S&P rates new Pride convert BB

Standard & Poor's assigned a preliminary BB rating to Pride International Inc.'s proposed $250 million senior unsecured 3.25% convertible notes due 2033 and affirmed its other ratings.

Houston, Texas-based Pride has about $1.9 billion in outstanding debt.

Pride is expected to apply roughly $115 million of the proceeds to redeem its 0% convertible debentures due 2018, which are putable on April 24. The company is also expected to use proceeds to opportunistically reduce its higher-cost outstanding debt, S&P said.

Ratings reflect a competitive position in the cyclical contract drilling market, a broad, geographically diverse drilling fleet, multiyear contracts that provide sufficient cash flow to meet debt service through 2004 and aggressive financial leverage.

Financial leverage is aggressive for a drilling contractor, with the debt to capital ratio around 50% and near-term debt to EBITDA expected to be just under 4x. EBITDA interest coverage should be around 3.5x and EBITDA to interest plus capital expenditures would be above 2x, assuming a maintenance level spending budget.

Pride maintains a strong liquidity position with roughly $125 million of unrestricted cash at Dec. 31. Operating cash flow in 2003, protected by the current contract position, should handily cover $80 million to $85 million in capital expenditures.

Although Pride may opportunistically repay more expensive outstanding debt, the company is expected to maintain adequate liquidity in the form of cash and/or access to credit facilities. Maturities in 2004 and 2005 total $194 million and $394 million, respectively.

The outlook is stable, reflecting expectations that Pride will generate sufficient cash flow and maintain adequate liquidity, S&P added.

Moody's ups EchoStar

Moody's Investors Service raised its ratings for EchoStar Communications Corp. and subsidiary EchoStar DBS Corp., including the 4.75% convertible due 2007 and 5.75% convertible due 2008 to B2 from Caa1.

The upgrade reflects strong liquidity, reduced financial leverage and improved financial flexibility following the blocked merger with Hughes Electronics Corp., cessation of the former commitment to acquire PanAmSat, and extinguishment of the Vivendi preferred equity stake on attractive terms.

The outlook is now stable.

The outlook incorporates Moody's belief that EchoStar will continue to successfully execute its business plan and operate in a fiscally prudent manner, including deleveraging through the early redemption of obligations either on the open market or as they become callable beginning next year.

The outlook also reflects an expectation for more than $350 million of positive free cash flow over the next 12 months, even after larger capex spending in 2003 and the one-time $600 million breakup fee to Hughes.

Relative to the net debt load, the company is clearly transitioning to an improved credit profile with greater financial flexibility and stability and projected free cash flow should grow even further over time, Moody's said.

Fitch: Dean conversions improve credit statistics

Fitch Ratings noted Tuesday that the conversion of a majority of the Dean Foods Co. trust-issued preferred equity securities (Tipes) positively impacted its credit statistics, reducing total debt to EBITDA to 3.8x from 4.0x at Dec. 31.

On March 17, Dean Foods announced it would redeem $100 million of the $600 million on April 17 and holders had until April 16 to convert the issue to common stock. Some 99.2% of holders elected to convert prior to the redemption date, thereby significantly reducing the cash requirements.

The conversions combined with free cash flow financed redemptions of the remaining TIPES lead to stronger credit statistics.

Fitch rates Dean's secured credit facility BB+, senior unsecured notes BB- and trust convertible preferreds at B-.

The outlook is stable.

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