Moody's cuts Photronics ratings

Moody's Investors Service assigned a B3 rating to Photronics Inc.'s new convertible and lowered its existing ratings, including the outstanding 6% and 4.75% convertibles to B3 from B2.

The rating action takes into account recent weakening in sales, influenced significantly by the semiconductor industry's challenges and the impact on new photomask orders, S&P said.

The rating outlook is stable, reflecting the anticipated repayment of the remaining $62 million 6% convertibles, which mature in June 2004, and a relaxation of covenants in the senior secured bank credit facility, providing ample liquidity at this time.

S&P rates Manor Care at BBB

Standard & Poor's assigned BBB ratings to Manor Care Inc.'s new $90 million senior convertible debt due 2023, $200 million senior unsecured credit facility due 2006 and $200 million senior unsecured notes.

The outlook is stable, S&P said, noting improved operating cash flow and proceeds from asset sales have helped to reduce debt.

Cash flow coverage of interest increased to 8.6x at Dec. 31 from 5.8x in 2001. Funds from operations to lease-adjusted debt increased to 37% in 2002 from an average in the mid-20% area during the prior four years, S&P said.

This cash flow protection better supports the investment-grade rating in the face of business uncertainties, which include reimbursement risk and, to a lesser extent, patient liability costs.

Moody's ups KPN

Moody's Investors Service upgraded Koninklijke KPN NV's ratings, including the 3.5% subordinated convertible notes due 2005 to Baa3 from Ba1.

Also, the ratings were placed on review for further upgrade.

The rating action reflects progress in deleveraging, with total adjusted debt declining from €27.7 billion to €21.9 billion in 2002, and an expectation that free cash flow may enable it to continue to reduce debt in the future.

Moody's said new management has taken a more conservative approach to achieving growth and said the review will assess the longer term sustainability of that approach if business conditions become more challenging.

S&P ups Whole Foods outlook

Standard & Poor's confirmed the ratings of Whole Foods Market Inc. and revised its outlook to positive from stable.

The revision reflects strong same-store sales trends through first quarter despite a weakened economy, and a more moderate financial policy due to reduced debt levels in 2002 and less expected reliance on acquisitions to grow its store base in future years, S&P said.

Should Whole Foods continue to grow its store base while improving credit protection measures and liquidity over the next few years, a higher rating will be considered.

Moody's cuts Continental Air

Moody's Investors Service lowered the ratings of Continental Airlines Inc. including the senior unsecured convertibles to Caa2 from B3.

The outlook is negative, reflecting a high level of uncertainty regarding demand and pricing dynamics.

The downgrade reflects the financial risks posed by recent substantial declines in air travel demand and yields, and the probability that these conditions will continue through a substantial portion of the second quarter.

Balance sheet liquidity remains adequate - estimated to be in excess of $1.1 billion - but could face erosion if the typical seasonal strength seen in second and third quarters does not materialize, Moody's said.

S&P ups Service Corp. outlook

Standard & Poor's confirmed the ratings of Service Corp. International, including the convertible at B, but revised the outlook to stable from negative.

The ratings reflect vulnerability to periods of business weakness despite the relatively favorable long-term predictability of the funeral home and cemetery business, S&P said.

Liquidity is good and there is no significant maturity risk until 2005, when $400 million of debt is due and the revolving credit facility matures. This appears manageable, considering the recurring cash flow, which S&P believes will exceed $200 million in 2003.

The outlook is stable, as downside risks associated with current industry conditions are incorporated into the current rating

S&P rates Panva Gas convertibles BB+

Standard & Poor's assigned a BB+ rating to Panva Gas Holdings Ltd.'s proposed $50 million 2% convertible bonds due 2008.

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