Moody's puts Vishay on review

Moody's Investors Service placed Vishay Intertechnology Inc.'s ratings under review for possible downgrade, including the 0% convertibles due 2021 at Ba1 and 5.75% convertibles due 2006 issued by General Semiconductor Inc. at Ba3.

The review was prompted by continuing weakness in Vishay's discrete semiconductor markets and the implications for higher debt leverage accruing from its recently announced acquisition of BCcomponents Holdings BV.

The review will take into account Vishay's current outlook for 2003, recognizing that wireless telecom has recently shown some improvement, but also noting that IT capital spending continues to be flat and investment in telecom infrastructure is expected to decline further from 2001 and 2002 spending levels.

Excluding acquisitions, Vishay's revenues through the first nine months of 2002 declined 20% from the 2001 period while EBIT of $73 million, adjusting for restructuring charges, was down 39%.

The review also will focus on the increase in debt leverage from the BC acquisition, Moody's said.

Vishay ended fiscal third quarter with debt of only $489 million, or 17% of its Sept. 30 capitalization. But on closing the BC deal, the company drew some $150 million from its credit facility and issued $105 million of senior notes in exchange for an equal amount of BC mezzanine debt.

S&P affirms FEI ratings

Standard & Poor's affirmed the B+ corporate credit and B- subordinated debt ratings of FEI Co., following news its merger agreement with Veeco Instruments Inc. (not rated) had been terminated. The outlook is stable.

FEI's rating reflects high volatility and technology risk in semiconductors, its small operating scale and reliance on a narrow technology and product spectrum.

These factors are offset by adequate profitability, cash flow generation and balance sheet liquidity, S&P said.

Despite weakened profitability in recent quarters, FEI maintains credit protection metrics and balance sheet liquidity levels that are adequate for the rating level.

Concurrent with declines in profitability, total debt-to-EBITDA increased to 3.2x at Sept. 29 from 2.5x at March 30 and that may increase further in coming quarters, S&P said.

FEI, however, had cash and investments of $262 million at Sept.29, which exceeded funded debt by $86 million. Furthermore, announced cost-cutting actions should help to offset lower revenue levels and help preserve profitability in 2003.

S&P rates Penn Treaty American convertibles CC

Standard & Poor's assigned a CC rating to Penn Treaty American Corp.'s $45 million 6.25% convertible subordinated notes due Oct. 15, 2008.

The notes are part of a rights offering to holders of the company's common stock, its existing convertible subordinated notes due 2008 and its existing convertible subordinated notes due 2003.

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