S&P rates Apria convertible BB+

Standard & Poor's assigned a BB+ preliminary rating to the $250 million convertible senior notes of Apria Healthcare Group Inc. and confirmed it BBB- corporate credit rating. The ratings outlook is stable.

The ratings on reflect the company's leading position in providing specialized home health care services and equipment, as well as disciplined cost management practices. These are partly offset by the exposure of its highly focused business to third-party reimbursement policies and cost pressures.

In addition to healthy free operating cash flow, at June 30 Apria had approximately $24.4 million of cash and short-term investments and nearly full availability of its $100 million senior secured bank credit facility maturing in July 2006. Liquidity should adequately meet near-term needs, S&P said.

The outlook reflects expectations that acquisitions and past restructuring efforts will continue to pay off in a more focused business with leaner operating costs, offsetting reimbursement and labor pressures.

Modest debt reduction in 2002 and a one-year maturity extension to 2008 of its $175 million senior secured term loan improved financial flexibility, S&P added.

Moody's affirms UnumProvident ratings

Moody's Investors Service confirmed the ratings of UnumProvident Corp. including its senior debt at Baa3 following the announcement that its U.K. subsidiary, Unum Ltd., plans to purchase U.K. assets of the Swiss Life Group.

The outlook remains negative.

S&P ups Northrop Grumman

Standard & Poor's raised the ratings of Northrop Grumman Corp. including its senior unsecured debt to BBB from BBB- to reflect improving prospects for earnings and cash flow generation in the next few years and well-positioned operating capabilities in an environment of increased defense spending. The outlook is stable.

Outstanding debt is about $6.5 billion.

The all-equity financed purchase of TRW has improved Northrop Grumman's capital structure, with debt to capital in the 30%-35% range, aided by about a $3 billion debt reduction following the sale of TRW's automotive business. Debt to EBITDA is about 2.5x, S&P said.

When sizable unfunded postretirement obligations are included in debt, key credit protection measures weaken noticeably, but a material portion of those is recoverable under defense contracts.

At June 30, Northrop had about $270 million of cash and equivalents plus a $2.5 billion revolving credit facility maturing in 2006, under which there are almost no borrowings.

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