Moody's rates new Terex notes B2, cuts outlook to negative

Moody's Investors Service assigned a B2 rating to Terex Corp.'s new $200 million of 9.25% senior subordinated notes due 2011, confirmed the company's existing ratings and lowered the outlook to negative from stable. Ratings confirmed include: Terex's $300 million senior secured revolving credit facilities at Ba3, $122.9 million senior secured term loan B at Ba3, $289.1 million senior secured term loan C at Ba3, $300 million of 10.375% senior subordinated notes due 2011 at B2, $100 million of 8.875% senior subordinated notes due 2008 at B2 and $150 million of 8.875% senior subordinated notes due 2008 at B2.

Moody's said it cut the outlook because it expects further weakness in the overall economy will lead to continued weakness Terex's key end-markets. "The negative outlook also incorporates uncertainty as to the length of the economic recession," Moody's added, noting that Terex's recovery may lag the general economy because its products are capital-intensive.

Moody's affirms Buhrmann

Moody's Investors Service affirmed its ratings on Buhrmann NV affecting $2.1 billion of debt including its $1.75 billion senior secured credit facilities at Ba3 and its $350.0 million 12.25% senior subordinated notes due 2009 at B2. The outlook is stable.

Moody's said its confirmation follows Buhrmann's announcement it had renegotiated certain covenants of its senior secured credit facility including the debt leverage and interest coverage covenant ratios in order to ensure adequate financial flexibility over the next 24 months.

The rating agency noted Buhrmann has "continued to face pressure" in its US and European office products markets in the third and fourth quarters, primarily as a result of the weakening economic environment.

"While the company has successfully maintained top-line growth and market share to date in line with expectations, Buhrmann's operating profitability has been affected by the weaker trading environment, and by changes in the product mix towards lower-margin products," the rating agency said.

Moody's downgrades Loral Space

Moody's Investors Service downgraded Loral Space & Communications Ltd., including cutting the $492 million 6% series C convertible preferred stock and the $297 million 6% series D convertible preferred stock were to C from Ca and the $350 million 9.5% senior notes due January 2006 to Ca from B3.

The downgrade reflects Moody's concerns regarding the liquidity of Loral Space & Communications, a pure holding company. In order to service its debt and preferred stock obligations, Loral is dependent upon dividends from its subsidiaries, primarily Loral Satellite Inc. and Loral SpaceCom Corp. However, those two entities are currently encumbered with significant amounts of secured debt, Moody's noted. These two credit facilities total $1.1 billion and require $620 million of principal amortization in 2002 with final maturities of November 2002 and August 2003. Loral is currently reviewing these credit facilities with its lead banks.

Loral could extend its ability to service the 9.5% senior notes by deferring or eliminating the dividends on its two convertibles, which total $12 million per quarter. However, Loral is also subject to potential additional cash claims from PanAmSat and ChinaSat, as well as $19 million in contingent liabilities, some or all of which may be non-cash, in connection with Globalstar service provider partnerships, which would consume some of the benefits of any preferred dividend elimination. Notwithstanding the ability of Loral to conserve cash to fund to fund the coupon payments on the 9.5% senior notes, given the company's current financial condition and recent operating results, Moody's doubts the company will be able to attract the resources necessary to repay these notes in full at their maturity date of Jan. 15, 2006.

The ratings assume that Loral is successful in amending its two credit facilities with reasonable terms, Moody's said. Loral is also in the process of offering to exchange the two existing senior notes of another subsidiary, Loral Cyberstar, for a new $675 million 10% senior note due July 2006. This note will be guaranteed by Loral S&C, which has put additional strain on the senior implied rating of the company.

Moody's rates new Loral Cyberstar notes Caa1

Moody's Investors Service assigned a Caa1 rating to the $675 million of 10% senior notes due July 2006 being issued in an exchange by Loral Cyberstar, Inc. The existing issues are rated Ca. The outlook on the new notes is stable.

Moody's said its ratings reflect concern that "while leverage at Loral Cyberstar will be reduced due to the exchange offer, and the company will have sufficient liquidity to make interest payments on the new notes, Loral Cyberstar also must build a replacement for one of its three satellites in order to be able to refinance these new notes at their maturity."

Replacing that satellite, Telstar 11, will cost an estimated $250, Moody's said, adding: "The company estimates that it will be able to begin construction of the replacement satellite using internally generated funds, and fund the balance of its requirements through vendor financing or other means."

Moody's said it will review its ratings as prospects for fully financing the construction and launch become more certain.

Moody's assigns rates new Cott notes B2

Moody's Investors Service assigned a B2 rating to Cott Beverages Inc.'s proposed $275 million of senior subordinated notes due 2011.

Specifying that the ratings affect $450 million of debt securities, Moody's also confirmed the Ba3 rating on Cott's existing $100 million term loan and assigned a Ba3 rating to the proposed $75 million revolver which includes a $25 million add-on to the existing $50 million revolver. The senior implied rating and the unsecured issuer rating remain unchanged at Ba3 and B1, respectively. The outlook is stable.

According to the release, Cott's ratings of B1 on $160 million 9.375% senior unsecured notes due 2005, and B1 on $125 million 8.5% senior unsecured notes due 2007 are to withdrawn upon execution of the proposed tender offer.

"The ratings continue to reflect Cott's solid financial performance as evidenced by good margins, returns, and net operating cash flow," the Monday release stated.

The B2 assigned to the proposed subordinated notes reflects their contractual subordination to senior debt, the release stated, adding that the notes will be guaranteed on a senior subordinated basis by Cott Corporation and its restricted domestic subsidiaries. The proceeds from the notes, in conjunction with borrowings under the credit facility, will be used to refinance the 2005 and 2007 senior notes and to pay related fees.

S&P downgrades Royster-Clark

Standard & Poor's downgraded Royster-Clark Inc., including lowering its senior secured credit facility due 2004 to B+ from BB- and its $200 million of first mortgage bonds due 2009 to B from B+. The outlook is stable.

S&P said the downgrade reflects "the challenging operating environment for agricultural-inputs, which has resulted in weak operating performance and the related impact on Royster-Clark's financial measures."

Although the management team has taken steps to improve operating performance by closing underperforming retail locations and improving working capital management, S&P said it does not expect credit protection measures will improve to their previous levels over the near-term.

S&P said the ratings also reflect Royster-Clark's highly leveraged financial profile and its participation in a highly cyclical and seasonal, commodity-based industry, offset by a defendable market share in its operating region.

S&P rates new Cott notes B+, bank facility BB

Standard & Poor's assigned a B+ rating to Cott Corp.'s US$275 million unsecured notes due 2011 and BB to its $75 million secured revolving bank facility. S&P also confirmed the company's existing ratings, including its B+ senior unsecured debt. The outlook is stable.

S&P said the ratings reflect "Cott's strengthening operating results and lower operating costs, reflecting various cost-cutting initiatives undertaken in the past year. The ratings also reflect the company's leading global share of the retailer (private-label) brand of the carbonated soft drink market, a customer base consisting of first-rate food and mass merchant retailers, an integrated business structure, and improving cash flow and cost structures. These factors are offset by relatively high leverage, restricted financial flexibility, and dependence on a few key accounts."

S&P downgrades Jackson Products, still on negative watch

Standard & Poor's downgraded Jackson Products Inc. and kept the ratings on CreditWatch with negative implications where they were placed Sept. 26, 2001. Ratings affected include Jackson Products' $115 million of 9.5% subordinated notes due 2005, lowered to CC from CCC+ and its $105 million acquisition line due 2004 and its $30 mil revolving credit facility due 2004, both lowered to CCC from B.

S&P said the downgrade reflects the company's "weak financial performance, very constrained liquidity, and extremely limited financial flexibility."

It kept the ratings on CreditWatch because of concerns about "near-term liquidity, and the company's inability to make near-term debt amortization and interest payments."

The fourth amendment reduced, Jackson Products' revolver to $20 million on Dec. 15, 2001, from $24 million and is expected to decrease again to $19 million on Jan. 15, 2002, S&P said. As of Sept. 30, the company had less than $1 million in availability on its $24 million revolver.

In addition, it has a $2.9 million debt amortization payment due Dec. 31, 2001 and must make $8.4 million in debt amortization and interest payments in the next four months.

"It is highly likely that without a restructuring of the company's debt, equity infusion, or increase in the size of the revolving credit facility, the company will not be able to meet its debt obligations," S&P said.

S&P downgrades GSI Group

Standard & Poor's downgraded GSI Group Inc., including cuttings its subordinated debt to CCC from CCC+. The outlook is negative.

S&P said the downgrade reflects GSI's "strained liquidity position, which has resulted from the company's weak operating results and poor cash flow generation."

As of Sept. 28, GSI had about $40 million outstanding under its $60 million bank credit facility, although availability is further limited by a borrowing base, S&P said. Free operating cash flow, typically neutral to slightly positive for the first nine months of the year, was negative $3.8 million as of the end of the third quarter of 2001. In addition, GSI's $6.2 million acquisition of FFI Corporation in January 2001, combined with the costs to integrate the company, has reduced GSI's liquidity. Working capital liquidation should result in reduced bank borrowings and strengthened liquidity through the first quarter of 2002. However, S&P said borrowings will increase in the second and third quarters of 2002 to support working capital needs during the peak-selling season, and liquidity could become very constrained. The company is currently in compliance with its bank financial covenants, but future covenant requirements will be very restrictive.

S&P downgrades Hartmarx

Standard & Poor's downgraded Hartmarx Corp., including lowering its subordinated debt to C from B-. The ratings remain on CreditWatch with negative implications.

S&P said the downgrade is in response to an exchange offer for the company's subordinated notes maturing Jan. 15, 2002.

Standard & Poor's said it would consider the completion of the exchange to be tantamount to a default.

S&P downgrades Interface Inc.

Standard & Poor's downgraded Interface Inc. including lowering its senior unsecured debt to BB from BB+ and its subordinated debt rating to B+ from BB-. The outlook is negative.

S&P said it downgraded Interface because it "expects operating results and credit protection measures for fiscal 2001 and 2002 will be much weaker than previously anticipated."

"Revenue and margin pressures across all business segments, particularly the commercial interiors and office furniture markets, are expected to negatively impact operating results and related financial measures for the fourth quarter and full year 2001," S&P said.

S&P cuts NationsRent subordinated debt to D

Standard & Poor's downgraded NationsRent Inc.'s subordinated debt to D from C. Other ratings have already been lowered to D.

S&P said its action follows the company's announcement that it intends to reorganize under Chapter 11 of the U.S. Bankruptcy Code.

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