Moody's downgrades Lodgian

Moody's Investors Service downgraded Lodgian Financing Corp.'s $200 million of 12¼% senior subordinated notes due 2009 to C from Caa2 and Lodgian Capital Trust I's $175 million of 7% convertible redeemable equity trust certificates ("CRESTS") due 2010 to C from Ca. The outlook remains negative.

Moody's said the downgrade follows Lodgian's announcement that it is not in compliance with the financial covenants on its senior secured credit facility following the release of third quarter results.

Lodgian reached a forbearance agreement with its senior lenders on Nov. 13, Moody's added. The lenders cut the revolving commitment and imposed other requirements. The non-compliance also triggered a cross-default on Lodgian's senior subordinated notes and CRESTS, Moody's said.

Lodgian announced it would not be making the $12.3 million interest payment due Jan. 15, 2002 to the holders of the company's $200 million senior subordinated notes due 2009.

Moody's said it expects there will be "little to no" recovery value realized by the holders of Lodgian's subordinated notes and CRESTS.

Moody's downgrades America West

Moody's Investors Service downgraded America West Airlines, Inc., affecting $2 billion of debt. Among the ratings affected is the unsecured debt, cut to Ca from Caa2, and all the company's equipment trust certificates, mostly downgraded two notches.

Moody's said the downgrades follow America West's deferral of payments on several of its lease obligations as well as the continuing weak economy and difficult financial environment for the company and the airline industry in general.

"Supporting the ratings is the company's continued progress in reducing costs and the substantial increase in customer service and satisfaction," Moody's added.

But it said the outlook is negative because debt protection measurements are "likely to remain constrained due to continued weak cash flow generation."

Because of the deferral of the lease obligations, America West has been told it is in default, Moody's said, adding that a cross-default is possible.

Moody's downgrades Metals USA notes to Ca

Moody's Investors Service downgraded Metals USA, Inc.'s $200 million of 8.625% senior subordinated notes due 2008 to Ca from Caa2 after the company filed for Chapter 11. The outlook is negative.

Moody's said it expects secured creditors will see their claims settled with "little or no loss" but says unsecured creditors "could experience significant losses given the magnitude of Metals USA's financial obligations compared to its realizable value." The company had debt of $480 million on Nov. 14.

Moody's rates Ingles Markets new deal at Ba3

Moody's Investors Service assigned a Ba3 rating to the planned offering of senior subordinated notes by Ingles Markets, Inc. The outlook is stable.

The rating agency said its assessment considers "the company's leveraged financial condition, the intense supermarket competition in the Southeast among several well-regarded players, and exposure to the economic fortunes of a relatively small geographic region. However, the ratings recognize the long-term stability of the company's strategy, the flexibility and asset value derived from considerable real estate ownership, and control over distribution and real estate selection. Ratings also benefit from the company's position in the fast-growing southeastern United States and Moody's belief that real estate fair market value substantially exceeds book value."

Moody's downgrades LDM Technologies

Moody's Investors Service downgraded LDM Technologies, Inc., affecting $110 million of debt. Among the ratings reduced are the company's $110 million of 10.75% guaranteed senior subordinated notes due 2007, lowered to Caa3 from B3. The outlook is negative.

Moody's said the reduction reflects "continued weakness in LDM's debt protection measures, together with Moody's increased concerns regarding the adequacy of the company's liquidity position and weak financial condition."

The rating agency said a series of significant negative factors - some out of management control -have hurt the company, including a one-year delay of the Ford Expedition launch for which LDM had invested $13 million in a new plant.

Its German operations have also performed poorly, Moody's added, and there have been capacity issues at its Ontario, Canada plant due to several General Motors vehicle platforms experiencing much higher volumes than projected, resulting in costly overtime and other expenditure for LDM.

Moody's downgrades Crown Cork and Seal

Moody's Investors Service downgraded Crown Cork and Seal, affecting $5.8 billion of debt. Ratings lowered include the company's $400 million term loan maturing 2002 to B2 from B1 and its $2.5 billion revolving credit due 2004 to Caa1 from B3, and its senior unsecured bonds to Ca from Caa3.

Moody's said the reduction reflects "an increasingly difficult business position and high leverage, and on-going uncertainty regarding future asbestos claims payments. They also reflect the difficult task faced by the company in improving its operating leverage, either by increased free cash flow or through asset sales."

The rating agency said Crown Cork's "financial flexibility remains limited, in spite of steps recently taken by Crown Cork and Seal, such as the elimination of common stock dividends. The company's operating performance remains under pressure. Concentration is increasing the power of Crown Cork and Seal's clients. For certain product lines representing a substantial portion of the company's activity, differentiation occurs mostly on sales price. This forces the company to participate in a competitive race to reduce costs, made more difficult in a time of reduced financial flexibility."

Moody's lowers BancTec

Moody's Investors Service downgraded BancTec, Inc. including, reducing its $150 million of 7½% senior notes due 2008 to Caa3 from B3. The outlook is negative.

Moody's said it cut the ratings because of "continued revenue declines and operating losses in BancTec's United States integration and business process solutions business. The company's challenges to restoring profitability are compounded by a weakened environment for IT spending in the wake of the September 11 tragedy and the prevailing climate of uncertainty here and abroad, which could be more protracted than previously perceived."

Moody's said it believes that the turnaround of the company's transaction processing and document imaging business, at one time premised on an optimistic outlook for 2002, is now unlikely, jeopardizing substantial recovery of principal on the senior notes.

S&P rates new APCOA/Standard Parking notes B-

Standard & Poor's assigned a B- rating to APCOA/Standard Parking, Inc.'s new $50 million of 14% senior subordinated second lien notes due 2006.

S&P puts Luxfer on negative watch

Standard & Poor's put Luxfer Holdings PLC's ratings on negative watch, including its £160 million of 10 1/8% bonds due 2009.

Moody's downgrades Ispat Inland

Moody's Investors Service downgraded Ispat Inland Inc. affecting $1.1 billion of debt. Ratings affected include the senior unsecured rating, cut to Caa2 from B3.

Moody's said the downgrade reflects "the weakening of Ispat's financial performance, cash flow and profitability that have prompted its parent, Ispat International NV, to provide cash infusions, and the likelihood that additional cash infusions may be required in the near-term."

Moody's said it acknowledged the U.S. steel industry's efforts to restrict imports, "but incorporates the expectation that lower levels of demand will hinder firmer pricing. As a result, Ispat's financial performance is expected to remain under pressure."

S&P lowers Captain D's Seafood

Standard & Poor's downgraded Captain D's Seafood Restaurants corporate credit rating to CCC+ from B+.

S&P said the downgrade is based on "heightened concerns" about Captain D's ability to refinance its existing $120 million bank loan that expires Dec. 31, 2001.

S&P downgrades Huntsman International

Standard & Poor's downgraded Huntsman International Holdings LLC and its subsidiary Huntsman International LLC. It affirmed its ratings on Huntsman Corp. and its subsidiary, Huntsman Polymers Corp. All ratings remain on CreditWatch with negative implications, where they were placed on May 22, 2001.

S&P said the downgrades of Huntsman International Holdings and Huntsman International reflect "heightened concerns related to the company's aggressive financial profile, which has deteriorated due to elevated debt levels and weaker than expected operating results as of Sept. 30, 2001. Recent operating results have reflected a number of persistent challenges including lower volume and pricing in key product areas including PO/MTBE, petrochemicals, and TIO2. These conditions are expected to persist at least throughout 2001, and will limit any opportunity to improve an already subpar financial profile. As of Sept 30, 2001, Huntsman International's financial profile reflected total debt to EBITDA near 6.5 times (x) and EBITDA interest coverage below 2x. In addition, Huntsman International has announced that it is not in compliance with the leverage covenant contained within its bank facilities. Until successfully amended, this condition will restrict Huntsman International's access to its bank facility, thereby eliminating alternative financial flexibility. The company further disclosed that the collateral pledged to support Huntsman Corp.'s bank facilities could trigger change of control provisions related to Huntsman International's subordinated debt obligations. While these issues elevate near-term risk given the challenges facing Huntsman Corp., Standard & Poor's does anticipate that either issue will result in an acceleration of Huntsman International's debt obligations."

Ratings affected include Huntsman International Holdings' senior unsecured debt, cut to B- from B, Huntsman International's senior secured cut to B+ from BB- and its subordinated notes, cut to B- from B, Huntsman Corp.'s subordinated debt confirmed at CCC- and Hunstman Polymers senior unsecured debt confirmed at CCC-.

S&P rates Ingles Markets B+

Standard & Poor's assigned a B+ rating to Ingles Markets Inc.'s proposed senior subordinated notes due 2011.

Moody's assigns Caa1 to new APCOA junk bonds

Moody's rated the proposed new $50 million secured senior subordinated notes of APCOA/Standard Parking, Inc. at Caa1. It also confirmed the company's $ 40 million bank facility at B2 and downgraded its $140 million 9¼% senior subordinated notes due 2008 (to be reduced to $64 million) to Caa3 from Caa2 and its $70 million 11 ¼% Holding Company senior discount notes (to be reduced to $41 million) to C from Ca. The outlook continues to be negative.

"The ratings reflect the company's highly leveraged financial condition (even assuming completion of the transaction), the limited liquidity resources available to the company, and the intensely competitive parking services industry," Moody's stated.

The Caa1 rating on the secured senior subordinated notes (issued by APCOA/Standard Parking, Inc) benefits from the collateral package, according to Moody's. The company's real and personal property will secure this loan and the company's domestic operating subsidiaries will provide guarantees, but the secured senior subordinated notes have a second lien relative to the company's bank facility, according to the release.

"In a default scenario, Moody's is not certain that the company's enterprise or asset value will allow complete recovery on these notes," the ratings release stated.

Moody's assigns Ba3 to Allied Waste 8.5% senior secureds due 2008

Moody's assigned a Ba3 rating to Allied Waste North America, Inc.'s $750 million of 8.5% senior secured notes due 2008. At the same time Moody's confirmed the existing ratings of Allied, its parent, Allied Waste Industries, Inc., and its subsidiary, Browning-Ferris Industries, Inc. The ratings outlook remains negative. Approximately $ 11.5 billion of long-term debt instruments are affected by the ratings action, according to Moody's.

"The ratings continue to reflect Allied's leading market position as the second largest integrated solid waste company in the United States; the company's strong management and its track record of profitable growth," Moody's stated.

"The negative outlook reflects the potential for continued diminution in credit protection measures due to the company's high sensitivity to changes in operating margins vis a vis its competitors due to its high leverage," according to Moody's.

The Ba3 rating on the new senior secured notes reflects the benefits of the upstream guarantee of most of the operating subsidiaries of Allied as well as the guarantee of its parent. The new notes rank equal in payment with the existing and future senior debt. The notes enjoy equal and ratable security interests in the stock of BFI's subsidiaries and assets of BFI and its subsidiaries to the extent these assets continue as collateral for the senior secured facilities. All of the senior secured public debt of Allied is effectively subordinated to the secured credit facility to the extent that the bank facility is secured by the assets of Allied. The notes are also structurally subordinated to the liabilities of the non-guarantor subsidiaries, which debt approximates $110 million.

The ratings actions affected include the following: Allied Waste Industries, Inc.'s B3 rated $1 billion issue of perpetual convertible preferred stock and Browning-Ferris Industries, Inc.'s Ba3 rated $360 million issue of 7.4% secured debentures due 2035; Ba3 rated $99.5 million issue of 9.25% secured debentures due 2021; Ba3 rated $161.1 million issue of 6.375% senior secured notes due 2008; Ba3 rated $156.7 million issue of 6.1% senior secured notes due 2003; Ba3 rated $69.4 million issue of 7.875% senior secured notes due 2005.

Fitch still sees liquidity problems for Enron, ratings remain on watch

Fitch said Wednesday that its ratings for Enron Corp. remain on watch, evolving, as liquidity concerns about the company persist even in light of the Dynegy merger. Fitch's BBB- senior unsecured debt, BB subordinated debt, B+ preferred stock and F3 commercial paper are on watch.

Since Nov. 9, following the announcement of the possible Dynegy merger transaction, several important negative developments have occurred, Fitch said. At that time it was expected that the significant cash infusion and positives associated with the merger would stabilize the company's liquidity situation. In fact there continues to be liquidity pressures. Most importantly, Fitch believes that there have been significant cash collateral calls from wholesale trading customers well in excess of previous expectations. Additional concerns include the surprise $690 million debt acceleration and other potential near-term debt maturities, which would require additional cash outlays. The company has less flexibility to deal with these continuing issues as well as possible off balance sheet debt accelerations, negotiations with banks including the extension beyond the recently negotiated mid-December 2001 maturity of the $690 million repayment and the major bank line refinancing needs in early 2002.

In addition, the present situation is pressuring some of the perceived fundamental values of the company, Fitch said. While it is unclear how much weaker the wholesale trading business profile is, it is likely that counterparties will continue to closely monitor and limit their exposure to Enron. In addition, the company's ability to favorably negotiate and realize inherent value of many planned asset sales is substantially weaker in the present crisis mode.

Dynegy has recommitted its support for pursuing the Enron merger, subject to completion of its confirmatory due diligence. However, in light of recent developments Dynegy's position regarding the merger must be considered less certain. The unanticipated deterioration, the surprise liquidity developments and the potential negative impact on the combined company's ratings from these worse dynamics at a minimum suggests a strong renegotiation possibility or a possible discontinuance under the MAC clause out.

More equity and cash may be needed to stabilize Enron's credit profile. It is probable the lower stock price reflects this reality as well as potential stockholder equity dilution. If Dynegy steps away entirely from the merger, Enron's credit situation seems untenable with a bankruptcy filing highly possible. Our present BBB- rating rests on the merger possibility and continued support of the lending banks, without which Fitch would consider lowering the rating to the B category to reflect Enron's already compromised credit profile. At this point Fitch is not overly concerned about additional increased liquidity pressures or merger outs from our rating actions or other rating agencies' potential actions as significant negotiation is occurring across all creditor fronts already.

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