Moody's cuts Energis

Moody's Investors Service downgraded Energis plc and kept the ratings on review for further downgrade. Ratings affected include Energis' £125 million senior unsecured notes due 2009, $200 million senior unsecured notes due 2009 and £300 million global bonds due 2010, all lowered to Caa2 from B2, and Energis Holdings Ltd.'s £725 million senior secured revolving and term credit facilities due 2008 lowered to B2 from Ba2.

Moody's said it first put Energis on review after the company said it was unlikely to meet revenue and EBITDA expectations for the year ending March 2002 and warned it may breach financial covenants.

Energis now said it is looking at the possibility of restructuring its bonds and that it expects to be in violation of bank covenants.

Moody's said successfully renegotiating the bank covenants is "critical" to Energis' survival, particularly given the company's extremely limited access to the public capital markets. The rating agency also said "it now appears very likely that a restructuring of the company's bonds will be required."

Moody's downgrades Vintage Petroleum

Moody's Investors Service downgraded Vintage Petroleum, including lowering its senior subordinated notes to B1 from Ba3. The outlook is negative.

Moody's said that before Vintage can begin to delever it will need significant time, improved North American reserve replacement and production performance, Argentine fiscal and political stabilization, and oil and gas price firming. The negative outlook reflects the risk that these factors could deteriorate more than expected.

Moody's said it lowered Vintage's ratings because of low production replacement by extension and discovery, especially excluding the Trinidad additions; very low production replacement by E&D in the U.S. and Argentina; sharply reduced 2002 cash flow and capital outlays; lower 2002 production, compounded by faster-than-expected Canadian declines; uncertain organic reserve replacement outlook, particularly at lower capital outlays; rising leverage on proven developed reserves; reduced pro-forma 2001 reserves at lower, yet near historic average prices; and the impact of higher production taxes and hard currency restrictions on Argentine reserves, cash flow and cash flow convertibility.

S&P lowers Bear Island, on watch

Standard & Poor's downgraded Bear Island Paper Co. LLC and put it on CreditWatch with negative implications. Ratings affected include Bear Island's $100 million 10% senior notes due 2007, lowered to B- from B and its $50 million revolving credit facility and $70 million term loan, both lowered to B from B+, along with Bear Island Finance Co. II's $100 million 10% senior notes due 2007, lowered to B- from B.

S&P said weak newsprint pricing continues to hurt the Bear Island's profitability and cash flow.

"Bear Island's credit measures, which were already subpar for the previous rating, are likely to deteriorate further in the near term", S&P said. "Demand for the company's newsprint is holding up relatively well, but prices are not expected to rebound until industry demand recovers along with the U.S. economy."

S&P said Bear Island's liquidity might shrink substantially before the economy improves, straining its financial flexibility.

S&P cuts Hawk, on watch

Standard & Poor's downgraded Hawk Corp. and put the company on CreditWatch with negative implications. Ratings affected include Hawk's $100 million 10.25% senior notes due 2003, lowered to CCC+ from B+, and its $35 million secured term loan due 2003 and $50 million secured revolver due 2003, both cut to B from B+.

S&P said it cut Hawk's ratings because of weaker-than-expected operating performance and very constrained liquidity, which has heightened financial risk.

Due to weak operating results, Hawk was in violation of bank covenants at the end of the fourth quarter of 2001, S&P noted. The company has obtained a waiver until March 30, 2002, and is currently in the process of obtaining an amendment.

S&P said Hawk continues to be negatively affected by the soft industrial market and the depressed aerospace market.

S&P upgrades Packaging Corp.

Standard & Poor's upgraded Packaging Corp. of America, including raising its corporate credit rating to the investment-grade level of BBB- from BB+ and its $550 million 9.625% senior notes due 2009 to BB+ from BB. The outlook is stable.

S&P said the upgrade is in response to Packaging Corp.'s proven ability to maintain relatively stable financial results despite the current economic climate.

The company has "demonstrated its ability to produce fairly stable operating results, generate good cash flow, and reduce debt, even during the current industry downturn, thereby improving credit measures to levels commensurate with the new rating," S&P said.

The rating agency noted Packaging Corp. has reduced its debt by $1.1 billion since becoming a stand-alone company in April 1999.

Current ratings give some flexibility for modest acquisitions and completion of the company's current share repurchase program, S&P added.

S&P puts STC on positive watch

Standard & Poor's put STC Broadcasting Inc. on CreditWatch with positive implications. Ratings affected include STC's $100 million 11% senior subordinated notes due 2007 rated CCC+ and its $35 million revolving credit facility due 2004 rated B.

S&P said its action follows LIN Holdings Corp.'s announcement of its plan to acquire STC and its parent company, Sunrise Television Corp. for common stock.

The combined business will have greater scale and cash flow diversity, as well as a stronger financial profile, S&P said.

All STC's debt and part of its preferred stock will be repaid with proceeds from the station sales and an initial public stock offering proposed by LIN, S&P added.

Netia files for bankruptcy

Netia Holdings SA said it filed for bankruptcy along with two subsidiaries Netia Telekom SA and Netia South Sp. z o.o. The subsidiaries also made Section 304 bankruptcy filings in the U.S.

Moody's rates Accredo bank loan Ba2

Moody's Investors Service assigned a Ba2 rating to Accredo Health, Inc.'s proposed $275 million senior secured credit facilities due 2009. The outlook is positive.

Moody's said the ratings reflect Accredo's strong historical performance and Moody's expectation of continued strength, favorable growth trends for biotech drugs and the specialty pharmacy industry, the company's sound business model, an experienced and knowledgeable management team and the company's limited exposure to government reimbursement.

Negatives include moderate leverage, significant revenue concentration issues even after the planned acquisition of the Specialty Pharmaceuticals Services division of Gentiva Health Services, Inc., an anticipated increase in the competitive landscape and the potential for integration issues related to the acquisition, Moody's said.

Moody's rates Quintiles bank loan Ba2

Moody's Investors Service assigned a Ba2 rating to Quintiles Transnational Corp.'s new $150 million senior revolving credit facility maturing 2005.

Moody's said its ratings reflect Quintiles' leading global market position as a provider of contract research and marketing services for the pharmaceutical industry and strong financial condition including $602 million of cash and debt instruments as of Dec. 31, 2001 and low debt of $38 million.

The ratings also incorporate the potential longer term margin benefits of Quintiles' strategic plans to develop more partnerships involving investments in the development of drugs, and to increase its multi-year profit-sharing commercialization contracts, the rating agency added.

Moody's also said Quintiles has high fixed costs and working capital needs because of the broad scope of its operations and information technology, and its low operating margins.

Negatives include earnings volatility due to a decrease in demand for outsourcing services by large pharmaceutical companies in recent years, Quintiles' significant restructurings and other special charges, its inadequate return on assets even before special charges and potential future restructuring and asset impairment charges, Moody's said.

Moody's puts Venture Holdings on review

Moody's Investors Service put Venture Holdings Co., LLC on review for possible downgrade. Ratings affected include Venture's $175 million guaranteed senior secured revolving credit facility due 2004, its $75 million guaranteed senior secured term loan A due 2004 and its $200 million guaranteed senior secured term loan B maturing 2005, all rated B1; its $125 million 11% guaranteed senior notes due 2007 and $205 million of 9.5% senior notes due 2005, both rated B2; and its $125 million of 12% guaranteed senior subordinated notes due 2009 rated B3.

Moody's said it put Venture on review because of concerns about Venture's ability to satisfy a requirement of the senior secured bank credit agreement that the company issue $125 million of pari passu subordinated notes by March 31, 2002 and use the net proceeds to pay down bank debt.

If Venture cannot satisfy this requirement, a bank amendment necessitating a 100% lender vote would be necessary, Moody's added.

"Moody's also has concerns regarding Venture's currently limited liquidity position even before consideration of the imminent refinancing deadline," the rating agency added. At Sept. 30, 2001 Venture reported LTM revenues exceeding $1.8 billion, paired with only limited additional availability of $38 million under the company's $175 million borrowing base revolving credit facility.

Venture's debt structure also continues to lack a natural foreign currency hedge due to a mismatch of exclusively dollar-denominated debt with a predominance of foreign-denominated revenues, Moody's said.

Moody's withdraws ThermaSys rating

Moody's Investors Service said it withdrew its ratings on ThermaSys Corp. due to a lack of sufficient available information regarding the company's recent financial performance, management's 2002 outlook, and other key operating or strategic factors.

Fitch rates AMF exit facility B+

Fitch Ratings assigned a B+ rating to AMF Bowling Worldwide, Inc.'s proposed exit facility made up of a revolving credit facility and a term loan and a B- rating to AMF's proposed 13% senior subordinated notes. The rating outlook is stable.

Fitch said the ratings reflect AMF's emergence from bankruptcy with a significantly reduced debt load, stable cash flow generation from its U.S. bowling centers, recent cost reduction initiatives, leading market position and brand value, offset by the weakening performance of the company's Products and International Bowling Centers businesses, declines in bowling center lineage, a shift from league play to open play and the mature nature of the business.

The reorganization plan will cut AMF's total debt significantly to $453 million from $1.2 billion, Fitch noted.

AMF is expected to exhibit pro forma total adjusted leverage of 4.7 times (Total debt plus eight times rent expense divided by EBITDAR) and pro forma EBITDAR coverage of interest and rent expense of 2.2 times, Fitch said.

S&P cuts Energis, still on watch

Standard & Poor's downgraded Energis plc and kept the company on CreditWatch with negative implications.

Ratings affected include Energis' $200 million 9.75% notes due 2009, £125 million 9.5% notes due 2009 and £300 million 9.125% notes due 2010, all lowered to C from B.

Moody's confirms Key Energy, rates add-on notes at Ba3

Moody's Investors Service confirmed the ratings of Key Energy Services and assigned a Ba3 rating to the company's $100 million add-on to its 8.375% senior unsecured notes due 2008. The outlook is positive.

Moody's expects weakening near term fundamental business conditions, but Key's lower leverage should enable it to withstand a downturn such as that experienced in 1998/99, with potential for credit accretion as conditions improve, depending on the length and depth of the downturn.

The outlook relies on Key's consistent public and private statements that it will continue to reduce debt to achieve a 30% to 35% debt/capitalization target, much lower levels of debt and leverage and to use an appropriate mix of debt and equity for strategic acquisitions, Moody's said. Continued debt reduction planned by Key in 2002 to the extent cash flow permits, could solidify financial flexibility that might support growth during the downturn, Moody's said. Key currently estimates trough EBITDA at $140 million based on cost savings, would provide meaningful free cash flow and could accelerate potential credit accretion. Over the past year, Key reduced debt by $143 million to $415 million and increased equity by $146 million to $556 million, bringing debt/capitalization down to about 43% at Dec. 31 from 58% at yearend 2000.

S&P rates new Key Energy notes BB-

Standard & Poor's assigned a BB- rating to Key Energy Services Inc.'s new offering of $100 million 8.375% senior unsecured notes due 2008.

S&P downgrades International Shipholding

Standard & Poor's downgraded International Shipholding Corp. and removed the company from CreditWatch with negative implications. The outlook is negative.

Ratings affected include International Shipholding's $100 million 9% senior notes due 2003 and $110 million 7.75% senior notes due 2007, both lowered to B from BB.

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