Moody's puts Mikohn on review

Moody's Investors Service put Mikohn Gaming Corp.'s $105 million senior secured notes at B3 on review for possible downgrade. Modoy's also lowered Mikohn's senior implied rating to B3 from B2 and senior unsecured long-term issuer rating to Caa2 from B3 and kept them on review for possible further downgrade.

Moody's said the action is in response to further declines in Mikohn's financial performance and increasing concern regarding near-term liquidity.

At this point, Mikohn's financial profile is weaker than it was when Moody's initially assigned the company a B2 senior implied rating in August 2001, the rating agency said.

Debt/EBITDA is currently near 7.0 times, almost twice as large as the original pro forma estimate of 3.7x, Moody's noted.

Although the company may have enough cash on hand to make its next interest payment, if results do not improve materially in the near-term, leverage will increase, liquidity will deteriorate and the company's ability to meet debt service obligations will be impaired, Moody's added.

S&P raises Venture Holdings

Standard & Poor's raised Venture Holdings Co. LLC's corporate credit rating to CCC from SD and its $205 million 9.5% senior notes due 2005 to CCC- from D and placed the ratings on CreditWatch with negative implications.

S&P said the action follows Venture's payment of the annual coupon that was due on the bonds on July 1.

Restrictive agreements with its bank group prevented the company from making the coupon payment on its due date. However, the indentures governing the bonds provided for 30-day grace periods, and Venture made the required payment within that time frame, S&P said.

The CreditWatch listing reflects the risks that Venture will be unable to access the cash flows of its European subsidiary, Peguform GmbH, to service its debt obligations, S&P added.

Venture, a Fraser, Mich.-based manufacturer of automotive components, continues to contest the May 28, 2002, insolvency petition filed by directors of Peguform. Peguform makes up the bulk of Venture's European operations, which generated about 70% of the company's sales during 2001, S&P noted.

A temporary administrator has been appointed to determine whether there is good reason to open insolvency proceedings, and has 90 days in which to make his determination. Venture's North American operations have struggled during the past few years due to reduced automotive production and pricing pressures, while the European operations performed adequately during this period, S&P said.

S&P raises LDM

Standard & Poor's upgraded LDM Technologies, Inc. including lifting its $110 million 10.75% senior notes due 2007 to CCC from C and removed the ratings from CreditWatch with negative implications.

S&P said the action follows LDM's termination of its exchange offer for its 10.75% notes. The company had offered to exchange $850 principal amount of new 11.75% senior notes due 2007 and $10 cash for each $1,000 principal amount of the existing notes.

If completed, the exchange offer would have represented a deep discount to the face value of the existing notes, which S&P said would have been tantamount to a default.

The ratings on LDM reflect its decent niche market position, offset by an aggressive financial profile and limited financial flexibility which makes the company vulnerable to intense industry pressures, S&P said.

The company has doubled in size since 1995, primarily through a series of acquisitions. Although the acquisitions greatly expanded LDM's product offerings, they also left the company highly leveraged. Debt to EBITDA is currently estimated to be about 5.5 times, S&P said.

S&P keeps Home Products outlook at negative

Standard & Poor's said Home Products International Inc.'s outlook remains negative and there is no impact on the ratings or outlook from its second quarter earnings announcement. S&P rates Home Products' corporate credit at B+.

Home Products continues to make strong progress in building sales at its core customers, and has improved its credit measures in recent periods following the application of funds from asset sales to reduce debt, S&P said.

However the rating agency said it remains concerned about the company's exposure to Kmart Corp., currently operating under bankruptcy protection. Kmart represents about 20% of Home Products' sales, and has reported negative same-store sales growth during the spring and summer. A loss of or reduction in Kmart business could negatively impact Home Products' ability to sustain the recent improvement in credit measures.

S&P rates MedQuest notes B-, loan BB-

Standard & Poor's assigned a B- rating to MedQuest Inc.'s proposed $180 million senior subordinated notes due 2012 and a BB- rating to its planned $80 million bank loan. The outlook is stable.

S&P said the rating reflect MedQuest's single-business-line concentration, ambitious growth plans and very highly leveraged capital structure. Disciplined operating strategies, top-tier standing in an otherwise highly disaggregated market, and the high-margin, rapidly growing nature of its specialty medical field partly offset these vulnerabilities.

MedQuest is moderately vulnerable to changes in third-party reimbursement rates (government payors comprise 24% of revenues), S&P said. This, coupled with the high-fixed-cost nature of its business, heightens the importance of a lean cost structure and high capacity utilization.

On the other hand, the company should benefit from demand growth fueled by wider acceptance of imaging as a cost-reducing diagnostic tool, expanded medical applications, favorable demographic trends, and a relatively stable technology environment, S&P added. MedQuest also is well positioned to gain market share from hospitals, a growing trend.

The proposed debt issues, part of a larger recapitalization that introduces a prominent financial sponsor, represents a more aggressive financial policy at the same time the company is accelerating growth, S&P said.

MedQuest's very highly leveraged capital structure (pro forma 4.3 times lease-adjusted debt to EBITDA and negative net worth at year-end 2002) limits insulation against adverse operating results, S&P said. For the next several years, MedQuest also must manage its obligations while a layer of capital assets is in ramp-up mode.

S&P cuts Ericsson to junk

Standard & Poor's downgraded Telefonaktiebolaget LM Ericsson to junk and kept it on CreditWatch with negative implications.

Ratings lowered include Ericsson's notes and bank loan, cut to BB+ from BBB-.

S&P rates Emmis Operating's loan B+

Standard & Poor's rated Emmis Operating Co.'s $500 million senior secured term loan B due 2009 at B+. Emmis Communications Corp.'s B+ corporate credit rating, B- senior unsecured debt rating and CCC+ preferred stock rating were affirmed. Emmis Operating's B+ corporate credit rating, B+ senior secured debt rating and B- subordinated debt rating were also affirmed.

Proceeds from the new loan were used to repay debt under the previous term loan B. The facility has a lower interest rate and less restrictive covenants in later periods, in exchange for tighter near term covenants. Security is substantially all assets.

The ratings continue to reflect strength from Emmis' large-market radio operations, good discretionary cash flow generating potential of the business, a measure of cash flow diversity provided by middle-market TV stations, and station asset values, particularly in larger markets, S&P said. Offsetting factors include high financial risk from debt-financed acquisitions, the soft, competitive advertising environment, and the presence of much larger operators in key markets.

S&P cuts Mikohn

Standard & Poor's downgraded Mikohn Gaming Corp. including lowering its $105 million 11.875% senior notes due 2008 to B- from B. S&P also changed the CreditWatch implications to negative from developing.

S&P said the action is in response to Mikohn's announcement that operating performance during the quarter ended June 30, 2002, was well below expectations, which resulted in a violation of bank covenants and a significant decline in credit measures.

In addition, S&P said it is concerned that if operating performance during the next few quarters does not materially improve the company's liquidity position could further deteriorate.

The weak performance was driven by the delayed launch of Clue, the removal of participation slots machines and table games by various operators, and increased costs, S&P noted.

While current liquidity seems adequate, with approximately $13 million in cash on hand and modest capital spending requirements, continued weak operating performance in the near term will use this excess cash, S&P said. In addition, the company cannot currently draw on its bank revolving credit facility due to covenant violations.

S&P says Noveon unchanged

Standard & Poor's said Noveon Inc.'s ratings are unchanged at BB- with a stable outlook on the announcement it has filed with the Securities and Exchange Commission for an initial public offering.

Noveon, formerly PMD Group, estimates the IPO at $345 million but proceeds to the company as opposed to the amount that will be raised through a secondary offering by existing shareholders have not been determined.

Noveon will likely use its proceeds for debt reduction, at the onset. As a result, the company's credit protection measures will improve from currently weak levels and approach the levels expected at the current ratings, S&P said. Nevertheless, the company will remain aggressively capitalized, and the ratings recognize that smaller, debt-financed bolt-on acquisitions are possible.

S&P confirms Metaldyne

Standard & Poor's confirmed Metaldyne Corp.'s ratings and removed them from CreditWatch with positive implications. Ratings confirmed include Metaldyne's $345 million 4.5% convertible subordinated debentures due 2003 at B, $250 million revolving credit facility due 2007 and $400 million term D bank loan due 2009 at BB- and $250 million 11% senior subordinated notes due 2012 at B. The outlook is stable.

S&P said the confirmation follows the completion of the sale of a 66% stake in Metaldyne's formerly wholly-owned subsidiary TriMas Corp. for $840 million in cash and debt reductions. Proceeds were used to reduce debt, which improved Metaldyne's previously stretched financial profile.

Total debt to EBITDA declined to about 4.3 times from 5.3x and pro forma EBITDA interest coverage improved to 2.8x from 2.2x, S&P said.

Although Metaldyne's credit statistics have improved, its debt burden remains heavy, S&P added. The company intends to pursue strategic acquisitions and joint ventures which will likely result in continued heavy debt use.

Fitch cuts Portland General

Fitch Ratings lowered Portland General Electric Co. including cutting its senior secured debt to BB+ from BBB, senior unsecured debt to BB- from BBB- and preferred stock to B from BB. All ratings remain on Rating Watch Negative.

Fitch said it lowered Portland General because of the company's reduced financial flexibility resulting from its status as a subsidiary of an insolvent parent, Enron, and a difficult capital market environment.

Fitch said the continuing uncertainty associated with the company's lack of financial flexibility and potential liquidity problems is not consistent with an investment-grade rating.

Fitch lowers Eletropaulo

Fitch Ratings downgraded Eletropaulo Metropolitana Eletricidade de Sao Paulo SA, cutting its foreign currency ratings to B- from B+ and its local currency ratings to B- from BB+. It also put the ratings on Rating Watch Negative.

Fitch said it lowered Eletropaulo because of the impending unmitigated debt maturities, delay in receiving BNDES cash, a continued slide in the Brazilian real, lack of refinancing alternatives in Brazil and overall poor credit market conditions facing Brazilian issuers.

To address upcoming maturities at Eletropaulo and its holding companies, AES ELPA and AES Transgas, the company has retained a financial advisor to help design a financial structure at both the operating and holding company levels with the objective of lowering near term liquidity needs and extending upcoming maturities, Fitch said.

Near-term refinancing options available to the company are limited to rolling over existing local and international bank transactions and commercial paper as AES management recently repeated their intention to not invest additional funds into Brazil, Fitch said.

Fitch revises Williams watch to evolving

Fitch Ratings revised Williams Cos., Inc.'s Rating Watch to evolving from negative. Ratings affected include Williams' senior unsecured notes, debentures and Feline PACS at B-, WCG Note Trust's senior notes at B- and the senior unsecured notes and debentures of Northwest Pipeline Corp., Texas Gas Transmission Corp. and Transcontinental Gas Pipe Line Corp. at BB-.

Fitch said the watch change follows Williams' announcement that it has completed a series of transactions which have significantly bolstered its near-term liquidity position.

Specifically, Williams obtained cash and/or available credit totaling $3.4 billion through $2 billion of secured credit facilities and net cash proceeds of $1.4 billion from delivered from asset sales.

In addition, Williams announced it has reached an agreement to sell the Cove Point LNG facility in a $217 million cash transaction which could close within 45 days. Moreover, the recent plan of re-organization filed by Williams Communications Group could provide Williams with additional cash proceeds of approximately $225 million later this year.

The transactions announced today are clearly positive and mitigate the near-term financial hurdles faced by Williams including its ability to meet upcoming debt maturities and ongoing cash collateral calls from energy trading activities, Fitch said.

However, the ongoing business, credit, and cash flow profile of Williams continues to evolve, Fitch added.

In particular, the announced divestitures, which include key energy assets such as NGL pipelines and E&P properties, have historically been solid cash flow generators for Williams. In addition, the pledged collateral for the new secured credit facilities, which includes substantially all of the oil and gas reserves of Barrett Resources, structurally subordinates Williams' outstanding senior unsecured debt obligations.

S&P raises Bradley Operating

Standard & Poor's upgraded Bradley Operating LP to investment grade.

Ratings raised include Bradley's $100 million 7% senior unsecured notes due 2004 and $100 million 7.2 % senior unsecured notes due 2008, both lifted to BBB- from BB+.

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