Moody's downgrades Adelphia Business Solutions

Moody's Investors Service downgraded Adelphia Business Solutions, Inc., affecting $1.2 billion of debt securities. Among the reductions, Moody's cut Adelphia Business Solutions' 12¼% senior secured notes due 2004 and its 13% senior discount notes due 2003 to Ca from Caa2 and its 12 7/8% senior redeemable preferred stock due 2007 to Cc from Ca.

Moody's said the downgrade follows Adelphia Communications, Inc.'s announcement that its directors have authorized the distribution of Adelphia Communications' 79% equity interest in Adelphia Business Solutions to its shareholders.

Moody's commented that without additional unidentified funding it does not expect Adelphia Business Solutions "will be able to sustain its current business plan in the short term."

At September 30, 2001, the company had "pro-forma unrestricted liquidity of approximately $186 million comprising unrestricted cash of $80 million (including the October 1, 2001 cash proceeds received in connection with the sale of certain network assets to ADLAC), $6 million available under the ADLAC secured credit facility, and $100 million of additional credit support committed by ADLAC in connection with the spin-off. This liquidity is available to fund cash needs estimated by the company at approximately $395 million through September 30, 2002, of which approximately $85 million will be required by December 31, 2001," Moody's said. It noted that Adelphia Business Solutions does not expect to obtain an additional $300-$500 million credit facility it had been negotiating with a group of banks.

Moody's believes it will be difficult for the company to raise additional funding on a stand-alone basis given investor views of the CLEC sector.

S&P downgrades Adelphia Business Solutions

Standard & Poor's downgraded Adelphia Business Solutions Inc. and kept the ratings on CreditWatch with negative implications where they were placed on Sept. 4. Ratings affected include its senior secured debt, cut to CCC+ from BB-, its senior unsecured debt, cut to CCC- from B+, its subordinated debt, cut to CCC- from B and its preferred stock, cut to CC from B-.

S&P said its downgrade reflects the Adelphia Communications' decision to spin off its 79% stake in Adelphia Business Solutions to shareholders and news that Adelphia Business Solutions does not expect to obtain the $300 million to $500 million bank credit facility it had been pursuing.

"As a result, ABIZ may be unable to meet its funding requirements beyond Dec. 31, 2001," S&P said.

The rating agency commented: "Even with ABIZ's scaled back expansion plans, the $85 million funding needed just through the end of 2001 will largely deplete cash balances and the $6 million available under its credit facility."

S&P noted Adelphia Business Solutions estimates it will need a further $300 million through the first nine months of 2002, of which up to $100 million of credit support might come from Adelphia Communications.

Without support, Adelphia Communications will be lowered further, S&P said. With it, the company will likely remain on CreditWatch negative.

Current investor sentiment on CLEC's make the company's prospects for obtaining funding for the balance of 2002 "dubious at best," S&P added.

Moody's downgrades Revlon

Moody's Investors Service downgraded Revlon Consumer Products Corp. and assigned a B3 rating to its proposed $325 million senior secured bank credit facilities and a Caa1 rating to its proposed $250 million senior secured notes due 2005. The action affects $1.725 billion of debt, including its senior notes, cut to Caa2 from Caa1 and its senior subordinated notes, cut to Ca from Caa3. The outlook is negative.

Moody's said the downgrade reflects Revlon's "continuing pressure on sales growth, operating margins and gross margins; and more critically, upon its ongoing reliance on bank borrowings, asset sales and third party sources to service its interest expense and Moody's estimated minimum enterprise re-investments."

Sales fell 14.9% in fiscal 1999 and 3.5% in fiscal 2000 and are down 0.6% year on year for the nine months to Sept. 30, 2001, Moody's said. EBITDA of -$45 million, $197 million, and $184 million for the same periods has either under funded or just covered interest by -$102 million, 1.35x and 1.31x, Moody's added.

It noted: "Finally, should Revlon be unable to consummate its currently contemplated refinancing plans for existing bank debt, it would likely face significant liquidity challenges in the near term as its current bank facilities mature in May 2002."

S&P rates Revlon's new 2005 notes B-

Standard & Poor's assigned its B- rating to Revlon Consumer Products Corp.'s proposed $250 million senior secured notes due 2005 and a B bank loan rating to Revlon's proposed $325 million senior secured credit facilities.

S&P affirmed Revlon's B- corporate credit rating, CCC + senior unsecured rating, and CCC subordinated debt rating. The outlook is negative.

"The ratings for Revlon reflect a weak financial profile, characterized by high debt leverage and a prolonged period of poor operating results," S&P stated. "Despite its strong brand name, Revlon has been challenged in its efforts to reverse the decline in revenues and market share due to intense competition in the mass-market cosmetics industry, divestitures, and the ongoing reduction of inventory levels by retailers. Specifically, revenues have declined 40% to $1.35 billion for the trailing 12 months ended Sept. 30, 2001 from $2.25 billion in fiscal 1998."

The new $250 million senior secureds due 2005, S&P said, are rated the same as the corporate credit rating. The notes will be secured by a second lien on substantially all of Revlon and its domestic subsidiaries' stock and assets, and two-thirds of its first-tier foreign subsidiaries' stock, providing a strong measure of protection to lenders. However, based on S&P's simulated default scenario, which severely stressed the company's cash flows, it is not clear that the distressed enterprise value would be sufficient to cover the full amount of the notes.

S&P rates Allied Waste new 2008 bonds BB-

Standard & Poor's assigned its BB- rating to Allied Waste North America Inc.'s (AWNA) proposed $500 million senior notes due 2008. It affirmed its existing BB ratings on AWNA's parent, Allied Waste Industries Inc. The outlook is stable.

"The ratings reflect Allied Waste's strong competitive business position, offset by a relatively weak credit profile," S&P stated.

The release went on to say that the company's July 1999 largely debt-financed acquisition of Browning-Ferris Industries Inc. made Allied Waste the second-largest solid waste management firm in the U.S., with estimated 2001 revenues of $5.5 billion.

Stating that the company's profit margins have historically been in the mid-30% area, S&P said that recession and increased competition are likely to cause those margins to decline to the low 30% area in 2002.

Moody's downgrades Fairchild Corp.

Moody's Investors Service downgraded Fairchild Corp., affecting $470 million of debt securities including its $244 million senior secured bank facility, cut to B1 from Ba3, and its $225 million 10.75% senior subordinated notes due 2009, reduced to Caa1 from B3. The outlook was cut to negative.

Moody's said the downgrades reflect the projected major cut-back in commercial aircraft production expected as a result of the deteriorating fundamentals of the airline industry with the sharp decrease in travel following the Sept. 11 terrorist attacks.

The rating agency commented that reductions in commercial aircraft production will "adversely impact Fairchild's future results and will reverse the improvement in aerospace fastener demand experienced earlier this year and in the just completed quarter ended September 2001."

The downgrades also reflect Fairchild's "weak operating results not withstanding the now increased concern related to commercial aircraft build rates," Moody's added.

Moody's downgrades Grupo Minero Mexico

Moody's Investors Service downgraded the Secured Export Notes issued by Grupo Mexico Export Master Trust No.1 to Ba3 from Baa2 and Grupo Minero Mexico Guaranteed Senior Notes Series A and B to B1 from Ba1, affecting $1.1 billion of debt. The ratings remain on review for a possible further downgrade.

Moody's said the downgrade was triggered by "a deterioration of the fundamentals of Grupo Minero Mexico. GMM's earnings have exhibited a downward trend over the course of the year as the industrial demand for copper declined and this put pressure on copper prices. This situation has worsened following the tragic events in September."

S&P puts Gentiva Health on positive watch

Standard & Poor's put its B+ corporate credit rating and its preliminary B+/B- rating on Gentiva Health Services Inc.'s $150 million senior unsecured/subordinated shelf registration on CreditWatch with positive implications.

The action reflects Gentiva's "recent improved operating performance and reduction in debt," S&P said.

The rating agency noted Gentiva has performed well following its spin-off from Olsten Corp. in March 2000 and it has paid off all the debt it assumed at that time.

It added: "Lower exposure to Medicare and the conclusion of a government investigation also limit business risk. Financial flexibility is afforded by its increased cash on hand and prospects for continued improved operating cash flow."

S&P downgrades Aavid

Standard & Poor's downgraded Aavid Thermal Technologies Inc. including cutting its $22 million revolving credit facility due 2005 and its $28 million term loan due 2005 to CCC+ from B+, its $150 million 12.75% senior subordinated notes due 2007 to CC from CCC+.

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