S&P rates International Game convertible BBB-

Standard & Poor's assigned a BBB- rating to International Game Technology's proposed $400 million 0% senior unsecured convertible notes due 2033.

At the same time, S&P affirmed the company's BBB- corporate credit rating.

The outlook is stable.

Pro forma for the new converts, total long-term debt outstanding will be about $1.38 billion.

The ratings reflect a leading position as a manufacturer and distributor of slot machines and proprietary gaming systems, favorable industry prospects and solid and improving credit measures.

Those factors are offset by a historically aggressive financial policy.

IGT has a market share of nearly 70% of the North American slot machine installed base and a comparable share of the wide area progressive systems and a number of competitive advantages, including greater financial resources and R&D capabilities.

Pro forma debt leverage adjusted for operating leases for the last 12 months ended Dec. 28, measured by total debt to EBITDA, was under 2x, S&P said.

Taking into account share repurchases, pro forma cash balances were more than $675 million at Dec. 28 and S&P expects the company to have full availability under its revolver. In addition, IGT generated $470 million in discretionary cash flow in fiscal 2002.

Debt maturities are modest in fiscal 2003, but increase to $400 million in fiscal 2004.

Given current cash balances, proceeds from the convertible and forecasted discretionary cash flow, no further access to the capital markets is anticipated.

Moody's ups Freeport McMoRan

Moody's Investors Service upgraded the senior unsecured debt ratings of Freeport McMoRan Copper & Gold to B2 from B3. The outlook is stable.

The upgrade reflects the strong production and operating fundamentals, low cost and longevity of reserves at Freeport's 90.6% owned subsidiary P.T. Freeport Indonesia. It also considers the dividend stream available to Freeport from PTFI but reflects the subordinated position of debtholders of the holding company to creditors of the operating company.

The rating also incorporates the improving capital structure as focus on debt reduction continues and improved stability within the Indonesian operating environment, but acknowledges still challenging conditions and risk of political and economic uncertainty in Indonesia, Moody's said.

The outlook reflects Moody's expectation that performance at PTFI will continue to be strong due to the copper and gold production levels anticipated for the next several years.

Application of dividends from PTFI to debt reduction will contribute to a continuation in the improvement of Freeport's leverage position.

S&P cuts Cable & Wireless to junk

Standard & Poor's downgraded Cable & Wireless plc to junk including cutting its $2 billion 1% exchangeable bonds due 2003 to B+ from BBB+ and Cable & Wireless International Finance BV's £200 million 8.625% bonds due 2019 to B+ from BBB+. The ratings were removed from CreditWatch with negative implications. The outlook is negative.

S&P said the downgrade follows the significant weakening in Cable & Wireless' liquidity due to recently disclosed additional obligations and up to £800 million ($1.295 billion) in additional cash restructuring costs.

The downgrade also reflects the continuing poor performance of the company's C&W Global division and the resultant significant negative free cash flow at Cable & Wireless, which further weakens the company's liquidity, S&P said.

Although C&W is expected to stagger its restructuring costs to delay the cash impact and will, as a result of restructuring, reduce its negative free cash flow, the company has negligible headroom to fund further unanticipated cash outflows assuming no further measures are taken to boost liquidity, S&P commented. It is critical, therefore, that Cable & Wireless improves its access to capital and reaches free cash flow breakeven in the next year.

S&P puts Village Roadshow on watch

Standard & Poor's put Village Roadshow Ltd. on CreditWatch with negative implications including its $48.8 million Prides due 2008 at BB-.

S&P said the watch placement reflects concern about Village Roadshow's aggressive financial structure in the context of its earnings profile.

The company's financial structure is derived from its active use of operating leases to finance long-term access to cinema sites; high debt levels, incorporating on- and off-balance-sheet debt; and material contingent liabilities, S&P said.

Nevertheless, Village has demonstrated a willingness to restore its financial profile by cutting dividend payments to ordinary shareholders in 2002, S&P added.

Moody's withdraws Elektrim ratings

Moody's Investors Service withdrew its ratings on Elektrim SA following the restructuring of its outstanding €440 million 3.75% convertible notes.

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