S&P puts Premcor on positive watch

Standard & Poor's put Premcor Refining Group Inc. and Premcor USA Inc. on CreditWatch with positive implications, changing it from the previous CreditWatch with developing implications.

Debt affected includes Premcor Refining's $150 million 9.5% senior notes due 2004, $100 million term loan, $100 million 8.375% notes due 2007, $100 million floating-rate senior notes due 2004, $150 million 8.625% senior notes due 2008, $75 million floating-rate senior notes due 2005, all rated BB-, its $175 million 8.875% senior subordinated notes due 2007 rated B, and its $500 million senior secured bank loan due 2003, rated BB.

Premcor USA debt affected includes its $175 million 10.875% notes due 2005 rated B and its $63 million 11.5% senior cumulative exchangeable preferred stock rated B-.

Moody's downgrades Remington

Moody's Investors Service downgraded Remington Products LLC, including its $180 million of senior subordinated notes, cut to Caa2 from B3. Moody's does not rate Remington's existing bank facilities. The outlook is negative.

Moody's said the downgrade completes a review begun in December 2001. At the time, Moody's said it was concerned about Remington's margin deterioration from operational and logistical issues, its volatility of earnings and high inventory exposure due to material seasonality and external competitive pressure and possible constraints to flexibility from high leverage in a tight economic environment.

Moody's said these challenges are manifest in the charges totaling $26.4 million taken by Remington to support its business and remedy problems in inventory management, product mix realignment and warehouse and handling systems corrections.

From 2000 to 2001, debt rose to $213 million from $203 million, cash fell to $4.1 million from $10.3 million and cash interest expense went to $24.2 million from $22.0 million, Moody's noted.

S&P downgrades Consolidated Container

Standard & Poor's downgraded Consolidated Container Company LLC and put it on CreditWatch with negative implications. Previously the outlook was negative. Ratings affected include Consolidated Container's $185 million 10.125% senior subordinated notes due 2009, cut to CCC from B-, and its $90 million revolving credit facility due 2005, $150 million term A loan due 2005 and $235 million term B loan due 2007, all cut to B- from B+.

S&P said its action reflects continued weakness in Consolidated's financial performance and constrained financial flexibility.

The rating agency said it has heightened near-term concerns that Consolidated Container will suffer a deterioration in liquidity due to possible violation of financial covenants in its recently amended revolving credit facility.

Consolidated Container is required to achieve minimum EBITDA of $35 million for the period January through May of 2002, which may not be achievable without a significant improvement to operating results, S&P said.

In addition, other financial covenants tighten in the second half of 2002, and the company faces a sizable debt amortization schedule, the rating agency added.

S&P upgrades Home Interiors

Standard & Poor's upgraded Home Interiors & Gifts Inc. and maintained its stable outlook on the company. Ratings affected include Home Interiors' $149 million 10.125% senior subordinated notes due 2008, raised to CCC+ from CCC, and its $30 million revolving credit facility due 2004, $55 million term loan A due 2004 and $107 million term loan B due 2008, all raised to B from B-.

S&P said its action reflects Home Interiors' enhanced financial flexibility, the result of improved profitability and cash flow generation achieved through the retention of experienced sales representatives, a better merchandise assortment and strong order fulfillment rates.

Nonetheless, Home Interiors has a high level of business risk associated with its direct sales business model and its aggressive debt leverage, S&P said.

During the important Christmas season, sales rose 10.1% in the fourth quarter and EBITDA margin expanded to 19.0% from 11.0% in the fourth quarter of 2000, S&P said, attributing the improvement to the retention of experienced displayers and improved manufacturing and logistics.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.