemented a recapitalization plan, which S&P had expected to occur in mid-2001. The recapitalization plan provided for the issuance of $250 million to $300 million of common stock, which was to be used to pay down corporate debt and provide the company with additional cash for general corporate purposes. The postponement of the common stock issuance and the delay in selling some noncore assets have caused the company to violate cash covenants in its master credit facility. As such, Covanta has had to seek waivers from its banks. While the company's banks have waived the covenant violations through January, Covanta needs to formulate and execute a credible recapitalization plan in the near term to handle this liquidity problem and to repay a convertible debenture coming due in early 2002.

If the company does not soon implement an adequate plan, a downgrade to non-investment-grade levels may ensue, S&P said. S&P said it still views the company's underlying energy business as a strong cash flow generator, but current liquidity levels and leverage cannot sustain the BBB rating. Should Covanta issue common stock, sell non-core assets and pay down debt, S&P said it might remove the watch listing and affirm the rating.

Moody's downgrades Dan River

Moody's Investors Service downgraded Dan River Inc. including lowering its $120 million of 10.125% senior subordinated notes due 2003 to Caa3 from B3. The rating agency also assigned a negative outlook.

Moody's said the downgrade reflects Dan River's "continued losses, caused by weak industry- wide demand for its products; cost inefficiencies from underutilization of vertically integrated domestic assets; price promotional environment at a time when the company needed to reduce inventory; and high working capital requirements."

However they also continue to recognize "lessened dependence on the more cyclical apparel segment, and the company's strong market share in home fashions. The ratings also recognize the company's high leverage, competition from imports, cyclical earnings pattern and sensitivity to raw material prices," Moody's added.

The negative outlook is because of Moody's concern about the length of the recession and the magnitude of future losses, future principal amortizations due on the amended bank facility, insufficient fixed charge coverage, and the underutilization of assets, which might suggest the need to close more plants if demand does not recover soon.

S&P downgrades United Globalcom

Standard & Poor's downgraded United Globalcom Inc.'s 10.75% senior secured discount notes to C from CC and its corporate credit rating to CC from CCC. The ratings remain on CreditWatch with negative implications. It withdrew the CC rating on the company's $355 million 10.875% senior secured discount notes.

The downgrade follows the sub-par tender offer for the 10.75% senior secured notes from a subsidiary of Liberty Media Corp., S&P said. On completion of the exchange, the rating on the 10.75% notes will be lowered to D and the corporate credit rating to SD (selective default).

S&P cuts some Loral CyberStar notes to D

Standard & Poor's cut its ratings on Loral CyberStar Inc.'s 11.25% and 12.50% senior unsecured notes to D from C, and lowered its corporate credit rating to D from CC.

The downgrade is in response to completion of a sub-par exchange offer for the notes, which Standard & Poor's views as tantamount to default.

S&P also confirmed its B rating on Loral CyberStar's $613 million senior unsecured notes due 2006 and guaranteed by Loral CyberStar's parent, Loral Space & Communications Ltd.

After the default, S&P assigned a B rating to the $37 million 11.25% senior unsecured notes and $49 million 12.50% senior unsecured notes not tendered in the exchange. A new B corporate credit rating was also assigned to the company. The outlook is negative.

Moody's downgrades Brush Wellman to junk

Moody's Investors Service downgraded Brush Wellman Inc.'s senior unsecured medium-term note program to Ba3 from Baa3.

Moody's said the downgrade of Brush Wellman, the largest subsidiary of Brush Engineered Materials Inc., reflects Brush Engineered Material's "substantially reduced business outlook, lower earnings and cash flow, and narrowed financial flexibility resulting from the significant erosion of demand in its key end-use markets."

Cost reduction measures are expected to reduce overhead costs and improve absorption of fixed costs in the near-term but the negative outlook reflects Moody's expectation that Brush Engineered Material's end-use markets "will remain under pressure over the near-term as well as the need for the company to continue to reduce costs and cash expenditures in order to enhance financial flexibility during this difficult period."

Moody's downgrades Salta Hydrocarbon to junk

Moody's Investors Service downgraded Salta Hydrocarbon Royalty Trust's $234 million of 11.55% targeted amortization notes due 2015 to Ba1 from Baa3 and kept the rating on review for possible further downgrade. The action follows Moody's downgrade of Argentina's country ceiling to Ca from Caa3.

Moody's said it downgraded Salta because the "rapidly deteriorating economic, financial and social conditions in Argentina increase the level of unpredictability of key elements of the transaction and indicate a risk that is no longer consistent with an investment grade rating of the royalty-backed notes."

The rating agency said it is particularly concerned that a new Argentine government could introduce measures such as regulations on domestic prices of oil and gas which may reduce the level of cash flow that is available to make debt service payments on the notes.

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