Moody's upgrades Plains All American senior unsecured, rates notes Ba2

Moody's Investors Service upgraded Plains All American Pipeline LP's senior unsecured debt to Ba2 from Ba3 and assigned a Ba2 rating to its planned $150 million senior unsecured notes due 2012. Moody's also confirmed Plains Marketing LP's $450 million secured revolving credit due 2005 at Ba1. The outlook is stable.

Moody's said the actions follow Plains All American's $323 million acquisition of primarily fee-based crude pipeline assets from Shell and Equilon in July 2002 and its recently completed units issuance raising $145 million of net proceeds.

The actions reflect the execution over time by Plains All American's management of a series of acquisitions and units issuances that have added scale to Plains All American's business and diversified its earnings streams, Moody's said.

Also influencing the ratings is Plains All American's publicly stated strategy to fund acquisitions with a 50/50 mix of debt and equity over time in order to maintain leverage and interest coverage ratios within specifically stated levels, Moody's added.

However Plains All American's ratings will remain restrained at current levels until the portion of earnings derived from Plains All American's marketing and trading activities drops, Moody's said.

S&P puts Holley Performance on watch

Standard & Poor's put Holley Performance Products Inc. on CreditWatch with negative implications including its $150 million 12.25% senior notes due 2007 at CCC- and its $25 million revolving credit facility due 2007 at CCC+.

S&P said the action follows Holley's failure to make its $9.2 million interest payment due Sept. 16 on its 12.25% senior notes maturing 2007.

Holley was unable to make the interest payment due to its weak cash flow generation and very limited liquidity, S&P noted. Holley had only $7 million available under its revolving credit facility on July 30, 2002, and limited cash.

The company's equity sponsor, Kohlberg & Co., has committed to provide $15 million of capital to the company to enhance its liquidity. The investment is conditioned upon bondholders consenting to modifications of the bond indenture that would permit the company to incur additional indebtedness. In addition, Holley is seeking amendments to financial covenant requirements of its credit facility.

The interest payment has a 30-day grace period, S&P noted.

If the consents are not received and the additional investment is not made, Holley would have insufficient liquidity to make the interest payment before the expiration of the grace period, and the ratings would be lowered to D, S&P said.

If the investment is made, the ratings could be affirmed or lowered based on S&P's assessment of Holley's ability to meet its future debt service requirements when they come due.

S&P rates TI notes B

Standard & Poor's assigned a B rating to TI Automotive Finance plc's proposed $215 million senior notes due 2012. The outlook is stable.

The ratings reflect TI Automotive's fair business profile as a leading provider of automotive fuel storage, carrying, and delivery systems, and its fair degree of revenue diversity, S&P said. The business profile is constrained by the highly competitive and cyclical nature of the global automotive supply industry.

The ratings also incorporate TI Automotive's weak financial profile, characterized by a heavy debt load and thin cash flow protection, S&P added. Proceeds from the new debt issue will be used to repay existing debt and for general corporate purposes.

Pricing pressure in the automotive supply industry is intense, requiring suppliers to continually improve manufacturing efficiency and productivity, S&P said. Although demand is cyclical, TI Automotive's geographic, platform, and customer diversity should help to reduce earnings volatility. The company's products appear on 80 of the top 100 global automotive platforms, and 45% of sales are generated outside North America.

The combination of reduced automotive production, pricing pressure, and an adverse change in product mix led to weaker financial results during 2001. Sales declined 9.6% and the company recorded a $62 million net loss, S&P noted. TI Automotive took $34 million of restructuring and asset impairment charges in 2001 primarily related to the rationalization of production facilities and other cost-saving activities. Operating results have improved so far this year. Despite flat sales, EBITDA (adjusted for special charges) increased 30% for the first half of 2002.

However, financial risk remains high due to the company's highly leveraged capital structure, S&P said. Total debt (including operating leases) to capital is about 70% and debt to EBITDA is about 3.5 times. Pro forma for the debt issue, TI Automotive will have a $150 million revolving credit facility and $734 million of bank term debt (denominated in pounds).

Moody's rates Jefferson Smurfit notes B2, loan Ba3; cuts existing

Moody's Investors Service assigned a B2 rating to the €900 million senior notes due 2012 to be issued in euros, pounds and dollars by MDP Acquisitions plc, the indirect parent of Jefferson Smurfit Group plc and a Ba3 rating to its new €2.525 billion senior secured credit facilities. Moody's also downgraded the existing ratings include Smurfit Capital Funding plc's $250.0 million 6.75% guaranteed debt securities and $292.0 million 7.50% guaranteed debt securities, both cut to Ba3 from Baa2.

Moody's said the ratings reflect the company's leading market position in the European containerboard industry, dominated by the top three players, Moody's expectation that the company should remain strongly cash flow generative going forward, particularly in the context of a relatively light mandatory debt amortization schedule for the next 24 months, management's strong track record to date in successfully growing the business in a highly competitive market environment, Jefferson Smurfit's high degree of vertical integration and generally low-cost mill position allowing strong process/quality control and an efficient production process, and overall stable demand for the company's products, with sufficient end-market and geographic diversification to mitigate the impact of macroeconomic fluctuations.

Negatives include the company's highly leveraged capital structure as a result of the leveraged buyout, that expected cash flow improvements and de-leveraging for the consolidated group are partly dependent on a sustainable upturn in the industry cycle as well as material improvements in operating profit margins going forward, a continued degree of integration and event risk relating to recent acquisitions and to further potential selected acquisitions as part of the company's business portfolio optimization strategy (within an industry which remains fragmented), significant new European testliner capacity expected to come on-line in the near-term and uncertainty as to the pace of demand growth in light of a weak economic environment, continued exposure to raw material price fluctuations (particularly waste fiber), and structural issues leading to substantial bondholder subordination, Moody's said.

Pro forma Total Debt/EBITDA (cash-pay debt only) will be approximately 4.8x, EBITDA/Net Cash Interest Expense will be approximately 2.7x, and (EBITDA - Capex)/Net Cash Interest Expense will be approximately 1.8x, Moody's said.

While mandatory debt amortization requirements remain relatively modest for the next 24 months, Moody's said it expects that significant de-leveraging over time will likely depend on substantial EBITDA growth over the next few years. In particular, both top-line growth and margin improvements from current levels (driven in part by cost-saving initiatives) will be key in yielding material de-leveraging.

Moody's puts Panda-Rosemary, Panda on review

Moody's Investors Service put Panda Rosemary LP and Panda Funding Corp. on review for possible downgrade including Panda Rosemary's senior secured debt at Ba2 and Panda's senior secured debt at Ba3.

Moody's said its review will analyze the impact of recent events on the future cash flows of each entity.

Panda Rosemary has been experiencing declining steam sales to Westpoint Stevens, its steam host, whose operations have been weakened due to severe foreign competition in the textile industry, Moody's said. The declining steam sales may jeopardize Panda Rosemary's QF status, which requires a minimum thermal output from the facility. A loss of the QF status, if unremedied, would allow Virginia Electric and Power Co., the power purchaser, to terminate the power purchase agreement.

Moody's noted that the company received a waiver from the Federal Energy Regulatory Commission of compliance with QF regulations for 2002 and 2003 and that the company is building a water distillation facility to replace its steam host.

S&P cuts Jefferson Smurfit, rates notes B, loan BB-

Standard & Poor's downgraded Jefferson Smurfit Group plc, cutting its corporate credit rating to BB- from BB+, and removed it from CreditWatch with negative implications, assigning a stable outlook.

S&P also assigned a B rating to MDCP Acquisitions I's planned €300 million senior notes due 2012, $300 million senior notes due 2012 and £300 million senior notes due 2012 at B and its €425 million revolving credit facility due 2009, €1.05 billion term A loan due 2009, €525 million term B loan due 2010 and €525 million term C loan due 2011 at BB-.

S&P cuts Advanced Lighting

Standard & Poor's downgraded Advanced Lighting Technologies Inc. and put the company on CreditWatch with negative implications. Ratings lowered include Advanced Lighting's $100 million 8% senior notes due 2008, cut to CCC- from CCC, and its $50 million credit facility, cut to CCC+ from B-.

S&P said the downgrade follows Advanced Lighting's failure to make its $4 million interest payment due Sept. 16 on its 8% senior notes.

S&P said Advanced Lighting has experienced increased financial stress due to weak economic conditions and constrained liquidity.

Advanced Lighting violated its 1.0 times fixed charge coverage covenant required by its bank credit agreement for June 30, 2002, S&P noted. The company entered into an agreement with its bank group, which provides for continued access to a $25 million revolving credit facility until Oct. 10, 2002, but prevents the company from making the bond interest payment.

The indenture governing the notes provides for a 30-day grace period during which the company can make the interest payment and avoid a default. Advanced Lighting has been working with several banks to establish replacement credit facilities that would provide additional borrowing capacity. The company believes that its existing bank group may permit the interest payment to be made within the grace period if the company makes sufficient progress in securing replacement credit facilities, S&P noted. The ratings will be lowered to D if the company fails to make the payment within the grace period, S&P added.

S&P cuts Edelnor

Standard & Poor's downgraded Edelnor (Empresa Electrica del Norte Grande SA) including cutting its $250 million 7.75% senior loan participation certificates due 2006 and its $90 million 10.5% senior loan participation certificates due 2005 to D from CC.

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