Moody's cuts SBA outlook to negative

Moody's Investors Service lowered its outlook on SBA Communications Corp. to negative from stable and confirmed the company's ratings. Ratings affected include SBA Communications' $500 million 10.25% senior notes due 2009 and $269 million 12% senior discount notes due 2008, both rated B3, and SBA Telecommunications, Inc.'s $200 million secured revolving credit facility and $100 million secured term loan facility, both rated B1.

Moody's said its action is in response to the current uncertainty regarding future demand for wireless tower space and after reviewing SBA's revised operating plan to lower capital expenditures.

Independent tower operators such as SBA are facing uncertainty prospects for cash flow growth due to recent weakness in subscriber growth at wireless carriers, Moody's said. It noted SBA recently reduced its planned spending on tower development in 2002 by approximately $45 million, but still forecasted 2002 EBITDA to be in the same range as previously guided.

In SBA's favor, Moody's said it has a simpler business model than its peers, with no substantial broadcast, international or other non-tower businesses. The company also has a relatively light secured bank debt at "a modest" $50 million, although Moody's expects this to increase.

Moody's rates AMF exit financing at B1 for loan, B3 for notes

Moody's Investors Service assigned a B1 rating to AMF Bowling Worldwide, Inc.'s proposed $75 million guaranteed senior secured revolving credit facility due 2007 and $275 million guaranteed senior secured term loan facility due 2008 and a B3 rating to its proposed $150 million 13% senior subordinated notes due 2008. The outlook is stable. The planned transactions will finance AMF's emergence from bankruptcy.

Moody's said its assessment of AMF reflects the company's "vastly improved financial flexibility, given the significant reduction in leverage provided by the company's recently approved plan of reorganization."

Approximately $1.2 billion of pre-petition claims will be replaced with $450 million of funded debt, the rating agency said.

However, Moody's said AMF's leverage remains high; Moody's expects pro forma lease adjusted leverage of approximately 4.7 times EBITDAR and pro forma EBITDAR coverage of interest and rent of around 2.2 times.

The ratings are limited by AMF's participation in highly mature businesses, by the high degree of seasonality at U.S. bowling centers and by the operating difficulties of the bowling products division, Moody's said.

But the company benefits from the stable revenue and cash flow generation of AMF's bowling centers, the rating agency added.

Moody's downgrades Pueblo Xtra

Moody's Investors Service downgraded Pueblo Xtra International, Inc. including cutting its $43 million revolving credit facility due 2003 to B3 from B2 and its $177.3 million 9.5% senior notes due 2003 to Caa3 from Caa1. The rating outlook is negative.

Moody's said Pueblo Xtra's ratings could be lowered again within several quarters if the company is unable to pay all obligations according to contractual terms or does not comply with bank covenant agreements. The revolving credit facility matures in February 2003 and the senior notes mature in August 2003.

"Given the current market environment for providing capital to highly leveraged retailers and the estimated enterprise value of the company relative to its liabilities, Moody's believes that the company's current debt level is unsustainable over the medium term," the rating agency said.

Moody's cuts Crown Castle outlook

Moody's Investors Service lowered Crown Castle International Corp.'s outlook to negative and confirmed the ratings of the company and its subsidiaries. Ratings affected include Crown Castle International's $450 million 9.375% senior notes due 2011, $180 million 9% senior notes due 2011, $125 million 9.5% senior notes due 2011, $500 million 10.75% senior notes due 2011, $251 million 10.625% senior discount notes due 2007, $500 million 10.375% senior discount notes due 2011 and $260 million 11.25% senior discount notes due 2011, all rated B3, its $280 million 12.75% exchangeable preferred stock due 2010, rated Caa2, and Crown Castle Operating Co.'s $500 million secured revolving credit facility, $300 million secured term loan A and $400 million secured term loan B, all rated Ba3.

Moody's said its action is in response to the current uncertainty about future demand for wireless tower space and after reviewing with Crown Castle management its current operating plans.

"There is increased uncertainty regarding the size of the demand for the available space on the towers owned by Crown Castle and its peers given the current outlook for wireless subscriber growth and the potential for reduced capital spending by the carriers," Moody's said.

Crown Castle's forecasts for the next three years project relatively modest EBITDA growth compared to its peers and require no additional drawings from its committed bank credit facilities.

Moody's noted Crown Castle has a solid position in the independent tower industry with a more mature but still attractive tower portfolio, good management and a strong liquidity position. But it also has high leverage and a borrowing structure that spreads substantial debt over several financings

S&P puts AES on watch

Standard & Poor's put AES Corp. on CreditWatch with negative implications. Ratings affected include AES' senior unsecured debt at BB and its senior subordinated notes and convertibles at B+. Also affected is AES' subsidiary IPALCO Enterprises Inc. at BBB and AES' affiliate Indianapolis Power & Light Co., also at BBB. S&P affirmed AES Gener SA and Empresa Electrica Guacolda SA at BBB- and Eletropaulo Metropolitana Eletricidade de Sao Paulo SA at BB- since S&P does not expect AES' ratings will fall more than one notch.

S&P said its action follows Venezuela's decision to allow the Bolivar to float, resulting in extremely volatile trading in the currency.

One of AES largest cash flow generating businesses is CA La Electricidad De Caracas in Venezuela, S&P noted.

Substantial devaluation of the Bolivar, which Standard & Poor's believes to be significantly overvalued, could negatively affect distributions from EDC, the rating agency said.

Fitch downgrades AES

Fitch Ratings downgraded AES Corp.'s senior unsecured debt and revolving credit facility to BB from BB+, its senior subordinated debt to B+ from BB and its convertible junior debentures and trust convertible preferred securities to B from B+. All ratings were removed from Rating Watch Negative. The outlook is negative. Fitch's also downgraded AES' subsidiaries IPALCO Enterprises, Indianapolis Power and Light (IP&L), CILCORP and Central Illinois Light Co. (CILCO). IPALCO and IP&L's have a stable outlook while CILCORP and CILCO are on Rating Watch Evolving to reflect the pending sale by AES.

Fitch said the negative outlook reflects the company's tight liquidity situation in the next 12-18 months and AES's exposure to the Venezuela Bolivar, which started floating freely against the US dollar Feb. 13.

Fitch said the downgrades are the result of a Rating Watch Negative begun in late December 2001 due to concern over AES' lack of short-term liquidity and the pending refinancing of two debt facilities associated with two subsidiaries. These were refinanced or extended early this year.

"The new ratings reflect the high consolidated leverage and high parent company leverage, the challenge of lower profitability from merchant power exposures in the US and UK, the parent company's investment concentrations in various emerging markets, as well as the benefits of significant portfolio diversification," Fitch said.

However the rating agency also noted recent actions by AES management to tighten controls, conserve cash and reduce strains on corporate liquidity.

S&P cuts CellStar to SD

Standard & Poor's downgraded CellStar Corp.'s corporate credit rating to SD from CCC- and removed the rating from CreditWatch. It also cut CellStar's $130 million 5% convertible subordinated notes due 2002 to D from C and confirmed its $135 million revolving credit facility due 2002 at CCC-.

S&P said the downgrade is in response to the completion of CellStar's exchange of its convertible subordinated notes due October 2002 for securities having a total value that is materially less then the original issue.

S&P cuts Evenflo to D

Standard & Poor's downgraded Evenflo Co. Inc.'s corporate credit rating to D from CC and its $110 million 11.75% senior notes due 2006 to D from C.

S&P said the downgrade follows Evenflo's decision not to make the Feb. 15, 2002 interest payment on the 11¾% notes in order to conserve cash and provide greater liquidity to pay its trade creditors.

S&P lowers Evergreen outlook

Standard & Poor's lowered its outlook on Evergreen International Aviation Inc. to negative from stable. S&P rates Evergreen's corporate credit at B+.

S&P said its action is in response to continuing weak market conditions in the commercial airfreight sector.

"The outlook revision stems from concerns that a continuing slump in commercial airfreight markets, although offset in the near term by profitable U.S. military business, will place pressure on the financial profile," S&P said.

S&P downgrades FiberMark

Standard & Poor's downgraded FiberMark Inc. The outlook is negative. Ratings affected include FiberMark's $100 million 9.375% senior notes due 2006 and its $230 million 10.75% senior unsecured notes due 2011, both lowered to B+ from BB-.

S&P said it cut FiberMark's ratings because sub-par credit measures that have persisted beyond expectations. The previous rating had incorporated the anticipation of a significant increase in debt following the company's acquisition of Decorative Specialties Inc. in 2001.

"Credit measures had been expected to recover within two years," S&P said. "However, performance during the past year was much weaker than expected. Moreover, anemic end market demand is likely to continue to suppress earnings and prevent the expected improvement of FiberMark's financial profile within this time frame."

FiberMark's ratings could be lowered again if credit measures do not improve during the second half of 2002, S&P added.

S&P downgrades Flag, still on watch

Standard & Poor's downgraded FLAG Telecom Holdings Ltd. and kept the company on CreditWatch with negative implications. Ratings affected include Flag Ltd.'s $430 million 8.25% notes due 2010, cut to CCC+ from B+ and Flag Telecom Holdings' €300 million 11.625% notes due 2010 and $300 million 11.625% senior notes due 2010, both cut to CCC- from B-.

S&P said it cut Flag's ratings after the telecommunications company said it is considering strategic and financial alternatives. The rating agency said it believes this could include a balance sheet restructuring, and that FLAG could also violate a covenant in its FLAG Atlantic credit facility during 2002. "Although FLAG appears to have adequate liquidity into 2003, management has indicated that, if business conditions do not improve, additional funding, a strategic partner, or a debt restructuring could be necessary in 2003," S&P said.

S&P puts Neenah on negative watch

Standard & Poor's put Neenah Foundry Co. on CreditWatch with negative implications. Ratings affected include Neenah's $50 million revolving credit facility due 2002, $20 million term loan A due 2003 and $125 million term loan B due 2005, all rated B, and its $150 million 11.125% senior subordinated notes due 2007, $45 million 11.125% senior subordinated notes due 2007 and $87 million 11.125% senior subordinated notes due 2007, all rated CCC+.

S&P said its action follows disclosure in Neenah's quarterly filing that it is in violation of its bank covenants and is in the process of amending its credit agreement.

"In addition to breaking bank covenants, Neenah faces significant challenges over the next several months because the company's bank credit facility matures in April 2002 and its semi-annual interest payment is due on May 1, 2002," S&P said.

Should bank negotiations prove to be challenging or become delayed, ratings could be lowered in the near term, the rating agency added.

S&P cuts Banco Comercial

Standard & Poor's downgraded Banco Comercial SA, including lowering its $100 million 8.25% bonds due 2007 and $100 million 8.875% bonds due 2009 to BB- from BB+. The ratings remain on CreditWatch with negative implications.

S&P rates Kamps bank loan BB+

Standard & Poor's assigned a BB+ rating to Kamps AG's €400 million revolving credit facility due 2007.

S&P downgrades Insilco

Standard & Poor's downgraded Insilco Holding Co. and Insilco Technologies Inc.'s corporate credit rating to D from CCC. It also lowered Insilco Holding's $105 million 14% senior discount notes due 2008 to C from CC and kept the rating on CreditWatch with negative implications and Insilco Technologies' $120 million 12% senior subordinated notes due 2007 to D from CC and its $44 million revolving credit facility due 2006, $35 million term loan A due 2006 and $150 million term loan B due 2007 to D from CCC.

S&P downgrades Encompass

Standard & Poor's downgraded Encompass Services Corp. and removed the ratings from CreditWatch with negative implications. The outlook is negative.

Ratings affected include Encompass' $300 million revolving credit facility due 2005, $130 million term loan A due 2006, $170 million term loan B due 2006 and $100 million term loan C due 2007, all cut to B+ from BB- and its $135 million 10.5% senior subordinated notes due 2009, cut to B- from B. It also downgraded Building One Services Corp.'s $200 million 10.5% notes due 2009 guaranteed by Encompass to B- from B.

Moody's downgrades RCN

Moody's Investors Service downgraded RCN Corp., ending the review which began Sept. 27, 2001. The outlook is negative. Ratings affected include RCN's $250 million guaranteed senior secured revolver due 2006, $250 million guaranteed senior secured term loan A due 2006 and $500 million guaranteed senior secured term loan B due 2007, all lowered to Caa1 from B2, and its $161 million 10% senior notes due 2007, $232 million 10.125% senior notes due 2010, $356 million 9.80% senior discount notes due 2008, $145 million 11% senior discount notes due 2008 and $292 million 11.125% senior discount notes due 2007, all cut to Ca from Caa2.

Moody's said it cut RCN primarily because of "upward revisions of the expected credit loss that are likely to be realized by the company's creditors upon ultimate recovery under an anticipated default scenario perhaps as early as later this year but almost certainly by 2004 at the back end of our rating horizon."

In particular, the rating agency said recent tenders for debt have had a negative medium-term impact on excess cash balances originally intended to support asset deployment and business growth. These disadvantages outweigh the near-term benefits of reduced debt service costs and may well accelerate the seemingly inevitable debt restructuring and/or liquidation of the company, Moody's said.

Moody's downgrades Oglebay Norton

Moody's Investors Service downgraded Oglebay Norton Co. The outlook is negative. Ratings affected include Oglebay's $350 million secured revolving credit facility, cut to B1 from Ba3, and $100 million 10% guaranteed senior subordinated notes due 2009, cut to Caa1 from B3.

Moody's said it lowered the company because of its weakened financial profile and the continuing pressure on its cash flow due to the soft U.S. economy and lower demand for its industrial minerals and marine transportation services.

The rating agency said that due to the current economic downturn it expects Oglebay's EBITDA in the first half of 2002 to be less than the $33 million earned in the first half of 2001. Moody's expects an improvement in the second half of the year but sees the full year falling short of the $68 million of EBITDA earned in 2001.

Moody's said it believes it will be difficult for Oglebay to remain in compliance with current financial covenants.

S&P puts Giant Industries on negative watch

Standard & Poor's put Giant Industries Inc. on CreditWatch with negative implications.

Ratings affected include Giant's $100 million 9.75% senior subordinated notes due 2003 and its $150 million 9% senior subordinated notes due 2007, both rated B+.

S&P rates new RFS notes B+

Standard & Poor's assigned a B+ rating to RFS Partnership LP's planned offering of $125 million senior unsecured notes due 2012 guaranteed by RFS Hotel Investors Inc.

Fitch cuts Gap to junk

Fitch Ratings downgraded Gap, Inc. to junk from investment-grade. Ratings lowered included its $2 billion of senior unsecured notes, cut to BB from BBB-. The outlook is negative.

Fitch said the downgrade follows Gap's announcement of a commitment for a new $1.3 billion secured credit facility and reflects the structural subordination of the company's senior notes to the new facility.

The lower ratings also reflect sustained weakness in Gap's sales and uncertainty as to the timing of any future recovery, Fitch said.

Moody's downgrades B/E Aerospace

Moody's Investors Service downgraded B/E Aerospace, Inc. including lowering its $250 million 8.875% senior subordinated notes due 2011, $250 million 8% senior subordinated notes due 2008 and $200 million 9.5% senior subordinated notes due 2008, to B3 from B2. The outlook is stable.

Moody's said it cut B/E's ratings because of the company's "generally weakened financial profile due to the substantial contraction in the company's business experienced post the terrorist attacks on September 11, 2001 and the likelihood that demand for B/E's products will be constrained for the foreseeable future.

Moody's noted B/E's financial risk has increased since it sold $250 million of 8 7/8% subordinated notes in mid-2001.

The weak economy and the unprecedented downturn in air travel resulted in a 16% decline in the company's revenue for third quarter ended Nov. 24, 2001, excluding sales from acquired companies, Moody's noted, adding that airlines have been conserving cash by deferring cabin interior refurbishments and upgrades and by delaying purchases of new aircraft.

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