S&P upgrades Sweetheart, rates notes CCC-

Standard & Poor's upgraded Sweetheart Holdings Inc. including raising its corporate credit rating to CCC+ from SD, assigned a CCC- rating to Sweetheart Cup Co. Inc.'s $93.375 million senior unsecured notes due 2004 CCC- and confirmed The Fonda Group Inc.'s $120 million subordinated notes due 2007 at CCC- and removed it from CreditWatch.

The Sweetheart notes were issued in connection with an exchange offer for the company's $110 million of senior subordinated notes due 2003, of which $16.625 million remain outstanding and will mature on Sept. 1, 2003.

Because Standard & Poor's deemed this a distressed exchange tantamount to a default the corporate credit rating had been lowered to SD.

The new notes are rated two notches below the new corporate credit rating (the same as Fonda's subordinated notes) reflecting the effective subordination of the new notes to a significant amount of secured debt and operating leases.

Sweetheart has struggled with weak demand and pricing as a result of the decline in business and leisure travel and away-from-home-dining that followed the terrorist attacks of Sept. 11, 2001. In addition, during the past year, the company has incurred about $20 million of one-time costs to restructure its operations, S&P said. Cash flow generation has benefited slightly from inventory reductions, the receipt of business interruption insurance proceeds, and modest asset sales.\

As of March 31, 2003, the company had total debt, including capitalized operating leases, of more than $700 million. Credit measures are weak, with EBITDA interest coverage in the low 1x area and funds from operations to debt below 10%.

S&P cuts Tricom

Standard & Poor's downgraded Tricom SA including lowering its $200 million 11.375% notes due 2004 to CCC+ from B. The outlook remains negative.

S&P said the downgrade reflects the continuing negative trend in Tricom's operating performance, which has resulted in weaker key credit protection measures.

Tricom has been affected recently by the acquisition and consolidation of the pay-TV operation; costs associated with the new, advanced digital trunking services (iDEN) operation in Panama, and, more recently, the 36.4% year-over-year devaluation of the Dominican peso, S&P said.

If the company is not able to reverse trends in a timely manner, address the refinancing of the remainder of its short-term debt after its recent capitalization, or successfully complete its senior notes refinancing plan in a reasonably short time, a further rating adjustment could be considered, S&P said.

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