S&P rates Teekay convert BB-

Standard & Poor's assigned a BB- rating to Teekay Shipping Corp.'s new $125 million mandatory convertible. The outlook is stable.

"Standard & Poor's considers mismatched mandatory convertibles, such as these equity units, as a package of two distinct securities - medium-term notes, which are viewed as debt, and a forward contract for the issuance of common stock," said S&P credit analyst Philip Baggaley.

The $125 million proceeds will be used to repay existing revolver debt.

Teekay Shipping also announced preliminary 2002 results, with revenues of $544 million and net income of $53 million, compared with 2001 results of $790 million in revenues and $337 million in net income, S&P said.

As of Sept. 30, the company had some $1.0 billion of debt with lease-adjusted debt to capital of 42%. The subsequent $800 million acquisition of Statoil ASA's shipping subsidiary, Navion ASA, resulted in an increase in lease-adjusted debt to capital to about 56%.

S&P rates Omnicare shelf

Standard & Poor's assigned preliminary BBB- senior unsecured/BB+ subordinated debt ratings to the $850 million universal shelf registration of Omnicare Inc.

The ratings have been placed on negative watch, as are Omnicare's other ratings.

Permanent use of significant debt to finance the $460 million acquisition of NCS Healthcare Inc. may weaken Omnicare's funds from operations to lease-adjusted debt to below 20%.

This level is considered weak for an investment-grade company. Furthermore, there is a risk that Omnicare may not realize the benefits from the acquisition to the extent anticipated by management.

S&P ups Verizon outlook

Standard & Poor's confirmed its ratings on Verizon Communications Inc. (senior unsecured at A+) but revised its outlook to stable from negative.

The revision reflects debt reduction efforts over the past year and achieving gross debt to reported EBITDA below 2x sooner than S&P anticipated. Verizon reduced debt by more than $10 billion in 2002 via asset sales and free cash flow.

Verizon's rating assumes minimal consolidated revenue growth in 2003, in addition to a similar 3.7% decline in access lines experienced in 2002. Debt leverage is anticipated to remain below 2x, S&P said.

Furthermore, the rating does not incorporate Vodafone's option beginning July 2003 to put its 45% ownership back to Verizon Wireless.

S&P cuts Village Roadshow

Standard & Poor's downgraded Village Roadshow Ltd. including cutting its $48.8 million Prides due 2008 to B+ from BB- and removed it from CreditWatch with negative implications. The outlook is stable.

S&P said the downgrade reflects concerns about the group's aggressive financial structure, its increasing exposure to higher risk film production, and the increasingly competitive Australian radio broadcasting market.

Positives include the solid position of the company's Australian/New Zealand cinema network, which is currently benefiting from a high point in the film creative cycle, and the solid market position of its radio business.

Village's aggressive financial structure is derived from its active use of operating leases to finance long-term access to cinema sites; high debt levels, incorporating on- and off-balance-sheet debt; and material contingent liabilities, S&P said. Despite rationalizing its cinema network over the past three years, Village had operating lease commitments of A$1.6 billion at June 30, 2002. Although Village's businesses are benefiting from a strong supply of quality film product, the company's credit protection measures, incorporating operating lease adjustments, are weak for a BB+ rating, and are not expected to materially improve over the next three years.

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