Moody's puts Airborne on review, direction uncertain

Moody's Investors Service placed the ratings of Airborne Inc. and its primary operating subsidiary Airborne Express Inc. on review with direction uncertain, including the $150 million of 5.75% senior unsecured convertible notes due 2007 at Ba3.

The review was prompted by the announcement to sell its package delivery operations to DHL, a subsidiary of Deutsche Post AG.

The existing debt obligations of Airborne will be assumed by DHL under the proposed transaction so the review will focus on DHL's (unrated) financial strength and the degree of support, if any, provided by Deutsche Post AG, the ultimate parent. .

Potentially favorable to current ratings would be a legal assumption of the debt by DHL with strong support from the ultimate parent. A lack of support for assumed debt and/or a weak financial structure and cash flow supporting debt would be negative, Moody's said.

Moody's cuts Mirant

Moody's Investors Service downgraded the ratings of Mirant Corp. and subsidiaries, including senior unsecured debt to Caa2 from B1 and preferreds to Ca from B3.

The downgrade reflects continuing uncertainty related to significant debt obligations over the next three years, including $3 billion of bank credit facilities, given the company's limited access to public debt markets.

Also, there are ongoing concerns about the level of cash flow that the restructured company will be able to generate relative to its high financial leverage and the likelihood that minimal amounts of free cash flow will be available for further debt reduction resulting in continued reliance on asset sale proceeds.

Moody's is maintaining a negative outlook.

Mirant appears to be dependent upon asset sale proceeds in order to meet its obligations through year-end 2003, Moody's said. In addition, a substantial portion of $2.3 billion in debt maturing in 2004 needs to be refinanced.

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