Moody's downgrades Kmart

Moody's Investors Service downgraded Kmart Corp.'s senior unsecured ratings. The outlook remains negative. Affected ratings include Kmart's senior unsecured debt, medium term notes and industrial revenue bonds, lowered to Ca from Caa3. Kmart's lease certificates were confirmed at C as were industrial revenue bonds already at C.

Moody's said its action follows Kmart's filing for Chapter 11 bankruptcy and noted "the uncertainty surrounding the company's operating plan, its plan for operations upon an emergence from bankruptcy and the implications of these events on the recovery value for unsecured note holders."

The downgrade follows a previous downgrade on Monday which included lowering its senior unsecured debt and medium term notes to Caa3 from Caa1; its lease certificates to C from Caa2; and its industrial revenue bonds to either Caa3 from Caa1 or C from Caa3.

S&P cuts Kmart to D

Standard & Poor's downgraded Kmart Corp. to D. Ratings affected include Kmart's debentures, lease certificates and notes, all previously rated CCC-, and its convertible trust preferred stock, previously rated C.

S&P said its action follows Kmart's filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Fitch cuts Kmart to D

Fitch downgraded Kmart Corp. to D, including its bank facility, notes and debentures and lease certificates, all previously rated CCC; and its convertible preferred securities previously rated CC. A total of $3.8 billion of debt and $890 million of preferred securities are affected.

Fitch said its action follows Kmart's Chapter 11 filing.

"The new rating level reflects the limited recovery that can be anticipated by bondholders given the large amount of trade and other general unsecured claims coupled with a new $2 billion debtor-in-possession facility," Fitch said.

S&P puts Fleming on negative watch

Standard & Poor's put Fleming Cos. Inc. on CreditWatch with negative implications. Ratings affected include Fleming's $250 million 10.5% senior subordinated notes due 2004 and $250 million senior subordinated notes due 2007 and $250 million senior subordinated notes due 2011, all rated B+; its $600 million revolving credit facility due 2003 and $250 million term loan due 2004, both rated BB+; its $290 million senior unsecured medium-term note program rated BB-, its $355 million 10.125% senior notes due 2008 rated BB-, its $130 million 5.25% convertible senior subordinated notes due 2009 rated B+.

S&P said its action reflects uncertainty about the impact of Kmart Corp.'s bankruptcy filing on Fleming.

Among the uncertainties are by how many Kmart will reduce its stores and the impact that downsizing will have on Fleming's capacity utilization and profitability and what changes, if any, may be made to the existing supply contract between Kmart and Fleming, S&P said.

Although Kmart is Fleming's largest customer, closings are likely to be lower-volume stores, S&P noted.

Fitch puts Fleming on negative watch

Fitch put Fleming Cos., Inc. on RatingWatch Negative, including its secured bank credit facilities at BB+, its senior unsecured notes at BB and its senior subordinated notes at B+.

Fitch said its action follows Kmart Corp.'s Chapter 11. Kmart represents about 20% of Fleming's revenues.

Noting Fleming ceased shipments to Kmart after it missed a $78 million payment on Friday, Fitch said it expects shipments to resume following Kmart's receipt of a $2 billion debtor-in-possession facility. But Fitch added that the impact of expected Kmart store closings on Fleming's business remains uncertain.

Moody's puts American Greetings on review for downgrade

Moody's Investors Service put American Greetings on review for downgrade, affecting $1 billion of debt including its $150 million revolving credit facility due 2002 and $200 million revolving credit facility due 2006, both rated Ba1; its $300 million senior notes due 2028 rated Ba1; and its $260 million senior subordinated notes due 2008 rated Ba3.

Moody's said its action reflects concerns about the impact of Kmart's bankruptcy on the company. Kmart is a significant client for American Greetings.

Sales lost from the possible closing of Kmart stores might not be offset by increased volume at neighboring stores of other retailers, Moody's noted, adding: "these challenges are occurring at a time when American Greetings is still in the process of re-engineering most aspects of the way it goes to market."

However, Moody's said the almost complete implementation of scan-based trading has led to a significant reduction in accounts receivable owed by Kmart to American Greetings and American Greetings has significant availability under its bank facilities.

S&P downgrades UAL, United, still on negative watch

Standard & Poor's downgraded UAL Corp. and its United Air Lines Inc. unit and kept the ratings on CreditWatch with negative implications. Ratings affected include UAL's preferred stock, lowered to CCC+ from B- and United Air Lines' senior secured debt, lowered to B+ from BB-, its senior unsecured debt, lowered to B- from B, and its equipment trust certificates, all lowered one notch.

S&P said its action reflects reflecting substantial ongoing losses and "lack of progress in crucial negotiations aimed at containing the airline's high labor costs."

Negotiations with United's mechanics union have not produced results and over the weekend a Presidential Emergency Board issued recommendations that would raise the mechanics' pay to levels comparable to those at American Airlines Inc. and Northwest Airlines Inc., S&P said.

"The negotiations highlight the conflict between the union's desire to match pay gains achieved by other United unions and by mechanics at other large U.S. airlines, and the company's ongoing efforts to secure pay and productivity concessions from labor in order to trim United's high operating cost structure in response to weak revenues," S&P continued.

Moody's confirms Adelphia bonds, raises bank debt

Moody's Investors Service confirmed its existing ratings for Adelphia Communications Corp. and its intermediate holding company subsidiaries, upgraded the company's subsidiary bank debt ratings to Ba2 from Ba3, and assigned a Caa1 rating to the company's $500 million issuance of 7½% mandatory convertible preferred stock due 2005. The outlook is now stable. The action, affecting $19 billion of debt, concludes a review begun in October 2001. Ratings confirmed include the company's senior unsecured notes and FrontierVision's senior subordinated notes at B2, its convertible subordinated Notes at B3 and its convertible and exchangeable preferred stock confirmed at Caa1.

Moody's said ratings continue to reflect Adelphia's "still highly leveraged balance sheet, moderate coverage levels, ongoing capital needs for investment in plant infrastructure improvements and new product deployments, and structural considerations with respect to debt composition and corporate governance."

Balancing those are Adelphia's "large size, well-clustered and technologically advanced cable systems, good prospects for cash flow growth once system upgrades are completed, and strong access to the capital markets."

Moody's said it raised the bank credit facilities because of "materially improved debt protection measures and correspondingly reduced credit loss assumptions in the event of default following the large amount of junior capital recently contributed beneath it."

Moody's downgrades Delco Remy

Moody's Investors Service downgraded Delco Remy International, Inc. Ratings affected include Delco Remy's $140 million 10.625% guaranteed senior subordinated notes due 2006 and $165 million 11% guaranteed senior subordinated global notes due 2009, both cut to B3 from B2; its $145 million 8.625% guaranteed senior notes due 2007, cut to B2 from B1; and its $300 million guaranteed senior secured revolving credit facility due 2003, cut to Ba3 from Ba2. The outlook is negative.

Moody's said it lowered Delco Remy's ratings "in reaction to the prolonged negative impact of unfavorable market conditions on the company's operating cash flow. Moody's additionally has increasing concerns regarding the adequacy of Delco Remy's liquidity flexibility."

Moody's said Delco Remy has seen a steadily rising leverage ratio and absolute debt levels while EBITA interest coverage has deteriorated over the past year.

Thanks to a high fixed cost base and a material degree of operating leverage, Delco Remy has been generating much lower-than-historical returns on its total asset base, Moody's added.

The rating agency said its is "becoming increasingly concerned" that the deterioration in Delco Remy's debt protection measures may require near-term re-negotiation of its bank covenants and that effective availability under the $300 million revolver will continue to be limited relative to both the company's size and to the high level of uncertainty regarding near-term market conditions.

Moody's puts EOTT on review for downgrade

Moody's Investors Service put EOTT Energy Partners, LP on review for downgrade, including its $235 million of 11% senior unsecured notes due 2009 at B1.

Moody's said EOTT's ratings will be lowered if it does not in the near term finalize a committed term loan to replace its interim uncommitted facilities.

The rating agency added that it was aware of material weakening in EOTT's fourth quarter 2001 and first quarter 2002 operating trends, a cut in the distribution to its MLP units by almost 50%, negotiations on the bank facilities and a review of strategic alternatives when it lowered the company's ratings to their current levels.

S&P downgrades Orius, on negative watch

Standard & Poor's downgraded Orius Corp. and put the ratings on CreditWatch with negative implications. Ratings affected include Orius' bank debt, lowered to CC from B-, its $150 million 12.75% senior subordinated notes due 2010 lowered to C from CCC.

S&P said the actions follows Orius' announcement that it has negotiated a fifth amendment to its credit agreement which includes delivery of a payment blockage notice for interest payments on its subordinated notes.

S&P said Orius will be in default on its subordinated debt as of the next interest date, Feb. 2, 2002 at which point S&P will cut the ratings on these securities to D.

The rating agency noted Orius competes in the large and highly fragmented telecommunications infrastructure service industry which has deteriorated rapidly over the last several quarters due to the weak U.S. economy and the inability of many customers in the telecommunications and cable markets to access the capital markets.

Compared to other rated telecommunications infrastructure providers, Orius has historically generated a higher percentage of sales from project-specific agreements, making the company more vulnerable to softening market conditions, S&P added.

S&P downgrades Marconi, negative outlook

Standard & Poor's downgraded Marconi plc, including lowering the senior unsecured debt of its Marconi Corp. plc unit to B- from B+. The outlook is negative.

S&P said its action follows an "adverse trading update" by Marconi for the third fiscal quarter to Dec. 31, 2001 showing "a very weak operational performance" by the company's core communications business. The downgrade also incorporated a further deterioration in prospects for 2002.

The weak performance, the result of further weakening market conditions, offset cost cutting and cash release initiatives, S&P noted.

"Of particular concern was the year-on-year decline in sales of 37%, which was higher than the 33% decline in the previous quarter; and the 43% fall in core orders received, both of which are indicative that the equipment market might not have yet reached its lowest point. Moreover, with an orders-to-sales rate of below one, Marconi needs to ensure that its financial problems do not affect its customer retention ability and overall competitive position," S&P said.

Moody's puts Yell on review for downgrade

Moody's Investors Service put Yell Finance BV on review for possible downgrade, affecting £1.55 billion of debt. Ratings involved in the review include its senior notes, Yell Finance's £250 million of 10.75% senior notes due 2011, $200 million of senior notes due 2011 and $288 million of 13.5% senior discount notes due 2011, all rated B2 and its $1.05 billion senior bank facilities rated Ba3..

Moody's said its review follows news that Yell will acquired McLeodUSA Publishing Co. for $600 million in cash.

The review for downgrade reflects "uncertainties regarding the acquisition's financing structure which is still under discussion," Moody's said.

Moody's noted Yell management and its financial sponsors intend "to closely replicate the structure of Yell's original financing in July 2001" and added that if the "new overall funding structure result in financial comfort parameters that are no worse or better than those achieved in July 2001 Moody's would, depending on its final assessment of the new, post acquisition entity's overall risk profile, expect to confirm Yell's ratings."

S&P puts Columbus McKinnon on negative watch

Standard & Poor's put Columbus McKinnon Corp. on CreditWatch with negative implications.

Ratings affected include the company's $200 million 8.5% senior subordinated notes due 2008, rated B, and its $300 million revolving credit facility due 2003, rated BB-.

Fitch says US Steel/National Steel merger could affect EES Coke

Fitch said ratings of EES Coke Battery Co., Inc.'s senior secured notes might be affected by a possible merger of United States Steel Corp. and National Steel Corp. EES Coke's $168 million senior secured notes issue series A due 2002 is rated BBB and its $75 million senior secured notes series B due 2007 is rated B-.

The series A notes are supported by tax-sharing payments for Section 29 tax credits but Fitch expects these to end on Dec. 31, 2002, well before the maturity of the series B notes. As a result, the series B notes are tied to National Steel's ability to meet its obligations under the 12-year Coke Sales Agreement. Fitch considers National Steel to be a weak B category issuer.

S&P lowers many Argentinean companies to SD

Standard & Poor's said it lowered the foreign currency debt rating on many Argentinean companies to SD (selective default). The outlook on all long-term ratings is negative.

S&P said its action is in response to the "recent crisis in the monetary and economic regime of the Republic of Argentina."

The rating agency added that it believes the companies covered by the SD "will find it impossible to meet some of their foreign currency obligations in a timely manner, due to sovereign-induced constraints."

It added that the SD rating does not imply "general insolvency" for the companies concerned.

Foreign currency ratings affected include:

--AES Ocean Springs Ltd. lowered to SD from CC;

--Aguas Argentinas SA lowered to SD from CC;

--Alto Palermo SA lowered to SD from CCC;

--Arte Gráfico Editorial Argentino SA lowered to SD from CC;

--CableVisión SA lowered to SD from CC;

--Camuzzi Argentina SA lowered to CCC from CCC+;

--Camuzzi Gas del Sur SA lowered to SD from B;

--Camuzzi Gas Pampeana SA lowered to CCC from B;

--CAPEX SA lowered to SD from CC;

--Companía de Transporte de Energía Eléctrica en Alta Tensión TRANSENER SA lowered to SD from CC;

--Compañía de Radiocomunicaciones Móviles SA lowered to SD from CCC+;

--Compañía Internacional de Telecomunicaciones SA lowered to SD from CCC+;

--Compañía Latinoamericana de Infraestructura & Servicios SA (CLISA) lowered to SD from CCC-;

--CTI Holdings SA lowered to SD from CC;

--Disco SA lowered to SD from CCC+;

--Empresa Distribuidora de Energía Norte SA (EDEN) lowered to SD from CC;

--Empresa Distribuidora de Energía Sur SA (EDES) lowered to SD from CC;

--Empresa Distribuidora Sur SA (EDESUR) lowered to SD from CC;

--Empresa Distribuidora y Comercializadora Norte SA (EDENOR) lowered to SD from CC;

--Imagen Satelital SA lowered to SD from CCC+;

--Industrias Metalúrgicas Pescarmona SAI.C.y.F. remains at SD;

--Inversora Eléctrica de Buenos Aires SA lowered to SD from CC;

--Mastellone Hermanos SA lowered to SD from CCC;

--Metrogas SA lowered to SD from CC;

--Multicanal SA lowered to SD from CC;

--Pan American Energy LLC remains at CCC+;

--Pecom Energía SA remains at CCC+;

--Sideco Americana SA lowered to SD from CC;

--Sodigas Pampeana SA lowered to CCC from B;

--Sodigas Sur SA lowered to SD from B;

--Telecom Argentina STET-France Telecom SA lowered to SD from CCC+;

--Telefónica de Argentina SA lowered to SD from CCC+;

--Telefónica Holding de Argentina SA lowered to SD from CCC+;

--Transportadora de Gas del Norte SA (TGN) lowered to SD from CC;

--Transportadora de Gas del Sur SA (TGS) lowered to SD from CC.

S&P cuts some Weirton Steel debt to D

Standard & Poor's lowered its corporate credit rating on Weirton Steel Corp. to SD (selective default) and lowered ratings on its $125 million 10.75% senior notes due 2005 and $125 million 11.375% senior notes due 2004 to D. S&P affirmed its CCC rating on Weirton's 8 5/8% pollution control revenue refunding bond series 1989 due 2014. All ratings were removed from CreditWatch where they were placed with negative implications on Nov. 1, 2001.

S&P said its actions follow Weirton's failure to make scheduled interest payments on its 11 3/8% senior unsecured notes and 10¾% senior unsecured notes.

Weirton is currently exchanging the notes for $79.3 million of new 10% senior discount notes due 2008, which represents a par value significantly less than the existing debt.

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