Moody's rates new Radiologix senior notes B2

Moody's Investors Service assigned a B2 rating to Radiologix, Inc.'s proposed $160 million of senior unsecured notes and a Ba3 rating to its proposed $50 million senior secured credit facility. The outlook is stable.

Moody's said the ratings reflect Radiologix's "high leverage and modest interest coverage, its short operating history and recent operational issues and the concentration of revenues in one market and among certain affiliated practices. Also reflected are industry challenges including a shortage of technicians, a competitive business environment, the potential for reimbursement pressures from both governmental and managed care payors and the capital intensive nature of the business."

On the plus side, Moody's cited Radiologix's "strong local market position and penetration, the recent improvement in operating trends, particularly in receivable collections and cash flow generation, and the company's recent shift in focus away from acquisitions and toward expansion within existing markets. Moody's also recognizes that the company will benefit from favorable demographic as well as industry trends."

S&P rates new Radiologix notes B

Standard & Poor's assigned a B rating to Radiologix, Inc.'s planned offering of $160 million of senior notes due 2008. It also rated the company's new $50 million bank loan due 2004 at BB-.

S&P downgrades Philippine Long-Distance Telephone

Standard & Poor's downgraded Philippine Long Distance Telephone Co. two notches, cutting its foreign currency senior unsecured rating to BB- from BB+ and its series III preferred stock to B- from B+. The outlook is developing.

S&P said the reduction reflects Philippine Long Distance's difficulties refinancing its debt, which has a relatively short maturity structure, and its highly leveraged balance sheet. The rating agency said it cut its assessment despite an improvement in the company's underlying business position.

"The postponement of its $250 million debt issuance in September demonstrates the formidable challenge of refinancing in the international credit markets," S&P noted.

From 2002 to 2004, Philippine Long Distance has PHP 83 billion ($1.6 billion) of debt maturing, including $417 million in 2002. About $650 million of external funding will be needed to refinance existing debt, S&P calculated.

At Sept. 30, 2001, the company's total debt was PHP171 billion, about 98% in U.S. dollars.

S&P noted the company is attempting to address its near-to-medium term liquidity problem by cutting capital spending, improving cost efficiency and selling a 15%-20% interest in its subsidiary Smart Communications Inc.

S&P cuts Ispat International outlook to negative

Standard & Poor's cut its outlook on Ispat International NV to negative from stable and affirmed the company's existing rating, including Ispat Inland Inc.'s senior secured debt at B+, Ispat Europe Group SA's senior secured debt at B+, Ispat Inland LP's senior secured debt at B+ and Ispat Sidbec Inc.'s senior secured debt at B+.

The rating agency said it took the action because of the "continuing difficult trading environment facing the company."

S&P noted that Ispat's EBITDA generation fell to negative $3 million in the third quarter of 2001 ($15 million before one-off expenditures). However the company's net debt only rose $34 million in the quarter, "thanks to drastic reductions in capital expenditure and working capital needs." As a result it was only marginally cash negative.

Nonetheless, S&P expects difficult trading conditions in North America to continue until at least the second half of 2002 "and Ispat's financial flexibility, which was previously good for the rating category, is deteriorating inexorably." Progress in Europe is being offset by the euro's weakness.

At Sept. 30 it had $60 million in cash and $175 million of inventory-secured bank lines available.

Anti-dumping action by the U.S. government could offer some relief but if current market conditions continue Ispat is likely to be downgraded in early 2002, S&P said.

Moody's rates Cognis bank debt Ba2

Moody's Investors Service assigned a Ba2 rating to the €1.6 billion of senior secured credit facilities of Cognis Deutschland II GmbH & Co. KG and various subsidiaries. The outlook is stable.

Moody's said the rating reflects expectations of relatively stable earnings as a result of a largely non-cyclical customer base and significant geographic and product line diversification, leading market share positions in a number of natural-oil based specialty chemicals businesses, benefits from vertical integration and economies of scale within oleochemicals, a focus on environmentally-friendly products and good margins and strong growth prospects in particular in the care chemicals division.

On the downside, Moody's noted Cognis' "moderately high initial leverage, volatility in certain raw material pricing such as natural and synthetic oils which may not always be passed through to customers, some degree of substitution risk and over-capacities in surfactants and surfactant raw materials viewed largely as commodities, weak performance by some of its organic specialty businesses and competitive pricing and potential backward integration by some of its larger consumer care customers."

Fitch cuts Brokat to D

Fitch downgraded Brokat AG and its €125 million of senior unsecured notes due 2010 to D from CC after the company said it will file for insolvency.

S&P cuts Brokat to D

Standard & Poor's downgraded Brokat AG's ratings including its senior unsecured debt to D from CC after the company filed for bankruptcy.

The rating agency commented: "Brokat's limited asset base makes very unlikely the repayment of the senior unsecured notes upon liquidation."

S&P puts NTELOS on negative watch

Standard & Poor's put its ratings for NTELOS Inc. on CreditWatch negative. Affected ratings include the $280 million 13% notes due 2010 and the $95 million 13.5% subordinated notes due 2011 both rated B-, the $100 million senior secured revolving credit facility due 2007, the $75 million senior secured term loan A due 2007 and the $150 million senior secured term loan B due 2008, all rated BB-.

S&P downgrades Jordan Industries

Standard & Poor's downgraded Jordan Industries Inc. and kept the company on CreditWatch negative. Ratings affected include the $120 million 10.375% senior notes due 2007, the $155 million 10.375% senior notes due 2007, both cut to B- from B, the $214 million 11.75% senior subordinated debentures due 2009, cut to CCC from CCC+, and the $93 million revolving credit facility due 2006, cut to B from B+.

S&P downgrades Day International

Standard & Poor's downgraded Day International Group, Inc. and removed the company from CreditWatch negative. The outlook is negative.

Affected ratings include the $100 million 11.125% senior notes due 2005, cut to B- from B, the $115 million 9.5% senior subordinated notes due 2008, cut to CCC+ from B- and the $35 million 12.25% senior exchangeable preferred stock 2010, cut to CCC from CCC+.

Moody's downgrades US Can

Moody's Investors Service downgraded United States Can Co., affected $523 million of debt. Among the ratings reduced were U.S. Can's $175 million 12.375% guaranteed senior subordinated notes due 2010, lowered to Caa1 from B3, and its $370 million senior secured credit facility, lowered to B2 from B1. The outlook is negative.

Moody's said the downgrades are in response to "the cumulative effects of weak year over year operating results throughout fiscal 2001 which have exacerbated the company's high debt burden and poor liquidity."

Moody's said it expects pressure on margins and returns will continue in the intermediate term, given that cost cutting initiatives continue to be implemented and may not benefit the bottom line until fiscal 2002.

Industry conditions remain challenging in all of U.S. Can's businesses, the rating agency added. In particular, Moody's said it is "particularly concerned" about the earnings contribution from the international operations which made up only 8% of operating income in the third quarter of 2001 versus 27% a year earlier even though it made up 29% of third quarter revenues, close to unchanged from a year earlier.

S&P puts Royal Caribbean-related deals on watch, positive

Standard & Poor's on Monday placed its BB+ ratings on class A-1 of two synthetic transactions linked to Royal Caribbean Cruises Ltd. on watch with positive implications. The two deals are swap-independent synthetic transactions that are weak-linked to the underlying collateral, Royal Caribbean Cruises Ltd. debt. The watch placements reflect the credit quality of the underlying securities issued by Royal Caribbean Cruises Ltd. The watch placements are a result the Nov. 20 announcement that Royal Caribbean Cruises has agreed to a merger of equals with P&O Princess Cruises PLC. The CreditWatch placement reflects the possibility that Royal Caribbean Cruises Ltd. could benefit from the combined entity's comparatively stronger debt protection measurements

Moody's places Luxfer Holdings under review for possible downgrade

Moody's placed the ratings of Luxfer Holdings Plc under review for a possible downgrade.

The review affects Luxfer's senior implied rating at Ba3, its unsecured issuer rating at B2, and its £160.0 million 10¼% senior notes due 2009 at B2 (outstanding principal reduced to approximately £128.1 million as of September 30, 2001).

"Moody's review reflects growing concerns as to the company's ability to strengthen internally generated cash flows over the short-term in order to comfortably continue to fund the business and service debt obligations going forward, particularly in light of current liquidity constraints," Moody's stated.

Luxfer's liqidity profile has recently "deteriorated significantly," with cash and equivalents of £11 million as of Sept. 30, 2001, compared to £24.6 million as of June 30, 2001, and £47 million as of March 31, 2001, according to the release. "While Moody's recognizes that a portion of this cash burn related to the company's active repurchase of outstanding bonds, the review for downgrade reflects growing concerns as to the company's ability to absorb further potential negative credit events and continue adequately funding the business going forward," Moody's said.

The Manchester, UK-based company specializes in the design and manufacture of products for the aerospace, automotive, medical, and general engineering industries.

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