Moody's rates Hovnanian senior notes Ba3, subordinated notes B2

Moody's Investors Service assigned a Ba3 rating to Hovnanian Enterprises, Inc.'s upcoming offering of $100 million senior unsecured notes due 2012 and a B2 rating to its upcoming $150 million senior subordinated notes due 2012. It also confirmed the company's existing ratings including its $150 million 10.5% senior unsecured notes due 2007 and $150 million 9.125% senior unsecured notes due 2009 at Ba3. The outlook is stable.

Moody's said the ratings reflect Hovnanian's 42-year history, its progress in reducing its investment properties portfolio and diversifying away from the Northeast and its integration so far of the Washington Homes acquisition made in 2001.

Moody's downgrades Madison River Telephone

Moody's Investors Service downgraded Madison River Telephone Co. including lowering Madison River Capital, LLC's $200 million senior notes due 2010 to Caa2 from Caa1. The ratings remain on review for possible further downgrade.

Moody's said it lowered Madison River because of the recently announced full-year 2001 results showed operating performance falling short of the rating agency's expectations and because of the company's weak liquidity profile.

The review for further downgrade will primarily focus on Madison River's liquidity position, Moody's said. Liquidity problems have been made worse in the short term by the company's conditional obligation to repurchase series B shares under an exercised put option for $35 million, to be paid no later than April 2002 or for $60 million after March 2004.

"We expect to conclude the review following resolution of the company's ongoing discussions with the Series B shareholders relating to a modification of the terms of the put option," Moody's said.

Fitch lowers Nextel outlook to negative

Moody's Investors Service lowered its outlook on Nextel Communications Inc. to negative from stable. Ratings affected include Nextel's senior unsecured notes at B+, its senior secured bank facility at BB and its preferred stock at B-.

Fitch said it lowered Nextel outlooks because it is concerned about whether Nextel will fully execute its strategic objectives in 2002/2003 and be able to accelerate its operational performance improvement to meet several challenges.

"While current financial and operating performance is encouraging, the company must make steady progress toward free cash flow positive by early 2004," Fitch said.

In particular, the rating agency noted debt service increases rapidly beginning in 2003.

Other challenges Nextel faces are reducing capital expenditures without affecting service quality, the competitive wireless pricing environment and quarterly EBITDA requirements associated with its bank convenants, Fitch said.

However the company does have adequate near-term liquidity, with $3.5 billion in cash at the end of 2001 and $1.5 billion remaining on its bank facility, a unique and differentiated offering to moderate pressure on ARPU and a high quality subscriber base, Fitch added.

Moody's downgrades Caraustar

Moody's Investors Service downgraded Caraustar Industries Inc. including lower its senior unsecured notes to Ba1 from Baa3 and its senior subordinated notes to Ba2 from Ba1.

Moody's said it lowered Caraustar because of the continued low industry-wide demand for the recycled paperboard, the company's key product, and the associated weakness in the company's cash generation and debt protection measurements.

"Although we believe that free cash flow has stabilized and is beginning a cyclical increase, longer term recovery in debt protection measurements is likely to be slower than originally anticipated," Moody's commented.

Operating margins have declined at Caraustar from 13% in 1998 to 4% in 2001, Moody's noted. Retained cash flow to total debt was only 9% in 2001, and EBIT interest coverage (excluding special charges) was only 0.6 times.

Moody's puts Foot Locker on upgrade review

Moody's Investors Service put Foot Locker, Inc. on review for possible upgrade affecting $380 million of debt. Among the ratings covered by the review are Foot Locker's senior unsecured notes and medium-term notes rated B1 and its $150 million convertible subordinated notes due 2008 rated B2.

Moody's said its review will look at the risks and benefits of Foot Locker's business strategy and financial policies.

Foot Locker is the largest athletic footwear chain in the U.S. and has a profitable global presence, the rating agency noted.

Moody's will also examine Foot Locker's ability to finance its store strategy from internally generated cash flow and withstand the inevitable shifts in consumer demand for its products.

"Foot Locker's current management team has focused on cash generation and carefully managed growth for the past two years, resulting in lower leverage and a significantly improved liquidity position," Moody's added. But it said it expects management will grow their franchise in the future.

Moody's cuts Doe Run

Moody's Investors Service downgraded The Doe Run Resources Corp. The outlook remains negative. Ratings affected include Doe Run's $100 million secured revolving credit facility, cut to Caa1 from B3, $50 million of 11.25% guaranteed senior secured notes due 2005, cut to Ca from Caa2, and $200 million of 11.25% guaranteed senior notes due 2005, and $55 million of guaranteed floating interest rate senior notes due 2003, both downgraded to C from Caa3.

Moody's said its action follows Doe Run's non-payment of $16 million of interest due March 15 on $305 million of senior notes. Doe Run plans to restructure its debt.

Moody's said the downgrades anticipate that the restructuring will result in significant losses on principal.

Moody's says outlook on CE Casecnan is positive

Moody's Investors Service confirmed the ratings of CE Casecnan Water and Energy Inc's $323 million senior secured notes at Ba2 and said the outlook is positive, concluding a review begun on Feb. 13, 2001.

Moody's said the positive outlook reflects the project's generation of cash flow after the commencement of commercial operations on Dec. 11, 2001.

Debt service coverage will be at least in line with a Ba2 rating, if not higher, based on historical hydrology, Moody's said.

The rating agency also expects there will continue to be a strong incentive for CE Casecnan's majority shareholder MidAmerican Energy Holdings Co. to support the project if there is a negative or unexpected arbitration development.

S&P rates new aaiPharma notes, loan

Standard & Poor's assigned ratings to aaiPharma Inc.'s planned offering of notes and new bank debt. The company's $175 million senior subordinated notes due 2010 were rated B- and its $75 million senior secured revolving credit facility bank loan due 2007 and $100 million term bank loan due 2007 were rated BB-. The outlook is stable.

S&P puts Manitowoc on negative watch

Standard & Poor's put Manitowoc Co. Inc. on CreditWatch with negative implications. Ratings affected include its $125 million revolver, $200 million term A loan due 2005 and $150 million term B loan due 2006 at BB and its €175 million senior notes due 2011 at B+.

S&P upgrades Hollywood Entertainment

Standard & Poor's upgraded Hollywood Entertainment Corp. Ratings affected include its $200 million 10.625% senior subordinated notes due 2004 and $50 million 10.625% senior subordinated notes due 2004, both raised to B- from CC. It assigned a BB- rating to its $150 million term loan due 2004 and $25 million revolving credit facility due 2004.

S&P rates new Hockey Co. notes B

Standard & Poor's assigned a B rating to The Hockey Co.'s upcoming offering of $125 million senior secured notes due 2009.

S&P cuts some Anchor Glass ratings

Standard & Poor's downgraded some Anchor Glass Container Corp. ratings and put the rest on CreditWatch with negative implications. The corporate credit rating was lowered to D from CC, the $50 million 9.875% senior notes due 2008 were lowered to D and the $150 million 11.25% first mortgage notes due 2005 and $100 million revolving credit facility due 2002 rated CC were put on CreditWatch with negative implications.

S&P takes PacifiCare off watch

Standard & Poor's removed on PacifiCare Health Systems Inc. from CreditWatch and confirmed its BB- counterparty credit rating. The outlook is negative.

S&P said its action is in response to PacifiCare's expected earnings improvements in 2002 and the company's continued work on refinancing or extending the maturity of its existing bank term loans, which are due on Jan. 2, 2003.

Explaining the negative outlook, S&P said: "If PacifiCare is unable to refinance or extend the maturity of the existing bank loans in the near term, Standard & Poor's will probably lower the ratings."

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