S&P downgrades Adelphia

Standard & Poor's downgraded Adelphia Communications Corp. and kept the company on CreditWatch with developing implications. Ratings affected include Adelphia's notes, cut to CCC from B-, its bank facilities, cut to B- from B+, its preferred stock, cut to CC from CCC and its convertible subordinated notes, cut to CCC- from CCC+.

S&P said it is concerned that Adelphia's delay in filing its 10K coupled with formalization of the SEC's investigation into the company's accounting further exacerbates the company's already weakened financial profile.

"Adelphia missed filing its 10K within the 15-day extension from the SEC, and we do not know when the 10K will be filed," Standard & Poor's credit analyst Richard Siderman said in a news release. "As a result of missing this deadline, the company jeopardizes its ability to sell publicly registered securities as well as maintain the listing of its equity securities on the NASDAQ."

S&P said it is concerned that the delay in filing the 10K could impair Adelphia's ability to meet covenants in some of its public debt issues or bank credit facilities.

Fitch gives PacifiCare Health evolving rating outlook

Fitch Ratings gave PacifiCare Health Systems Inc. an evolving rating outlook due to the uncertainty that all conditions under the newly amended credit facility will be met. If, however, the credit facility is successfully extended, senior debt ratings will likely be upgraded one notch to BB, according to a Fitch release, since the extension will give the company time to explore a more permanent and favorable capital structure.

Current company ratings include: a senior debt rating of BB- with an evolving outlook, a bank loan rating of BB- with an evolving outlook and a long-term rating of BB- with an evolving outlook.

Recently, the company and its lenders agreed to extend the credit facility's maturity date by two years from a current maturity of Jan. 3, 2003. The extension, however, is contingent upon a $250 million reduction of debt prior to Jan. 2, 2003, which will consist of a $203 million cash reduction in the term loan and a $47 million reduction in borrowing capacity under the revolver. Currently, according to the Fitch release, the company has $648 million of outstanding debt, with $593 million drawn under its term loan and $55 million drawn under its revolver.

"Based on recent discussions with PacifiCare's management, it is Fitch's understanding that the company plans to reduce the outstanding term loan by $203 million through a combination of operating cash flow and external financing," Fitch said. "PacifiCare has put in place an equity line, which allows the company to sell up to 6.6 million shares or $150 million in PacifiCare's common stock. It is also Fitch's understanding that PacifiCare is actively exploring other potential capital-raising alternatives. While the equity line does not resolve the refinancing issue, it does provide the company additional financial flexibility and liquidity in the short-term."

Moody's rates Forest Oil notes Ba3

Moody's Investors Service assigned a Ba3 rating to Forest Oil Corp.'s $150 million of 7.875% senior unsecured 12-year notes and confirmed its existing ratings including its senior unsecured notes at Ba3, its $600 million senior secured revolver at Ba1 and its senior subordinated notes at B1. The outlook is stable.

Moody's said Forest benefits from early 2003 prospects for bringing potentially sizable, longer-lived Redoubt Shoal production on line and its proven undeveloped reserves to proven developed status; Forest's reasonable scale for the rating; intensive Gulf of Mexico reserve and infrastructure positions and long Gulf of Mexico operating history; and diversified long-term potential across four existing operating basins.

Negatives include surging debt on proven developed reserves during the heavy front-end capital spending for Redoubt Shoal; Forest's reduced proven developed reserve scale and higher debt levels since 2000; six sequential quarters of falling pro-forma production, partly due to heavy capex devoted to longer-lead time areas, some cash flow diverted to debt reduction; and asset sales; expected production declines of 15% to 20% in 2002; partly due to priority front-end spending on Redoubt Shoal; fairly high combined unit production, G&A, interest, and finding and development costs for the rating; reliance on short-lived Guld of Mexico production for roughly 67% of cash flow; and the inexorable reinvestment and risk pressures of short Gulf of Mexico production.

S&P rates new Forest notes BB

Standard & Poor's assigned a BB rating to Forest Oil Corp.'s new offering of $150 million senior notes due 2014.

S&P says Lucent outlook still stable

Standard & Poor's said Lucent Technologies Inc.'s announcement of quarterly earnings and that it had met the financial conditions necessary to complete the spin-off of its 58%-owned Agere Systems Inc. will have no effect on its ratings or outlook. S&P currently has a B+ corporate credit rating on Lucent with a stable outlook.

Lucent's ratings continue to reflect challenging market conditions and the company's improved liquidity, in addition to its efforts to restore profitability, S&P said.

Moody's rating view on Trenwick unchanged

Moody's Investors Service announced that despite Trenwick Group Ltd.'s recent amendment to its senior credit facility, the rating view towards the company and its subsidiaries remains the same. Moody's outlook is developing as future rating actions would look at Trenwick's ability to restructure its capital to increase financial flexibility. If the company is successful in its restructuring efforts, "Moody's would likely raise its debt and financial strength ratings," the rating agency said.

In December 2001, Trenwick's senior debt rating was downgraded to Ba2 from Baa3 and its financial strength rating was lowered to A3 from Baa2 due to a lack of financial flexibility and liquidity because of bank covenants on the credit facility.

"Moody's noted that while the amendment of several of the financial covenants contained in the agreement is viewed favorably, the agreement contains rating agency downgrade provisions which may be triggered," Moody's said. "The revised agreement contains the pledge of stock of certain subsidiaries, which in the event of default may place senior bank creditors in a better recovery position relative to senior unsecured bondholders."

S&P confirms Riverwood corporate credit, cuts existing debt

Standard & Poor's confirmed Riverwood International Corp.'s corporate credit rating at B and downgraded its existing debt. Ratings affected include Riverwood's $250 million 10.25% senior notes due 2006 and $250 million 10.625% senior notes due 2007, cut to CCC+ from B-, and its $300 million revolving credit facility due 2005 and $335 million term loan due 2005, cut to B from B+. It also assigned a B rating to the company's new $250 million senior secured term loan due 2007.

S&P said the actions reflect a shift in the composition of Riverwood's debt following its new bank facilities, which substantially increase the amount of secured debt.

As a result the bank loan rating is now the same as the corporate credit rating and not one notch higher as was previously the case, S&P said.

Although S&P said it believes there is a strong possibility of substantial, or perhaps even full, recovery of principal in the event of default or bankruptcy, it added that its level of confidence in full recovery is not sufficient to warrant the bank loan rating being one notch higher than the corporate credit rating.

S&P puts Scientific Games on positive watch

Standard & Poor's put Scientific Games Corp. and CreditWatch with positive implications. Ratings affected include its $150 million 12.5% senior subordinated notes due 2010 at B- and its $65 million revolving credit facility due 2006, $60 million term A loan due 2006 and $220 million term B loan due 2007, all rated B+.

S&P rates RailAmerica's loan BB

Standard & Poor's assigned a BB rating to RailAmerica Transportation Corp.'s $375 million term loan B and $100 million revolver, which are both guaranteed by RailAmerica Inc. In addition, RailAmerica Inc.'s credit rating was raised to BB- from B+ and its credit rating for foreign currency was raised to BB+ from B+. Upgrades for RailAmerica Transportation Corp. include its $125 million term loan A due 2006, $205 million term loan B due 2007 and $50 million revolver due 2006, all raised to BB from BB-, and its $130 million senor subordinated notes due 2010 raised to B from B-.

The rating actions, according to S&P, "reflect the company's successful expansion of operations and improved financial profile." However, the company has a debt leverage of 70% debt to capital area and there is the potential for additional debt financing due to the company's active acquisition strategy.

"Major acquisitions have been successfully integrated, and RailAmerica's internal cash generation should support current ratings," the release said. "Further small-and medium-sized acquisitions are anticipated, and management is expected to finance large acquisitions with a mix of debt and equity to preserve current credit quality."

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