S&P rates new Sealed Air convert BBB

Standard & Poor's assigned BBB ratings to Sealed Air Corp.'s proposed new convertible senior notes as well as its proposed 10-year and 30-year straight senior notes but put them on negative watch with its other ratings.

The watch remains, pending completion of the company's asbestos settlements.

On Nov. 29, the company announced a preliminary agreement with the asbestos committees in W.R. Grace's bankruptcy, but a definitive settlement is taking considerably longer than expected and has created heightened concern

The claims stem from W.R. Grace's Cryovac packaging business, which Sealed Air purchased in 1998.

S&P also is concerned about reduced liquidity, as Sealed Air did not extend its $525 million revolving credit facility that matured on March 30.

Although the company plans to have in excess of $300 million in cash following the debt offerings and the redemption of its convertible preferred, S&P considers the lack of a committed multi-year revolver to be a credit risk that would place additional pressure on Sealed Air to achieve free cash flow targets.

Accordingly, Sealed Air is expected to establish a new credit facility shortly after the signing of the asbestos agreement.

Moody's rates new Sealed Air convert Baa3

Moody's assigned a Baa3 rating to Sealed Air Corp.'s proposed convertible and straight senior notes, and confirmed its other ratings, with a negative outlook.

The ratings reflect a view that the new offerings will be neutral to Sealed Air's credit risk.

Ratings also consider the company's strong market position and operating performance in the protective packaging industry, stable leverage and the expected finalization of an agreement to settle all current and future asbestos-related claims at terms that should not deteriorate debt metrics.

Uncertainty over sources of alternative liquidity offsets stable cash flows and is the basis for the negative outlook.

By accumulating cash from free cash flow, Moody's expects Sealed Air to meet the $512.5 million cash payment contemplated under the agreed asbestos settlement terms. However, the current absence of a revolving credit facility restrains financial flexibility.

Also, while Moody's understands that management intends to put in place such a facility in the near future, uncertainty remains on its terms. If security was granted to bank lenders, this would effectively subordinate existing senior unsecured debt.

Moody's considers that the company's litigation issue has a very high chance of being resolved. In November 2002, Sealed Air announced that it had reached a tentative agreement with asbestos-claims creditors groups in the WR Grace bankruptcy.

S&P cuts Elan to CCC

Standard & Poor's lowered Elan Corp. plc senior unsecured debt to CCC and subordinated debt to CC, and put the ratings on negative watch.

The downgrade and watch reflect the Ireland-based drug company's announcement that it is requesting with the Securities and Exchange Commission an extension to file its Form 20-F 2002 annual report by July 15.

The delay is related to the company's ongoing discussions with the SEC over appropriate accounting treatment for its various special purpose entities.

The delay in filing may cause the company to be in technical default of its debt covenants, raising the possibility that debtholders can demand immediate repayment.

Elan is already facing a possible put on $494 million in outstanding 0% convertible notes at the end of 2003.

As of March 31, the company had $984 million in on-hand cash and has received net proceeds of $315 million from the recently closed sale of its primary care business.

Elan would not be able to meet debt obligations if accelerated as a result of the delay in filing finacials with the SEC.

Moody's rates LNR senior debt at Ba3

Moody's assigned a Ba3 rating to the senior subordinated debt of LNR Property Corp., including its convertibles, based on a sound competitive position in commercial real estate lending, good earnings and continued efforts to diversify and strengthen its capital structure and financing sources.

Most of LNR's assets have limited liquidity. In recognition of this, the firm has been taking positive steps in recent years to lengthen debt maturities and unencumber assets. Moody's expects the firm to continue to strengthen its financing structure.

Leverage and fixed charge coverages are adequate for the ratings, but have little capacity for weakness. Moody's also views the firm's common stock buybacks as aggressive and would react negatively to further substantial buybacks.

The outlook remains stable.

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