Moody's rates RailAmerica loan Ba3, raises outlook

Moody's Investors Service assigned a Ba3 rating to RailAmerica Transportation Corp.'s proposed $475 million senior secured credit facility, confirmed its existing ratings including its $130 million 12.875% senior subordinated notes due 2010 at B3 and raised the outlook to positive from stable.

Moody's said it raised RailAmerica's outlook because of its improved credit risk parameters over the last two years and Moody's expectations for ongoing organic growth and maintenance of financial discipline, consistent with management's stated strategy and plans.

Leverage has been moderating from the original aggressive level though not at the pace originally expected due, in part, to the impact of the decline of the Australian dollar, Moody's said. The projected continuation of revenue expansion and improved debt protection measurements, notably adjusted debt-to-EBITDAR and free cash flow (net of capital expenditures and proceeds from asset sales)-to-debt could lead to a ratings upgrade.

Fitch rates Lyondell, Equistar BB-

Fitch Ratings assigned a BB- rating to Lyondell Chemical Co.'s senior secured credit facilities and senior secured notes and a B rating to its senior subordinated notes. Fitch also assigned a BB- rating to Equistar Chemicals LP's senior secured credit facility and a B rating to Equistar's senior unsecured notes. The Rating Outlook is Negative for both.

Fitch said the ratings reflect expectations for a significant improvement in Equistar's profit margins by 2004 and a more modest improvement in Lyondell's profit margins coming earlier, perhaps as early as 2003.

Lyondell and Equistar's excellent chemical market positions and historically strong access to liquidity via debt and equity capital markets also support the ratings, but are offset by high debt levels and the current weakness in Equistar's ethylene and polyethylene businesses, Fitch commented.

Liquidity via access to the senior secured credit facilities for both Lyondell and Equistar as well as liquidity via access to capital markets will continue to be an important credit issue in light of potentially large capital expenditure requirements and cyclically weak cash flow from operations, the rating agency said.

Fitch said the negative outlook reflects reflects short-term concerns that access to revolving lines of credit are conditional on compliance with financial covenants.

Moody's rates Wise Alloy's notes B3; loan B2

Moody's Investors Service assigned a rating of B3 to Wise Alloys LLC proposed $150 million senior secured notes due in 2009, jointly issued by Wise and Wise Alloys Finance Corp. In addition, a B2 rating was assigned to the company's $50 million senior secured credit facility. The senior implied rating is B3 and the senior unsecured issuer rating is Caa2. The outlook is stable.

"Moody's ratings reflect Wise's dependence on a single asset, dependence on sales chiefly to two customers, including Ca-rated (senior unsecured) Crown Cork & Seal Company, Inc., and lack of pricing power in a mature market dominated by two much larger, financially stronger, and fully integrated competitors, Alcan and Alcoa," Moody's said. "Market share concentration and intense competition among packaging companies and their customers, the beverage companies, as well as competition from other packaging materials such as plastics and glass, have severely limited the operating margins earned by producers of can stock and this is expected to continue."

Positive influences on the ratings include, the company's technological capabilities, cost reductions and work-culture changes that have been implemented and increased liquidity due to the credit facility.

S&P downgrades ON Semiconductor, rates new notes CCC+

Standard & Poor's downgraded ON Semiconductor Corp. and assigned a CCC+ rating to its upcoming issue of $300 million second priority senior secured notes. The outlook remains negative.

Ratings lowered include ON Semiconductor's $200 million senior secured term loan D due 2007, cut to B from B+, Semiconductor Components Industries LLC's $200 million six-year term loan, $325 million seven-year term loan, $350 million eight-year term loan and $150 million six-year revolver, all cut to B from B+, and its $400 million 12% senior subordinated notes due 2009, cut to CCC+ from B-.

S&P puts Advance Auto on positive watch

Standard & Poor's put Advance Auto Parts Inc. on CreditWatch with positive implications.

Ratings affected include its $60 million 12.875% senior discount debentures due 2009 at B- and Advance Stores Co. Inc.'s $200 million 10.25% senior subordinated notes due 2008 rated B- and $150 million revolving credit facility due 2006, $165 million term loan due 2006 and $365 million term loan due 2007, all at B+.

S&P rates Kazkommerts notes B+

Standard & Poor's assigned a B+ rating to Kazkommerts Capital 2 BV's $150 million 10.125% notes due 2007 guaranteed by Kazkommertsbank.

S&P rates AFC Enterprises loan BB

Standard & Poor's assigned a rating of BB with a stable outlook to AFC Enterprises Inc.'s proposed $275 million senior secured bank loan, which consists of a $75 million five-year revolver, a $75 million five-year term A and a $125 million seven-year term B. Proceeds will be used to replace the company's existing $198.3 million credit facility and repay $126.9 million of outstanding 10.25% senior subordinated notes due in 2007, according to the S&P release.

"The ratings on AFC reflect its participation in the highly competitive quick-service segment of the restaurant industry and the risks associated with operating multiple concepts," the release said. "These factors are partially offset by the company's relatively well-established concepts, steadily improving operating performance, skills in managing franchise operations, and experienced management team."

The company's EBITDA coverage of interest expense was 4.6 times, funds from operations to total debt was 28% and total debt to EBIDTA was 2.3 times at the end of 2001.

Moody's raises Freeport-McMoRan outlook to positive

Moody's confirmed Freeport-McMoRan Copper & Gold Inc.'s senior unsecured debt rating at B3 and raised the outlook to positive from stable. Although Moody's views Freeport-McMoRan 's operating position and financial profile as stronger than a B3, the rating is constrained by the risks associated with its concentration of assets in Indonesia.

The change in outlook reflects Moody's change in outlook for its Indonesian ratings, which reflects a number of factors including the country's improved relationship with other foreign creditors and the IMF. While this positive outlook reflects progress made so far, continued reforms are necessary to lift Indonesia's economic performance and improve investor confidence.

Ratings affected include Freeport-McMoRan's senior unsecured debt at B3 and preferred stock at

Caa2.

S&P upgrades Jackson Products

Standard & Poor's upgraded Jackson Products Inc. and removed the company from CreditWatch with negative implications. The outlook is negative.

Ratings affected include Jackson's $115 million 9.5% subordinated notes due 2005, raised to CCC from CC, and its $105 million acquisition line due 2004 and $30 million revolver due 2004, both raised to B- from CCC.

Moody's rates new Caremark Rx loan Ba2

Moody's Investors Service assigned a Ba2 rating to Caremark Rx, Inc.'s new $250 million senior secured term loan B due 2006 and confirmed its existing ratings including its $300 million senior secured revolving credit facility due 2005 and its $250 million 7.375% senior notes due 2006 at Ba2. The outlook is positive.

Moody's said the ratings reflect Caremark's strong operating performance, the sustained growth in cash flow and continued deleveraging at the company.

The rating agency also expects favorable industry fundamentals will drive industry growth in the near to intermediate term. These fundamentals include the positive trend in drug spending, significant generic introductions (which will boost profitability of mail pharmacy services) and strong growth in the development of biotech drugs (which should bolster the specialty distribution business).

Moody's also noted that Caremark has a stronger business mix and margins relative to its peers, and significantly higher profitability as measured by EBITDA/Script. This is attributable to the company's higher proportion of employer accounts, its higher mail penetration and strong specialty distribution business. This results in the company being less susceptible to eroding margins in its core claims processing business, Moody's added.

S&P rates Pioneer notes BB+

Standard & Poor's assigned a BB+ rating to Pioneer Natural Resources Co.'s new $150 million senior unsecured notes due 2012.

Fitch cuts AAR to junk

Fitch Ratings downgraded the unsecured debt of AAR Corp. to BB+ from BBB covering its senior unsecured notes and its unsecured bank credit facilities. The Rating Outlook is Stable.

Fitch said it cut AAR because of the significant negative impact of recent turmoil in the U.S. airline industry on AAR's operating cash flow generation capacity.

Although some signs of modest strengthening in demand for after-market aviation services are expected to appear as scheduled capacity in the airline industry returns to more normal levels, AAR's revenue and EBITDA growth rates are unlikely to rebound quickly, Fitch said.

Particularly in light of the company's need to move away from older-generation aircraft components in its inventory management and maintenance/repair/overhaul (MRO) businesses, Fitch said it believes that operating cash flows will remain under pressure for the next 18 months to two years.

© 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.