S&P cuts American Cellular

Standard & Poor's downgraded American Cellular Corp. including cutting its senior subordinated notes to D from C. The bank debt was maintained at CC and removed from CreditWatch negative.

S&P said the actions follow the company's announcement of its proposed restructuring, which would involve a tender offer of less than full value for the company's approximately $700 million of 9.5% senior subordinated notes due 2009. The deal also proposes a prepackaged bankruptcy plan if the tender offer is not successful.

S&P said it considers the debt exchange as tantamount to a default on the original debt issue terms.

The CC bank loan rating on the company has been affirmed and is also removed from CreditWatch. The outlook on the bank loan rating is negative. As part of the restructuring, the company intends to issue $900 million of new senior unsecured notes to pay down its bank debt, which represents about $900 million of the total $1.6 billion debt outstanding. The rating on the bank loan will be withdrawn upon payment from the proceeds of the new note issue.

Moody's rates Haights Cross notes Caa1, Caa2

Moody's Investors Service assigned a Caa1 rating to Haights Cross Operating Co.'s planned $260 million senior unsecured notes due 2011, a B2 rating to its planned $30 million senior secured credit facilities due 2008 and a Caa2 rating to parent Haights Cross Communications, Inc.'s planned $80 million proceeds senior discount notes due 2013. Moody's confirmed Haights Cross Operating's existing $144 million senior secured credit facility at B2. The outlook is stable.

Moody's said the ratings reflect Haights Cross' high leverage, cash flow restraint caused by soft top line growth and a reliance upon the proposed refinancing in order to meet its maturing obligations in 2005, according to Moody's estimates.

The ratings are supported by the publisher's diversified business base and recurring sales profile (especially of its Recorded Books division) that have helped to partially buffer Haights Cross from the full impact of the recent sales slowdown experienced by the educational publishing sector.

At the end of March 2003, Haights Cross recorded debt and preferred securities of $332 million, representing a fully levered profile of approximately 10 times GAAP EBITDA less cash pre-publication expenses.

Following the proposed financings, Moody's expects that leverage will increase nominally by late 2003, before commencing a gradual decline.

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