Moody's rates Paxson new deal B3, cuts outlook to negative

Moody's Investors Service assigned a B3 rating to Paxson Communications Corp.'s planned $310 million of senior subordinated discount notes due 2009 and revised the outlook on the company's ratings to negative. Ratings affected include Paxson's $360 million of bank credit facilities at Ba3, its $200 million of 10.75% senior subordinated notes due 2008 at B3 and its $310 million of 13.25% junior exchangeable preferred stock due 2006 at Caa1. Moody's withdrew the Caa1 rating on $286 million of 12.5% exchangeable preferred stock due 2006 which will be refinanced by the new offering.

Moody's said it lowered Paxson's outlook principally because of "increasing concern over strains in the NBC relationship, pressures on the company's growth plans from the weak advertising market, and the material shift in capital mix that results from the proposed refinancing."

Although Moody's does not anticipate Paxson's joint sales agreements with NBC will come to immediate harm it warned "the strained relationship may lead to a weakening of the importance of the company to NBC and makes the timing and likelihood of an acquisition by NBC more uncertain." Although the ratings did not previously include a definitive expectation NBC would acquire Paxson the relationship did give an added measure of comfort, Moody's said.

With the current continuing difficult conditions for advertising, "strong support from NBC would be of greater value to the company," the rating agency said. While Paxson's ratings growth has offset some of the impact of the soft advertising market, "the persistent weakness will likely challenge the company for the foreseeable future."

Moody's also noted that bondholders are left more weakly positioned because Paxson is refinancing preferred stock with a more senior obligation.

S&P rates new Paxson notes B-

Standard & Poor's assigned a B- rating to Paxson Communications Corp.'s planned offering of $310 million senior discount notes due 2009.

S&P rates new Charter notes B+

Standard & Poor's assigned a B+ rating to the planned $600 million of senior notes to be offered by Charter Communications Holdings, LLC.

S&P downgrades Advantica, on negative watch

Standard & Poor's downgraded Advantica Restaurant Group Inc. and put the ratings on CreditWatch with negative implications.

Ratings affected include Advantica's $592 million 11.25% senior notes due 2008, cut to C from CCC+ and its $200 million credit facility due 2003 cut to CCC+ from B.

Moody's puts Northern Natural Gas on review for upgrade

Moody's Investors Service put Northern Natural Gas Co.'s $500 million of senior notes rated B3 on review for possible upgrade.

The action follows the announcement that Dynegy Inc. has reached a settlement with Enron Corp. that will allow Dynegy to take ownership of Northern Natural Gas by the end of January. Enron had been contesting Dynegy's ownership claim.

Moody's said its review will look at terms of the settlement and transfer of Northern Natural Gas to Dynegy, the ranking of the pipeline's debt in Dynegy's capital structure and the durability of the transfer. Moody's noted that under the original preferred investment agreement, Enron had the option to repurchase the pipeline for a six month period, which has be slightly extended until June 30, 2002.

Moody's rates new Huntsman credit facility at B3

Moody's Investors Service assigned a B3 rating to Huntsman Corp.'s new supplemental priority credit facilities and confirmed the company's existing ratings. Ratings confirmed include Huntsman's $1.4 billion senior secured credit facility at Caa2, its $600 million of senior subordinated notes due 2007 at Ca and Huntsman Polymers Corp.'s $175 million senior notes due 2004 also at Ca. The outlook is negative.

Moody's said the supplemental credit facility, made up of a $40 million revolver and a $110 million term loan both due Dec. 31, 2002, serves to provide additional liquidity and replaces the company's off-balance sheet accounts receivable securitization program.

The rating agency said its B3 assessment reflects the benefits of the structure and collateral package.

"The B3 rating incorporates a very high probability of default along with expectations that full recovery would be likely under a bankruptcy scenario," Moody's said.

Moody's said the negative outlook reflects uncertainties about the company's prospects, "given its financial weakness and overcapacity in its markets."

A planned transaction with Bain Capital and Blackstone Capital, which included a $200 million cash infusion, did not materialize and Huntsman Corp. and Huntsman Polymers have failed to make interest payments due on their bonds on January 1, 2002 and December 1, 2001 respectively.

"Resolution of the company's financial difficulties could require a bankruptcy filing," Moody's added.

Moody's downgrades FITIC

Moody's Investors Service downgraded Fujian International Trust & Investment Corp. (FITIC)'s foreign currency debt and deposit ratings to C from Caa3.

Moody's said the action follows closure of FITIC by China's central bank. Foreign creditors and depositors will see "a modest recovery rate" from FITIC's liquidation, Moody's said.

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