Moody's rates Southern Calif. Edison credit facilities Ba2

Moody's Investors Service assigned a provisional Ba2 rating to the $1.5 billion of secured credit facilities being arranged by Southern California Edison Co.

Proceeds from the facility along with cash on hand will be used in part to repay creditors and generators approximately $5.5 billion of past-due amounts.

Moody's said its rating reflects SoCalEd's ability to repay all past-due obligations at closing and to generate sufficient excess cash flow over the next two years to repay the bridge facility, all procurement related debt, and other SoCalEd debt and preferred securities that mature in this timeframe.

The prospects for achieving this level of free cash flow were fortified by the California Public Utilities Commission's approval on Jan. 23 of the Procurement Related Obligations Account (PROACT) that codifies the Oct. 10, 2001 settlement of a federal lawsuit between CPUC and SoCalEd relating to the filed rate doctrine, Moody's said. In effect, the settlement enables SoCalEd to recover in cash from ratepayers all amounts that had previously been undercollected.

Moody's added that the settlement between SoCalEd and the CPUC represents "the first tangible step towards helping to fix the energy markets in California" but said a number of key market and regulatory issues remain unresolved.

The new credit facility will be secured by a first lien on the company's plant perfected through the pledge of first mortgage bonds provided to the lenders, Moody's said.

On closing of the credit facility Moody's said it will upgrade SoCalEd's outstanding securities, raising its first mortgage bonds to Ba2; its junior subordinated debt to B2; and its preferred stock to B3.

S&P upgrades Edison International, SoCalEd

Standard & Poor's upgraded Edison International and its Southern California Edison unit and removed them from CreditWatch with negative implications.

Ratings affected include: Edison International's corporate credit rating, raised to B- on CreditWatch developing from CC on CreditWatch with negative implications; Southern California Edison's multiple series of first mortgage bonds and first and refunding mortgage bonds, raised to BB from CC; its cumulative preferred stock, raised to B from C; its $100 million 8.375% QUIDS due 2044 and $200 million 6.375% notes due 2006, raised to B+ from C; its $300 million 6.65% notes due 2029, $250 million 7.625% notes due 2010, $1 billion variable rate notes due 2003 and $300 million floating rate notes due 2002, all raised to B+ from CC; EIX Trust I's $500 million 7.875% cumulative quarterly income preferred securities (QUIPS) and EIX Trust II's $325 million quarterly income preferred securities (QUIPS) series B, both raised to CCC from C.

S&P raises International Game to investment grade

Standard & Poor's upgraded International Game Technology's corporate credit and senior unsecured ratings to the investment-grade level of BBB- from BB+, including its $400 million 7.875% senior notes due 2004, $600 million 8.375% notes due 2009 and $250 million bank facility. It also upgraded Anchor Gaming's $250 million 9.875% senior subordinated notes due 2008 to BB+ from BB-. IGT recently acquired Anchor. The outlook is stable.

S&P said the upgrade is in response to IGT's "continued solid operating performance, modest debt leverage, and enhanced business profile following the completion of its acquisition of Anchor Gaming on Dec. 30, 2001."

The acquisition of Anchor provides IGT with 100% of the very successful Spin for Cash Wide Area Progressive Joint Venture with Anchor Gaming. Previously, IGT owned 50%.

S&P also noted IGT's leading position as a manufacturer and distributor of slot machines and proprietary gaming systems for casino operators and its experienced management team.

Compared to its competitors, IGT has greater financial resources, greater research and development capabilities, a more robust pipeline of new games, entrenched relationships with casino owners and a large installed base of machines, S&P added.

S&P changes Precision Partners watch to positive

Standard & Poor's changed its CreditWatch on Precision Partners Inc. to positive from negative and withdrew the rating on the company's $48 million bank facility made up of a $25 million revolver and a $23 million term loan, both due 2005 and both rated CCC+. Other ratings include Precision Partners' $100 million 12% senior subordinated notes due 2009, rated CC.

S&P said the change in CreditWatch is in response to Precision Partners' announcement it has obtained a new $75 million credit facility, increasing its near-term liquidity and financial flexibility $22 million of the revolving credit facility is currently undrawn.

However Precision Partners continues to be negatively affected by weak aerospace and auto markets, which have caused sales volumes at several of its subsidiaries to be below expected levels, S&P said.

It has also suffered from excess overhead and tooling problems at its Nationwide truck facility, the rating agency continued, adding that as of Sept. 30, 2001 credit protection measures were very weak, with total debt to EBITDA of about 6.0 times and interest coverage of about 1.5x.

Moody's confirms XTO notes, upgrades senior implied

Moody's Investors Service confirmed XTO Energy's $175 million of 8.75% notes due 2009 and $125 million of 9.25% notes due 2007 at Ba3 and upgrade its senior unsecured issuer rating to Ba2 from Ba3 and its senior implied rating to Ba1 from Ba2. The outlook is stable.

Moody's said the senior unsecured issuer rating indicates that if XTO issues senior unsecured notes they would have heavy effective subordination to its $800 million secured bank revolver. The revolver would be grandfathered.

To eliminate the notch, XTO must replace the secured revolver with an unsecured facility with no springing liens, Moody's said.

Moody's said it upgraded XTO's senior implied rating because of the cumulative impact of the company's 2000 adoption of a reduced leverage strategy, a sound 2002 production outlook, and a history of productively reinvesting capital at competitive full-cycle costs.

Moody's rates Collins & Aikman Floorcoverings new notes B2

Moody's Investors Service assigned a B2 rating to Collins & Aikman Floorcoverings, Inc.'s proposed issue of $175 million guaranteed senior subordinated notes due 2010 and confirmed the company's existing ratings including its $120.3 million senior secured and guaranteed bank facility due 2008 at Ba3. The outlook is stable.

Moody's noted Collins & Aikman Floorcoverings has "strong product niches in numerous purchasing segments of the specified carpet sector; a diversified customer base; and a strong equity sponsorship."

But it said it also has weakened leverage and interest protection measurements on a cash basis, lowered EBIT return on total assets of 12.7%, and acquisition risk.

Moody's also noted Colins & Aikman's Floorcoverings' small deterioration in gross margins over the past 4 years due to shifts in product mix, the impact of acquisitions in 1999 and the current recession.

Moody's downgrades KPNQwest

Moody's Investors Service downgraded KPNQwest NV multiple notches and said the outlook is negative. Ratings downgraded include KPNQwest's €340 million 7.125% eurobonds due 2009. €500 million 8.875% eurobonds due 2008 and $450 million 8.125% global bonds due 2009, all lowered to B3 from Ba1 and its senior implied rating to B1 from Ba1. Moody's also provisionally assigned a Ba3 rating to the company's proposed senior secured €500 million bank facility.

Moody's said its action is in response to the approval by the European Union of KPNQwest's acquisition of the Ebone and Central Europe businesses of Global TeleSystems, Inc.

Although further regulatory approval is needed, Moody's said its actions assume the acquisition will take place, most likely completing in early March 2002.

To finance the acquisition, KPNQwest is expected to use the new €500 million secured bank facility and issue a €210 million convertible bond.

Moody's said KPNQwest's existing unsecured bonds are lowered to two notches below the senior implied rating because they will be structurally subordinated at the holding company, behind the new bank facility, legacy operating leases and sizable trade creditors.

Moody's said KPNQwest has "a highly capable management team" which has had successes implementing its stand-alone business plan under very difficult market conditions.

However, the rating agency noted the risks associated with the integration process, which is designed to extract €600 million of expected synergies over four years, and the "very challenging" business plan, which depends on KPNQwest migrating its revenues from predominately wholesale to retail sales.

Moody's downgrades Dean Holding

Moody's Investors Service downgraded the notes of Dean Holding - formerly Dean Foods Corp. - to junk and confirmed most ratings of Dean Foods Co., formerly Suiza Foods Corp., affecting $4 billion of debt. The outlook is positive.

Ratings affected include: Dean Holding Co. (previously Dean Foods Corp.) $100 million 6.75% senior unsecured notes due 2005, $250 million 8.15% senior unsecured notes due 2007, $200 million 6.63% senior unsecured notes due 2009 and $150 million 6.9% senior unsecured notes due 2017, all lowered to B1 from Baa2; Dean Foods Co. (formerly Suiza Foods Corp.) $2.7 billion senior secured credit facility, maturing 2007 to 2008, confirmed at Ba2 and Dean Capital Trust (formerly Suiza Capital Trust II) $600 million trust convertible preferred securities due 2028 confirmed at B2; and Dean Foods Co. (formerly Suiza Foods) senior implied rating lowered to Ba3 from Ba2. Ratings on the old Dean Foods' credit facility and commercial paper were withdrawn.

Moody's said its actions follow the completion of Suiza's acquisition of Dean Foods Corp.

Moody's said its ratings on the merged company are limited by its financial leverage, a balance sheet with a high level of intangibles and the company's aggressive long-term growth strategy, which has been driven by acquisitions.

In addition, the fluid million k sector is mature, has very limited underlying growth and is highly competitive, constraining operating margins and top line growth to relatively low levels, Moody's said. There is also integration risk from the merger.

However the combined company has large scale and reach, being the largest fluid million k processor in the nation and benefiting from geographic, customer and supply diversity.

Moody's rates American Achievement proposed notes at B1

Moody's Investors Service assigned a B1 rating to American Achievement Corp.'s proposed $175 million senior unsecured note issue and a Ba3 rating to its proposed $40 million senior secured revolving credit facility. Moody's also upgraded the $41.4 million 11% senior subordinated notes issued by American Achievement's subsidiary Commemorative Brands, Inc. to Caa1 from Caa2. The outlook is stable.

Moody's said it upgraded the senior subordinated notes to reflect a reduction in the relative subordination of these notes, given the substantial decrease in secured debt offered by the proposed transaction, and the increased financial flexibility that will be provided by the refinancing of existing term loans that currently require quarterly amortization payments. However the rating agency said the notes remain deeply subordinated and have virtually no protective financial covenants.

American Achievement's ratings continue to reflect high financial leverage - total debt is around 4.5 times EBITDA and 5.5 times EBITA - thin interest coverage and relatively low retained cash flow as a percentage of debt, Moody's said.

American Achievement's "lack of financial flexibility is of particular concern, given the company's lack of business diversity and the risks present in its industry, including significant competitive pressures, a high degree of seasonality and low top-line growth," Moody's said.

Moody's upgrades Sovereign Bancorp

Moody's Investors Service upgraded Sovereign Bancorp and subsidiaries, including raising its senior debt to Ba2 from Ba3.

Moody's said the upgrade reflects its expectation that capital retention at Sovereign's operating thrift is expected to improve noticeably going forward, allowing the thrift to make larger dividends to its holding company, which currently is highly leveraged.

Capital retention improves because Sovereign has completed $333 million of payment obligations to FleetBoston which were related to its acquisition of FleetBoston branches, Moody's added.

"With these payments behind it, the financial flexibility of both the thrift and the holding company are expected to improve considerably," the rating agency commented.

Moody's also believes Sovereign will not negate this potential by executing another sizable acquisition financed with debt or hybrid securities.

Moody's downgrades YPF

Moody's Investors Service downgraded the foreign currency bond ratings of YPF SA and its Maxus Energy unit to B1 from Ba3 along with cutting Repsol YPF SA's senior unsecured debt to Baa2 from Baa1, Repsol YPF's preferred stock to Ba1 from Baa3 and YPF's structured export notes to Baa2 from Baa1. The outlook remains negative.

Moody's said its action on Repsol YPF reflects the company's business concentration in Argentina and the impact Argentine government measures may have on the company over the intermediate term. The rating agency also considered "the overall financial strength of the group under various stress scenarios in 2002."

Repsol YPF will likely keep a financial profile appropriate to a Baa2 senior unsecured debt rating, Moody's said but added that the negative outlook reflects the ongoing uncertainties of the Argentine economic and political situation.

Moody's lifts Pannon GSM to investment grade

Moody's Investors Service upgraded Pannon GSM Rt.'s senior unsecured foreign currency bonds to A2 from Ba3. The outlook is stable. Debt affected is Pannon Finance BV's €125 million senior unsecured guaranteed eurobonds, due 2004.

Moody's said the upgrade reflects the acquisition of a 100% interest in Pannon by Telenor Communication AS.

Pannon's rating is now higher than the A3 foreign currency country ceiling for Hungary due to the low likelihood of the Hungarian government imposing a debt moratorium and the possibility that Pannon would receive assistance from Telenor, Moody's said.

Moody's said its rating factors in "the strategic importance of Pannon to Telenor and therefore the high level of support that it expects Telenor to provide in developing Pannon's business, as well as the significant improvement to Pannon's financial flexibility as a result of it being part of a larger group with strong capitalization. "

S&P puts Romacorp on negative watch

Standard & Poor's put Romacorp Inc. and its parent Roma Restaurant Holdings Inc. on CreditWatch with negative implications. Ratings affected include Romacorp's $75 million 12% senior unsecured notes due 2006, rated B, and its $25 million senior secured revolving credit facility due 2003, rated B+.

S&P said its action reflects concerns about Romacorp's ability to amend its credit agreement before the end of the March 2002 quarter.

Romacorp announced it does not anticipate it will be in compliance with the amended terms of its credit agreement, which requires consolidated EBITDA of $15 million and an interest coverage ratio of 1.7 times for the 12 months to March 2002, S&P said. A previously amendment, which expires in the quarter ending March 2002, reduced the required consolidated EBITDA to $13 million from $15 million and the required interest coverage ratio to 1.5x from 1.7x.

For the 12 months to Dec. 23, 2001, EBITDA coverage of interest was only 1.5x, S&P said, noting Romacorp has suffered from weakness in markets such as Florida and Las Vegas sensitive to fluctuations in tourism following the Sept. 11 terrorist attacks.

S&P takes Hexcel off watch

Standard & Poor's removed Hexcel Corp. from CreditWatch with negative implications and confirmed the company's ratings. The outlook is negative.

Ratings affected include Hexcel's $100 million 7% convertible subordinated notes due 2003, $240 million 9.75% senior subordinated notes due 2009 and $100 million 9.75% senior subordinated notes due 2009, all confirmed at CCC+; and its $220 million senior credit facility, confirmed at B.

S&P downgrades Concordia

Standard & Poor's downgraded Concordia Bus AB, cutting its €100 million 11% subordinated notes due 2010 to B- from B.

S&P downgrades Globo Cabo

Standard & Poor's downgraded Globo Cabo SA including lowering its $185 million 12.625% notes due 2004 to B+ from BB- and putting them on CreditWatch with negative implications.

S&P downgrades Globopar

Standard & Poor's downgraded Globopar SA including lowering its €100 million 8.75% notes due 2002, $250 million 10.5% notes due 2006 and $500 million 10.625% notes due 2008 to B+ from BB- and putting them on CreditWatch with negative implications.

S&P cuts Metris outlook

Standard & Poor's lowered its outlook on Metris Cos., Inc. to negative from stable. The company's corporate credit rating is B+.

S&P downgrades EES Coke

Standard & Poor's downgraded EES Coke Battery Co.'s $75 million 9.382% senior secured notes series B due 2007 to CCC+ from B- and put them on CreditWatch with negative implications.

S&P downgrades Remington, still on watch

Standard & Poor's downgraded Remington Products Co. LLC and Remington Capital Corp. and kept them on CreditWatch with negative implications. Ratings lowered include Remington's $130 million 11% senior subordinated notes due 2006 and $50 million 11% senior subordinated notes due 2006, lowered to CCC from CCC+.

S&P said the downgrade reflects Remington's "reduced financial flexibility."

Financial results for 2001 are expected to be soft due to difficult industry conditions including the general weakness in the U.S. retail environment, intense competition and retailers' inventory contraction, S&P said. The rating agency anticipates 2002 will remain challenging and sees Remington's credit measures remaining "very weak."

S&P rates new Williams Scostman notes B-

Standard & Poor's assigned a B- rating to Williams Scotsman Inc.'s planned offering of $100 million senior unsecured notes due 2007.

S&P downgrades Lindsey Morden

Standard & Poor's downgraded Lindsey Morden Group, Inc. including lowering its C$125 million notes to BB- from BB. The outlook is negative.

S&P puts RCN on negative watch

Standard & Poor's put RCN Corp. on CreditWatch with negative implications. Ratings affected include RCN's $225 million 10% senior notes due 2007, $601 million 11.125% senior discount notes due 2007, $567 million 9.8% senior discount notes due 2008, $375 million 10.125% senior notes due 2010 and $256.755 million 11% senior discount notes due 2008, all rated B-, and its $1 billion credit facility due 2006 at B+.

S&P rates new Graphic Packaging notes at B+

Standard & Poor's assigned a B+ rating to Graphic Packaging Corp.'s planned offering of $250 million senior subordinated notes due 2012 and a BB rating to its $300 million revolving credit facility bank loan due 2007 and $150 million term loan B due 2009. The outlook is stable.

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