Moody's rates new LabCorp Baa3

Moody's Investors Service assigned a Baa3 rating to the new $350 million senior unsecured note offering of Laboratory Corp. of America Holdings.

The rating reflects positive growth fundamentals, good free cash flow generation relative to anticipated debt levels plus the expectation that LabCorp will refrain from additional acquisitions and that it will accumulate cash for the September 2004 put on its convertible.

Offsetting these strengths are intense competition, integration risks associated with the Dynacare and Dianon acquisitions and the potential for greater reimbursement pressure from both Medicare and managed care clients, Moody's said.

Following the Dianon acquisition, LabCorp's capital structure will consist of $350 million of the new senior notes, some $250 million of bank debt and about $510 million of convertible notes. Liquidity will be supported by undrawn credit facilities, although Moody's noted the presence of a material adverse change clause at borrowing dates that could limit access.

The rating outlook is stable, assuming LabCorp will refrain from any sizeable acquisitions over the next 18-24 months.

LabCorp may begin repurchasing shares following its October 2002 announcement of a $150 million authorized repurchase program but the ratings and outlook assume it will accumulate cash for the $530 million put on its convertible in September 2004, which could be funded with cash or stock.

S&P rates Lamar bank facilities at BB-

Standard & Poor's assigned a BB- senior secured debt rating to Lamar Media Corp.'s planned $1.25 billion senior secured credit facilities.

S&P confirmed Lamar Media and parent Lamar Advertising Co. existing ratings, including the Lamar Advertising 5.25% convertible due 2006 at B.

The ratings are based on the consolidated credit quality and reflect significant debt levels with debt to EBITDA in the high-5x area, tempered by strong market positions and more stable local advertising revenues, S&P said.

Also, with very strong operating cash flow margins and manageable capital expenditures, Lamar generates healthy levels of free operating cash flow.

In October, Lamar redeemed with cash its $74 million of 9.25% subordinated notes due 2007. In December, its $255 million of 9.625% subordinated notes due 2006 was redeemed with the sale of $260 million of 7.25% subordinated notes due 2013.

Lamar currently has a heavy bank debt amortization schedule but the new credit facility would push out these required debt payments.

Covenants in the credit facility are expected to include restrictions on debt, liens, dividends, investments, acquisitions and mergers. Covenants also are expected to include interest coverage, fixed charges, senior debt and total debt ratio tests.

The facilities will be secured by a perfected first priority security interest in all of the capital stock and other ownership interests of Lamar Media's direct and indirect subsidiaries.

The outlook is stable, with the expectation that, given Lamar's acquisition growth strategy, the overall financial profile will not change meaningfully in the intermediate term.

Moody's rates Freeport notes B2

Moody's Investors Service assigned a B2 rating to Freeport-McMoRan Copper & Gold's $500 million senior unsecured note issue due 2010.

The company's available liquidity will be used to redeem the Series I Gold-Denominated Preferred stock issue in August 2003 and the $250 million senior notes, which are putable in November 2003.

The rating reflects strong production and operating fundamentals, low cost and longevity of reserves at the 90.6% owned subsidiary P.T. Freeport Indonesia.

The rating considers the dividend stream available to Freeport from Freeport Indonesia but also the subordinated position of debt holders at the Freeport holding company level to creditors at the operating company.

The rating also incorporates the improving capital structure at Freeport as focus on debt reduction continues, as evidenced by improving coverage ratios and reducing leverage ratios, Moody's said.

The outlook is stable, reflecting an expectation that performance at Freeport Indonesia will continue to be strong due to the copper and gold production levels anticipated for the next several years.

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

S&P rates Sempra notes A-

Standard & Poor's assigned an A- rating to the proposed $400 million unsecured bonds of Sempra Energy. The outlook is stable.

The borrowing will not result in additional debt and current ratings incorporate the expected construction of four gas-fired plants totaling 2,375 megawatts for about $1.4 billion.

The ratings reflect the substantially increased scope of Sempra's unregulated ventures, including energy trading, merchant generation and investments in Mexico and South America, S&P said.

Unregulated operations are core businesses of Sempra, and are expected to contribute an average of 50% to earnings by 2004.

Moody's confirms Parker Drilling

Moody's confirmed Parker Drilling's ratings, including the 5.5% convertible due 2004 at B3, based on relatively sound cash liquidity and the assumption that asset sales will adequately augment the redemption of the $125 million convertible.

The resolution of a fiscal dispute between client TengizChevroil and the government of Kazakhstan also was a factor.

The rating outlook is stable but may turn negative if Parker does not complete asset sales by third quarter 2003, drilling market conditions weaken or if rig relocation costs become onerous, among other things.

However, to retain the ratings, Parker will need to demonstrate that cash flow coverage of debt would be compatible with the ratings.

S&P moves SCOR convertibles to A-

Standard & Poor's said SCOR's €233.45 million callable convertible bonds due 2005 are now rated A- instead of BBB.

S&P said the action corrects the rating initially assigned on Aug. 19, 1999 as a result of S&P's reclassification of the debt as senior unsecured from subordinated.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.