S&P rates Mountain Gods notes B

Standard & Poor's assigned a B rating to Inn of the Mountain Gods Resort and Casino's proposed $185 million senior notes due 2010. The outlook is stable.

The ratings reflect the enterprise's narrow business focus operating a single gaming facility, construction risks associated with the planned expansion, weak pro forma credit measures, risks operating a resort facility once the expansion is complete and outstanding compact issues with the state, S&P said. These factors are somewhat offset by the current limited direct competitive situation in its surrounding market, and the potential for EBITDA growth post-construction.

The Mescalero Apache Tribe commenced gaming operations in 1992 with its Casino Apache, located approximately four miles from its original Inn of the Mountain Gods hotel (which has since been demolished), and 20 miles from its Ski Apache. With the ski operations being a relatively small contributor to consolidated cash flow, operating performance has been driven by Inn of the Mountain Gods' casino operations, Casino Apache. The success of this facility has been due, in large part, to its good competitive position with no other casino-style gaming facility within a 125-mile radius, and its good location two miles off Highway 70.

As a result, consolidated EBITDA over the past three fiscal years has exceeded $23 million. In addition, EBITDA margins have exceeded 35%, which is very good relative to peers and the industry, as a result of a low cost structure and favorable current compact agreement with the state of New Mexico.

In an effort to expand and modernize its existing casino and hotel operations and to capitalize on excess demand, Inn of the Mountain Gods has undertaken a two-phased expansion project, S&P noted. The first phase, the Travel Center casino, was completed in May 2003 at a cost of $16 million. The second phase will be the new Inn of the Mountain Gods Resort & Casino, estimated to cost $150-$166 million and located on the site of the old hotel. It is expected to resolve some of the capacity constraints currently experienced at the property.

EBITDA during the 12 months ended July 31, 2003, was $22 million primarily because of the steady operating performance at the Casino Apache, given that the Travel Center has only been open since May 2003. Based on current operating trends and pro forma for the proposed note offering, EBITDA coverage of interest expense is expected to be around 2x and total debt to EBITDA under 6x for the fiscal year ended April 2004, S&P said. The rating agency expects credit measures to gradually improve from pro forma levels because of steady EBITDA growth and stable debt levels.

S&P rates Mobile TeleSystems notes B+

Standard & Poor's assigned a B+ rating to Mobile Telesystems Finance SA's planned $400 million note issue and confirmed parent Mobile TeleSystems OJSC's corporate credit at B+. The outlook is stable.

S&P said the proposed note issue should improve MTS' debt maturity profile as part of the proceeds will be used for refinancing, including straight repayment of a $100 million loan from Credit Suisse First Boston International and a $100 million loan from ING Bank NV.

Although the ratings on MTS remain constrained by the financial risk driven by the company's aggressive investment policy, they are supported by the company's leading market position in Russia and solid operating performance, S&P said.

Another important rating factor is the relatively weaker credit standing of MTS' controlling shareholder, Russian diversified holding company AFK Sistema. S&P believes that MTS retains a certain degree of separation from Sistema, however, due to the 25.1% stake held in MTS by T-Mobile, a subsidiary of Deutsche Telekom AG and the dividend policy agreed by key MTS shareholders.

Moody's rates Mobile TeleSystem's notes Ba3

Moody's Investors Service assigned a provisional Ba3 rating to Mobile TeleSystem OSJC's proposed $400 million senior unsecured notes due 2010 to be issued through Mobile TeleSystem Finance SA and confirmed its other ratings including its senior implied at Ba3. The outlook is stable.

Moody's said the ratings continue to reflect MTS' strong market position, as a leading mobile operator in Russia; the company's high subscriber, revenue and operating cash flow growth rates; the continued strong growth prospects afforded by the rapidly growing Russian and Ukraine mobile markets, which are still characterized by relatively low overall mobile penetration levels; and the company's still modest levels of indebtedness relative to operating cash flow.

The ratings also reflect the risks associated with the company's continued aggressive and rapid expansion activities (which have continued to render the company a net borrower), including the need to seamlessly digest a series of acquisitions without disruption to the end customer; the highly competitive operating environments in which the company operates, both in Russia and Ukraine; a gradual increase in debt leverage and a degree of potential refinancing risk in 2004 (pro forma for the proposed bond financing, the company will have $298 million in short-term debt in addition to $300 million in long-term debt that matures in December 2004; exposure to the vagaries of Russia's economic, inflationary and currency exchange environment; and a lack of regulatory transparency in Russia and Ukraine, both in terms of license issuance/renewal and inter-connection into the fixed line network.

Moody's confirms Tanger

Moody's Investors Service confirmed Tanger Factory Outlet Centers, Inc.'s senior debt at Ba1 with a stable outlook.

Moody's said the action is in response to Tanger's announcement of its acquisition of Charter Oak Partners Factory Outlet portfolio in a joint venture with Blackstone Real Estate Advisors.

The transaction encompasses 9 outlets totaling 3.3 million square feet in 8 states. The total purchase price is $491 million, of which $187 million is in a CMBS financing to be assumed by the buyers.

Tanger is contributing one third of the equity to the acquisition and assuming all leasing, management and operational responsibilities.

Moody's said it believes that the Charter Oak Acquisition is a vital strategic step for Tanger to maintain a meaningful competitive position in the outlet sector given the rapid growth of the sector leader, Chelsea Property Group. Additionally, the transaction adds both geographic and asset diversification to Tanger's portfolio by expanding its footprint to five more states and decreasing its dependence on a single asset (i.e. Riverhead).

Moody's noted however that as a result of the acquisition Tanger's secured debt ratio will increase, while its unencumbered portfolio will decrease materially. Nevertheless, Moody's considers the purchase of Charter Oak assets a strong and timely re-assertion of Tanger's role as a leading player in the retail outlet segment.

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