S&P cuts Intermet ratings

Standard & Poor's said it lowered its corporate credit and senior secured bank loan ratings on Intermet Corp. to B+ from BB- and its senior unsecured debt rating to B from B+.

The outlook is negative.

S&P said the downgrade reflects concern over Intermet's increased financial leverage due to rises in raw material prices and surcharges that have not yet been collected. Total debt (adjusted for $50 million excess cash) to EBITDA increased to 5.1x as of March 31, 2004, exceeding S&P's previous expectations of total debt to EBITDA in the 3x-3.5x range.

S&P said the ratings on Intermet Corp. reflect its aggressive financial policy, leveraged capital structure, and high customer concentration, offset by its leading market position, diverse capabilities, and adequate liquidity.

S&P cuts Allegheny Tech

Standard & Poor's said it lowered its corporate credit rating on Allegheny Technologies Inc. to BB- from BB and its senior unsecured debt rating to B+ from BB-.

At the same time, all the ratings on the company were removed from CreditWatch, where they were placed on Oct. 23, 2003 with negative implications. The outlook is stable.

S&P said the downgrade reflects the challenges the company continues to face in its highly cyclical, commodity flat-rolled stainless steel products segment, from which it derives the majority of its revenues.

S&P said the ratings on Allegheny reflect a highly competitive industry, its poor operating performance and credit measures, weak demand from its cyclical end markets, and an aggressive financial profile (including underfunded postretirement obligations).

The ratings also reflect the company's good market position in a broad range of specialty metals, fair liquidity, and cost reduction efforts.

Moody's cuts Boyd's Collection

Moody's Investors Service said it downgraded the senior implied and other ratings of The Boyd's Collection Ltd. and maintained a negative outlook.

Ratings downgraded include the senior implied rating to B1 from Ba3, $40.0 million senior secured revolver due 2005 to B1 from Ba3, $28.0 million senior secured term loan facility due 2005 to B1 from Ba3, $34.4 million 9% senior subordinated notes due 2008 to B3 from B2, and the unsecured issuer rating to B2 from B1.

Moody's said Boyds' ratings continue to be constrained by the company's modest size, relatively narrow product focus, and its participation in a highly competitive industry segment that is reliant on discretionary spending trends. The ratings also reflect the potential for a material business interruption because of its dependence on only two buying agencies for approximately 90% of its total imports since all of its significant manufacturers are located in China.

Boyds' ratings are supported, Moody's noted, by the company's history of brand development, innovation and product extensions; relatively moderate seasonality and customer diversification; and disciplined business practices with regard to debt repayment, cost control and retailer payment terms. The ratings also benefit from recent hiring of a new CEO with branded consumer product and retail experience who has, in turn, hired three additional senior personnel with functional expertise in the area of merchandising, retail and supply-chain management.

S&P: Merisant on negative watch

Standard & Poor's said it placed its ratings on Merisant Worldwide Inc. (formerly Tabletop Holdings Inc.) and its wholly owned subsidiary Merisant Co. on CreditWatch with negative implications.

This includes Merisant Worldwide's B+ corporate credit and its B- senior subordinated debt ratings and Merisant Co.'s B+ corporate credit, B+ senior secured bank loan, and B- senior subordinated debt ratings.

S&P said the CreditWatch placement follows Merisant Worldwide's recent S-1 filing with the Securities and Exchange Commission (filed under Tabletop Holdings) for an initial public offering of income deposit securities, representing shares of its common stock and new senior subordinated notes. In connection with this offering, Merisant Worldwide is expected to begin a tender offer for all of its outstanding senior subordinated discount notes due 2014 and Merisant Co.'s senior subordinated notes due 2013 and to repay all outstanding borrowings on Merisant Co.'s senior secured credit facilities.

S&P said it believes that the IDS structure, in general, exhibits an extremely aggressive financial policy. Merisant Worldwide will have significantly reduced its financial flexibility given the anticipated high dividend payout rate. As a result, the structure limits the company's ability to weather potential operating challenges and also reduces the likelihood for future deleveraging.

Moody's rates Clean Harbors

Moody's Investors Service said it confirmed the existing ratings of Clean Harbors Inc. and its subsidiaries with a stable outlook.

At the same time, Moody's assigned a prospective B1 rating to the company's proposed $30 million guaranteed senior secured revolving credit facility maturing in 2009, a prospective B2 rating to the $95 million guaranteed senior secured letter-of-credit facility due 2009, and a prospective Caa1 rating to the $150 million guaranteed senior subordinated notes due 2014.

Ratings confirmed include the company's B2 senior implied rating, B3 senior unsecured issuer rating, and B2 rating for the $100 million guaranteed senior secured revolver maturing in 2005 and $106 million guaranteed senior secured term loan maturing in 2005.

Moody's said the confirmed ratings reflect the low free cash flow generation of the company, both for the last 12-month period ended March 31 measured as cash from operations less capex, and pro forma for the transaction for the same period; the weak history of operating earnings and low-single-digit EBIT return on assets that do not yet reflect an adequate return to justify the assumption of significant deferred cash environmental liabilities from the acquisition of certain assets of the Chemical Services Division of Safety-Kleen Corp. in 2002; a very weak balance sheet with negative book shareholders equity; and break-even interest coverage measured as EBIT for the last-12-month period ended March 31 over pro forma interest expense.

Moody's said the ratings also incorporate the progress the company has made in the achievement of a large portion of planned cost reductions from the CSD integration and reducing expected cash outlays via active management of its environmental liabilities portfolio.

S&P rates Maax notes, loan

Standard & Poor's said it assigned it B+ long-term corporate credit rating to Maax Corp. and assigned its B+ rating to the company's C$330 million senior secured credit facilities and its B- rating to the company's proposed US$160 senior subordinated notes issue.

Proceeds from the facilities and notes will be used to purchase shares outstanding and repay existing debt in a going-private transaction. The outlook is stable.

"The ratings on Maax reflect the company's aggressive financial profile with high leverage and the below-average business position with high customer concentration in the very competitive bathroom fixtures industry," said S&P credit analyst Daniel Parker.

Partially offsetting these risks are the company's attractively positioned product mix and distribution capability, its steady profitability, and its ability to generate free cash flow.

S&P: Williams tender expected

Standard & Poor's said Monday that it views The Williams Cos. Inc.'s (B+/negative/--) announced cash tender offer for $1.1 billion in notes as a credit positive. However, the tender offer falls within S&P's expectations that Williams would use excess cash available to prepay debt maturities.

Therefore, the rating remains unchanged.

S&P said Williams is purchasing the notes to enhance its balance sheet by decreasing debt and reducing annual interest expense. Williams is offering to purchase the approximately $114 million outstanding principal amount of its 6.625% notes due Nov. 15, 2004. In addition, Williams is offering to purchase up to $1.0 billion of certain series of notes maturing in 2006 through 2009.

Moody's: Royal Caribbean positive

Moody's Investors Service said it changed Royal Caribbean Cruises Ltd.'s outlook to positive from stable and affirmed the company's existing ratings. Ratings affirmed include the company's senior unsecured debt at Ba2, senior implied rating of Ba2, long-term issuer rating of Ba2, and speculative grade liquidity rating of SGL-2.

Moody's said the change in outlook to positive reflects: 1. Royal Caribbean's increase in net yield due to an improving cruise price environment, 2. Moody's expectation that these trends are likely to continue leading to an improvement in debt to EBITDA and interest coverage; 3. the completion of the company's extensive capital spending program and Moody's expectation of a more measured pace of ship building activity going forward; 4. the company's improving risk profile as it transitions from being a net borrower to a generator of free cash flow.

Moody's said the ratings could be considered for an upgrade if the cruise pricing environment continues to improve, debt to EBITDA drops to around 5.0x and EBIT to interest is at least 2.0x, the company continues to maintain sufficient liquidity (together with free cash flow) to meet its near-term capital spending, debt amortization and potential put obligations, and pursues a capital spending plan that can be funded internally.

Given the improvement in overall industry conditions so far this year, and the company's commitment to reduce absolute debt, Moody's does not expect downward ratings momentum, However, the outlook could change to stable or the ratings pressured if the improving cruise price environment were to stall or reverse causing leverage statistics to deteriorate, the agency said.

S&P: Nextel Communications unaffected

Standard & Poor's said the announcement by Nextel Communications Inc. (BB+/positive/--) that it plans to redeem all of its outstanding 6% convertible senior notes due 2011 has no impact on the ratings or outlook on the company.

About $608 million in principal amount of these notes were outstanding at March 31. The redemption date has been set for June 7.

S&P said given Nextel Communication's good competitive position, ability to generate significant free cash flow, and more than $2.7 billion of cash and equivalents at the end of March, the company could retire these notes entirely with cash and not experience any meaningful degradation in liquidity.

Moody's: Alcatel outlook positive

Moody's Investors Service said it changed to positive from stable the outlook on Alcatel's ratings. All ratings were also affirmed at B1.

Moody's said the outlook change reflects: (i) Alcatel having reached important milestones such as operating profitability and cash burn break-even, (ii) the expectation that ongoing cost cutting and the announced divestments will stabilize performance and underpin a gradual improvement in profitability through 2004 albeit revenue visibility in all product and service segments remains low; and (iii) the company's ability to maintain healthy liquidity and adequate financial flexibility to meet maturing debt obligations, evidenced by a healthy cash position and the ability to access the capital markets to extend its debt maturity.

Going forward, Moody's said, a number of factors are likely to influence future changes to the ratings level; such factors include the pace of revenue growth and management's implementation of its program to lower the break-even sales level, the control over working capital and capital investment should orders increase, the effectiveness of the contracted joint ventures in optical fibers and mobile phones in shielding Alcatel from further cash support requirements, and maintenance of financial flexibility by keeping high cash balances and extending credit lines.

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