S&P cuts Central Parking

Standard & Poor's downgraded Central Parking Corp. including cutting its $175 million revolving credit facility due 2008 and $175 million term loan B due 2010 to BB- from BB+ and Central Parking Finance Trust's $110 million 5.25% convertible trust preferred securities to CCC+ from B. The ratings were removed from CreditWatch negative except the loans, which remain on watch. The outlook is negative.

S&P said the bank loans remain on CreditWatch negative while it reviews the valuation of the collateral package securing the bank facility.

The rating actions reflect the company's continued weak operating performance and S&P's belief that credit measures will be much weaker than previously expected for the full fiscal year 2003.

S&P said it is concerned that Central Parking's operating performance will continue to be pressured by challenging business conditions in the intermediate term.

The rating actions also take into consideration the company's recent amendment to its $350 million senior secured credit facility. The company was not in compliance with financial covenants for the period ended March 31, 2003, and the amendment provides for revised covenant levels over the next four quarters. S&P believes that the revised covenants are still tight and that the company may have some difficulties meeting them if operating conditions do not improve. Tighter restrictions on acquisitions and capital expenditures in the bank amendment provide some support for the ratings, though they also restrict the company's growth prospects.

Central Parking continues to be highly leveraged. The company's TIPS are treated as debt, and the TIPS dividends are treated as interest for the purposes of ratio calculations. Lease-adjusted EBITDA coverage of interest was about 1.2x, and lease-adjusted funds from operations to total debt was about 14% for the 12 months ended June 30, 2003, S&P said, adding that it does not expect material improvement in credit protection measures in the near term.

S&P raises Waste Connections, rates loan BB+

Standard & Poor's upgraded Waste Connections Inc. including raising its $150 million 5.5% convertible subordinated notes due 2006 and $175 million floating-rate convertible subordinated notes due 2022 to BB- from B+ and $425 million revolving credit facility due 2005 to BB+ from BB. S&P assigned a BB+ rating to its new $350 million revolving credit facility due 2008. The outlook is stable.

S&P said the upgrade reflects Waste Connections' improving financial profile as evidenced by its attractive profitability, increased cash flow generation and management's disciplined growth strategy.

The rating revision is supported by Waste Connections' demonstrated operating strength, which benefits from the company's unique business strategy including a focus on secondary markets, and significant operations under exclusive franchisee contracts. Acquisition-driven growth remains the key focus, but management is expected to maintain its prudent and successful track record of acquiring and integrating numerous, but small solid waste operations, while maintaining an improving trend in credit measures.

Waste Connections' ratings are based on its average business position as a major regional solid waste management company, efficient operations and generally favorable industry characteristics. These factors are partially offset by aggressive debt leverage, risks associated with an active growth strategy, and a somewhat less favorable operating environment because of a sluggish economy.

Despite Waste Connections' relatively modest scale of operations compared with those of leading industry participants, its operating profit margins of about 35% are impressive and the highest in the industry. Credit protection measures are sufficient for the rating, with funds from operations to total debt (adjusted for capitalized operating leases) at about 24%, EBITDA interest coverage approximately 5.5x, and debt to capital in the low 50% area, for the 12 months ended June 30, 2003, S&P said.

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