Moody's rates Rent-A-Center's new $100 million deal B1, outlook negative

Moody's assigned a B1 rating to Rent-A-Center's planned $100 million of senior subordinate notes Series C due 2008.

Moody's also confirmed the company's senior implied rating of Ba2, its $533 million senior secured bank facilities rated Ba2, its senior unsecured issuer rating of Ba3 and its $175 million of existing senior subordinated notes due 2008 rated B1. The action affects approximately $700 million of debt.

The rating outlook was changed to negative from stable, reflecting higher leverage, a resumption in their growth strategy, a reduction in franchise income and the number of franchisees, and a greater uncertainty in the operating environment, Moody's stated.

The ratings reflect the company's moderate leverage and retained operating cash flow; the low credit profile of its customer base; some risk from ongoing litigation and negative media image for the rent-to-own industry; and low tangible asset coverage, the rating agency stated. Moody's added that the rating is somewhat weakened by the company's need to repurchase $60 million of stock from the former CEO and by the re-leveraging caused by the new debt issuance.

Moody's noted that proceeds from the bond offering will be used to repay $30 million in secured term loans, and to finance a further $35 million in equity repurchases from the former chairman and CEO. The new notes will be pari-passu with Rent-A-Center's existing subordinated notes.

Moody's puts Ntelos on review for downgrade

Moody's Investors Service put the ratings of Ntelos Inc. on review for possible downgrade, affecting ratings including the company's $325 million secured credit facility rated B1 and its $280 million 13% senior notes due 2010 rated B3.

The action follows termination of a merger agreement with Conestoga Enterprises.

Moody's said that since it first rated Ntelos in July 2002 the company has "underperformed financially and operationally, primarily due to its PCS operations."

Merging with Conestoga would have brought additional cash flow to NTELOS and would have delivered since the company would have paid for Conestoga with its common and preferred stock.

Moody's put Dynea on review for downgrade

Moody's Investors Service puts Dynea International Oy's €240 million of senior notes rated B3 on review for downgrade.

The action follows the Finnish Government's to withdraw its proposal to sell its 56% stake in Kemira Oy to Dynea International's parent Dynea Oy.

Moody's said its action reflects concerns about "weakening debt protection measures for Dynea International Oy as well the lack of benefits previously anticipated from the transaction with Kemira Oy."

Moody's said its review will look at the market outlook for the resins business, particularly in Central Europe where Dynea has experienced a significant drop in volumes recently, the impact of Dynea's decision to reduce low-end panelboard resin production and the associated costs with the switch to specialty resin production, the impact of the slowdown in North America, management strategy (including Dynea's interest in Perstorp's resins) and the likely development of the group's financial profile and liquidity position.

S&P takes action on Argentinean corporate bonds

Standard & Poor's took various actions on Argentinean corporate bonds, including a number of downgrades and reductions in watches or outlooks.

The actions follow new measures requiring Central Bank authorization for remittances of funds abroad.

Although introduced to prevent a run on banks, S&P said: "Remittances of funds abroad to repay financial obligations may still be permitted. However, the fact that the Central Bank authorization will now be required indicates increasing direct sovereign interference risk."

Affected ratings include:

--Transportadora de Gas del Sur SA medium term notes cut to CCC+ from B

--Transportadora de Gas del Norte SA notes cut to CCC+ from B

--Empresa Distribuidora de Energia Sur SA bank loan cut to CCC+ from B-

--Empresa Distribuidora Y Comercializadora Norte SA (Edenor SA) medium-term notes and floating-rate notes cut to CCC+ from B

--Empresa Distribuidora de Energia Norte SA bank loan cut to CCC+ from B-

--Compania MEGA (Project MEGA) senior secured notes, medium-term notes, floating-rate notes and notes rated CCC+ put on CreditWatch negative from CreditWatch developing.

--Autopistas Del Sol SA notes cut to CCC+ from B

--Telecom Argentina STET-France Telecom SA notes cut to CCC+ from B

--Imagen Satelital SA notes cut to CCC+ from B-

--Disco SA senior notes cut to CCC+ from B-

--Aguas Argentinas SA bank loan cut to CCC+ from B

--AES Ocean Springs Ltd. bank loan cut to CCC- from CCC+

--Telefonica Holding de Argentina SA medium-term notes, notes and senior unsecured medium-term notes cut to CCC+ from B

--Pecom Energia SA notescut to CCC+ from B

--Multicanal SA notes cut to CCC from CCC+

--Mastellone Hermanos SA notes cut to CCC from CCC+

--Coto CICSA medium-term notes cut to CCC+ from B-

--Compania de Radiocomunicaciones Moviles SA medium-term notes cut to CCC+ from B

--CTI Holdings SA senior notes cut to CC from CCC-

--CableVision SA medium-term notes and notes cut to CCC- from CCC+

--Compania Internacional de Telecomunicaciones SA medium-term notes cut to CCC+ from B

--Acindar Industria Argentina de Aceros SA notes cut to CCC from CCC+

--Alto Palermo SA senior unsecured notes cut to CCC from CCC+

--Arte Grafico Editorial Argentino SA senior unsecured medium-term notes and bank loan cut to CCC+ from B-

--Compania de Alimentos Fargo SA medium-term notes cut to CC from CCC

--Metrogas SA senior unsecured notes, cut to CCC+ from B

--Compania de Transporte de Energia Electrica en Alta Tension TRANSENER SA medium term notes, cut to CCC+ from B

Moody's downgrades Penton Media, on review for further downgrade

Moody's Investors Service downgraded Penton Media, Inc. and kept the ratings on review for possible further downgrade, affecting ratings including Penton's $372 million of bank credit facilities, cut to B2 from B1, and its $185 million of senior subordinated notes due 2011, cut to Caa1 from B3.

Moody's said its actions reflect Penton's "poor operating performance as expected under management's reduced (revenue and cash flow) guidance statement issued (Tuesday), which falls materially below both Moody's original and recently revised expectations."

The rating agency said it believes management's "visibility" is "severely limited" at the moment because of both the severity of the revision and its proximity to the last change in guidance.

Moody's added: "It appears clear that the events of September 11, and subsequent travel safety concerns, are likely to have a much more materially adverse impact on the broader trade show industry sector, and Penton in particular, than Moody's had anticipated when the ratings were last revised and the outlook was changed to negative on October 1, 2001."

Moody's puts Advanstar on review for downgrade

Moody's Investors Service puts Advanstar Communications Inc.'s ratings on review for possible downgrade. Affected ratings include Advanstar's $450 million of bank credit facilities rated B1 and $150 million of senior subordinated notes due 2011 rated B3.

Moody's said the review reflects "continued weakness in the trade show sector caused by the soft economic environment and concerns related to travel and safety, which Moody's now believes warrants potentially far greater concern than previously anticipated on October 1, 2001, when Advanstar's ratings were revised downward and the rating outlook was changed to negative.

"It is apparent that the impact of the events of September 11, and subsequent travel concerns, are likely to have a much more materially adverse impact on the broader trade show industry sector than Moody's had originally anticipated," the rating agency added.

S&P cuts European Power to D

Standard & Poor's downgraded European Power Ltd. Co.'s $95 million of 12½% notes due 2010 to D from B-.

The action reflects S&P's lowering of Enron Corp. to D following its bankruptcy filing.

S&P puts Dunlop Standard on negative watch

Standard & Poor's put Dunlop Standard Aerospace Holdings plc's $225 million of 11 7/8% senior notes due 2009 on CreditWatch with negative implications. The securities are rated B-.

Moody's confirms La Quinta, outlook negative

Moody's Investors Service confirmed the ratings on La Quinta Properties, Inc., concluding the review begun on Sept. 25. Affected ratings include the long-term debt at Ba3 and preferred stock at B2. The outlook is negative.

Moody's said the negative outlook reflects "uncertainty about the length and depth of the post-September 11 weakness in lodging demand." But the confirmation is a result of La Quinta's "good ability to meet the challenges of a difficult operating environment given its solid balance sheet resulting from substantial deleveraging and a sound cash position stemming from the proceeds of the company's healthcare property disposition program."

Although the lodging environment is "difficult," Moody's said La Quinta's limited service hotel portfolio, with its lower price-points and drive-to-location concentrations "has proven to be more resilient to the declines in air travel and lodging demand than the more upscale brands."

La Quinta also has different financial covenants in its bonds than many of its peers and the company does not anticipate any difficult complying with bond or credit facility terms in the near and intermediate term, Moody's said.

Moody's upgrade Pediatric Services

Moody's Investors Service upgraded Pediatric Services of America, Inc., including raising its senior subordinated notes to Caa1 from Caa2. The outlook is stable.

Moody's said the upgrade follows recent improvement in Pediatric's operating performance and credit profile, a more favorable reimbursement and pricing environment and favorable industry trends for the home healthcare industry.

Moody's puts CII on review for upgrade

Moody's Investors Service put CII Technologies, Inc.'s ratings on review for upgrade, including its $95 million 10% senior subordinated notes due 2004 rated B3.

Moody's said the action follows the announcement that CII's parent CIIT Holdings, Inc. will be acquired by Tyco International Ltd., rated Baa1.

In addition to being acquired by a company with "significantly greater financial resources," Moody's noted there is a change of control provision in the notes.

S&P rates Nextel Partners new notes CCC+

Standard & Poor's assigned a CCC+ rating to Nextel Partners Inc.'s new $225 million 12.5% senior unsecured notes due 2009. S&P confirmed its existing ratings on the company, including its senior secured bank loan at B- and unsecured debt at CCC+. The outlook remains stable.

S&P noted that Nextel Partners has taken advantage of an improvement in the high yield market to increase liquidity.

The ratings and outlook reflect Nextel Partners' high debt leverage and negative free cash flow expected through 2003, S&P said. "While debt-per-pop was moderate, at about $42, debt-per-subscriber of $3,100 was high relative to the industry, mainly due to the company's start-up status and its focus on a narrow market segment. These factors are somewhat offset by continued solid operating performance to date and sufficient liquidity to fund operations into 2003."

S&P downgrades McLeodUSA

Standard & Poor's downgraded McLeodUSA Inc. and put the ratings on CreditWatch with negative implications. Ratings affected include the senior secured bank loan, cut to CC from B, the senior unsecured debt, cut to C from CCC+, and the preferred stock, cut to C from CCC.

S&P's action follows McLeod's announcement of a recapitalization plan.

"Even if the company does not pursue a pre-packaged bankruptcy, the corporate credit rating will still be lowered to D because Standard & Poor's views the exchange offer to be coercive and tantamount to a default," the rating agency said.

It commented: "The combination of savings from overhead reductions and proceeds from asset sales would have provided sufficient liquidity for the company to operate over the near term, but McLeod chose to undertake the current recapitalization or bankruptcy route."

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