S&P rates Trump notes B-, CCC, puts Trump AC on positive watch

Standard & Poor's assigned a B- rating to the proposed $420 million first priority mortgage notes due 2010 and a CCC rating to the proposed $50 million second priority mortgage notes due 2010 to be issued by Trump Casino Holdings LLC and its subsidiary Trump Casino Funding Inc. The outlook is stable.

S&P also put Trump Atlantic City Associates on CreditWatch with positive implications including its first mortgage notes at CCC.

S&P said it expects to raise the corporate credit and senior secured debt ratings on Trump Atlantic City to CCC+ with a stable outlook upon a successful sale of the Trump Casino Holdings notes.

The expected upgrade reflects the improved financial flexibility for the consolidated group of Trump companies with the proposed refinancing that alleviates near-term debt maturities, the good performance at Taj Mahal and Plaza that has created cushion against any effect from the opening of Borgata in mid-2003, and the company's ability to meet debt service requirements in the near term, S&P said.

The ratings for Trump Casino Holdings reflect the good operating results at each of its properties and improved financial flexibility stemming from the expected refinancing of debt that was scheduled to mature in 2003, S&P added. These factors are offset by competitive market conditions in its markets served, somewhat limited expected levels of free cash flow to reinvest in the properties, and the relationship to more highly leveraged Trump Atlantic City.

S&P expects the Chicago gaming market will remain healthy over the intermediate term, providing a favorable operating environment for Trump Indiana. Ongoing cost-reduction efforts, the opening of a new parking garage, and the commencement of dockside gaming improved the bottom line performance of this property in 2002, and those savings should continue to benefit the company in the future. However, significant upside is unlikely given the competitive market conditions.

S&P expects that Trump Marina will benefit over the long term from its location in the Marina District of Atlantic City. The Marina District received more visitors during 2002 due to improved access following the July 2001 opening of a tunnel that connects the area to the Atlantic City Expressway. Moreover, substantial renovations at nearby Harrah's, including a new 450-room hotel tower, helped to attract visitors to the Marina. The summer 2003 opening of Borgata, a 2,000-room property being built in the Marina District by joint venture partners MGM Mirage and Boyd Gaming Corp. will further add excitement to this section of the City when it is complete.

In the intermediate term, S&P said it expects that Trump Marina will indirectly benefit from these investments, and in the longer term, has the potential to expand and benefit to an even greater degree. However, the potential exists for a tax increase in New Jersey, which would directly affect EBITDA and future capital investment plans.

S&P cuts Rural Cellular

Standard & Poor's downgraded Rural Cellular Corp., removed it from CreditWatch with negative implications and assigned a negative outlook. Ratings lowered include Rural Cellular's $125 million 9.625% senior subordinated notes due 2008 and $300 million 9.75% senior subordinated notes due 2010, cut to CCC+ from B-, $237.5 million senior secured 8.5 year term loan B, $237.5 million senior secured 9 year term loan C, $275 million senior secured 8 year reducing revolver and $450 million senior secured 8 year reducing term loan, cut to B from B+, and $100 million senior exchangeable preferred stock due 2010, $140 million junior exchangeable preferreds and $25 million senior exchangeable preferreds, cut to CCC from CCC+.

S&P said the downgrade is because of the potential for Rural Cellular to breach its debt leverage bank covenant during 2003, the possibility of revenue loss as national carriers extend their Global System for Mobile Communications build and overall slower industry growth.

In addition, the payment of cash dividends on the company's senior exchangeable preferred stock commencing August 2003 could affect the growth of the company's free cash flow, S&P said.

In fiscal 2002, total revenue growth declined to 4% from 24% in fiscal 2001, reflecting slower subscriber growth and a significant decline in roaming revenue growth, S&P noted. Roaming revenue, which comprises about 27% of total revenue, has been affected by the decline in roaming yield, offsetting some increased roaming minutes of use. Overall roaming revenue is expected to be relatively flat in 2003.

Net customer additions were about 60,000 in 2002, compared to about 85,000 in 2001 reflecting slower industry growth and greater competition from national carriers, S&P added.

EBITDA margin continued healthy at 48%, one of the best in the industry, reflecting good cost control and good subscriber base, consisting of more than 88% of postpaid customers. In addition, churn rate continues to be below industry average at 1.8%. However, cost per gross add increased to $373 in 2002 from $287 in 2001 due primarily to lower gross customer additions and marketing promotions. Monthly average revenue per unit (ARPU) remained relatively flat at $57 compared to 2001.

S&P puts Corus on watch

Standard & Poor's put Corus Group plc on CreditWatch with negative implications including its €2.4 billion bank loan and €307 million 3% notes due 2007 at BB and Corus Finance plc's €400 million 5.375% bonds due 2006 and £200 million 6.75% bonds due 2008 at BB.

S&P said the watch placement reflects Corus' continuing difficulty in implementing the disposal of its Dutch aluminum assets to Pechiney SA as well as other unresolved issues.

If the outcome of these issues is negative, then the ratings on the group could be lowered by one or more notches, S&P added.

The disposal, which was factored into the current ratings, forms part of Corus' strategy to focus its efforts on turning around its U.K. steel operations, which have been heavily loss-making for several years. It was expected that the disposal proceeds would be used to repay debt in order to give Corus additional time to carry out its restructuring plans in the U.K., S&P noted.

S&P rates Unisys notes BB+

Standard & Poor's assigned a BB+ rating to Unisys Corp.'s new $250 million senior unsecured notes due 2010 and confirmed its existing ratings including its senior unsecured debt at BB+. The outlook is stable.

Unisys' ratings reflect a strengthened financial profile and an improving business profile of Unisys' information services segment, offset by current weak industry conditions, S&P said.

The company has focused its efforts on business process outsourcing and enterprise server opportunities, while de-emphasizing low-margin, commodity-based areas of the market.

Current global economic uncertainty has resulted in customers scaling back or canceling many capital projects, while Unisys' overall performance has also been affected by limited new hardware purchases, S&P noted. To offset this downturn and the uncertainty as to the timing and the extent of the recovery, the company has implemented cost-reduction actions and maintained adequate financial flexibility to cushion near-term volatility.

For 2002, Unisys' revenues declined 7%, to $5.6 billion, and net income rose to $223 million, from a loss of $67 million in the year-earlier period. Overall operating profit margins rose to over 9%, reflecting the company's focus on cost control and higher value-added business opportunities. Coverage of interest from EBITDA should remain in excess of 5x, while funds flow from operations to total debt, including capitalized operating leases, is expected to exceed 50%, S&P said.

Moody's rates Nycomed notes B3

Moody's Investors Service assigned a B3 rating to Nyco Holdings 2 ApS' planned €225 million senior notes due 2013 and a B1 rating to Nyco Holdings 3 ApS' planned €430 million senior secured credit facility. The outlook is stable.

Moody's said the ratings reflect the company's highly leveraged capital structure as a result of the LBO transaction; the expected growth in absolute debt levels over the next three years to fund plant expansion, scheduled in-licensing payments and consolidation of Leiras, its Finnish JV; expectation of negative free cash flow over the next two years as a result of the capital expenditure; future growth highly dependent on in-licensing new products and geographic expansion; potential changes in regulatory policies in its diverse markets; some exposure to pricing pressures from governments and healthcare organizations; competitive threats posed by different national and global pharmaceutical companies; and structural issues leading to bondholder subordination.

Positives include Nycomed's entrenched position in the Nordic pharmaceuticals market, its strong and diversified product portfolio, solid past performance and track record of cash flow generation, management's experience with working with high leverage, the expected ability of its business plan to withstand negative shocks, and relatively more conservative strategy of targeting in-licensing rather than in-house R&D.

S&P rates Nycomed notes B-

Standard & Poor's assigned a B- rating to Nyco Holdings 2 ApS' planned €225 million subordinated bonds due 2013. The outlook is stable.

The ratings reflect Nycomed's aggressive financial profile and its ambitious growth strategy, which will limit free cash flow generation in the short term, S&P said.

Furthermore, the group has limited internal R&D expenditure and relies on successful in-licensing deals for adding new products to its portfolio, S&P noted.

Positives are Nycomed's good position in the Scandinavian prescription drugs and over-the-counter markets, its well-diversified product portfolio, and growing predictable demand in the

European pharmaceuticals market.

The stable outlook reflects Nycomed's established positions in Scandinavia and other European markets, which should help generate firm cash flow, offset by the group's aggressive financial profile, S&P said. Nycomed is expected to make opportunistic acquisitions while maintaining debt protection measures at levels suitable for the ratings.

Moody's rates Unisys notes Ba1

Moody's Investors Service assigned a Ba1 rating to Unisys Corp.'s of $250 million senior unsecured notes and confirmed its existing ratings including its senior unsecured debt at B1. The outlook is stable.

Moody's said the confirmation reflects Unisys' competitive position in IT services, including business process outsourcing, and public sector IT outsourcing; improved services operating margins reflecting management's focus on higher value added business, workforce reductions taken prior to 2002, and continued discipline in managing costs; a successful shift from legacy hardware to IT services including systems integration, outsourcing, infrastructure services, and core maintenance, which provides longer term recurring revenue.

The stable outlook reflects Moody's expectation that Unisys will continue to have favorable pacing of contract awards, discipline in capital expenditures associated with services contracts, efficient financial performance of its consulting workforce as a result of restructuring charges taken in 2001, and significant growth in outsourcing, which build on contract awards achieved in 2002.

Unisys has been awarded significant new contracts and extensions on contract, especially in business process outsourcing, including payment and scheduling processing for the financial services and transportation industries, Moody's said. Major recent awards include outsourcing and network services contracts with the Royal and SunAlliance of the United Kingdom, Transportation Security Administration, Washington Mutual, and the recent contract extension with the Commonwealth of Pennsylvania.

S&P downgrades Magellan

Standard & Poor's downgraded Magellan Health Services Inc.'s senior secured debt and senior unsecured debt ratings to D from CCC and subordinated debt to D from CC after Magellan filed for reorganization under Chapter 11 of the U.S. bankruptcy code.

S&P said the filing reflects the consequences of deteriorating cost-of-care margins, the need to bring operating expenses down, and high leverage.

Magellan's proposed plan of reorganization incorporates the conversion of all the outstanding senior subordinated notes to all Magellan common stock, and it provides for the restructuring of the terms and conditions of the senior notes as well as bank loans and letters of credit totaling $235 million. It also includes the renewal and two-year extension of Magellan's contract with Aetna Inc., its largest customer, which accounts for about 12% of consolidated revenues.

If implemented, the plan will considerably increase Magellan's prospects for long-term viability by significantly reducing interest payments and providing the company with a stable, intermediate-term anchor of business in its Aetna contract, S&P said. However, management must still contend with declining business fundamentals, S&P said.

Moody's rates Pinnacle Entertainment loan B1

Moody's Investors Service rated Pinnacle Entertainment Inc.'s proposed $225 million secured credit facility, consisting of a $100 million revolver due 2007 and a $125 million term B due 2008, at B1 and confirmed the company's existing ratings and stable ratings outlook.

The B1 rating on the company's existing $110 million secured credit facility will be withdrawn once the new bank loan is in place.

Proceeds from the loan will be used to support capital projects including the development of Lake Charles and the expansion of Belterra.

Ratings reflect the company's high leverage, considerable planned development activities, Belterra's continuing ramp-up challenges and the potential negative impact on the company's Reno, Nevada property once Thunder Valley opens, Moody's said.

Positive influences on the ratings include the company's overall level of cash flow diversification and management's recent decision not to pursue the Aladdin Casino Hotel opportunity in Las Vegas, Nevada in order to focus on Belterra, Lake Charles and existing operations, Moody's added.

At Dec. 31, debt/EBITDA was about 6 times, Moody's added.

Fitch rates Unisys notes BBB-

Fitch Ratings assigned a BBB- rating to Unisys Corp.'s upcoming $250 million senior unsecured notes due 2010 and confirmed its existing senior unsecured debt at BBB-. The outlook is negative.

Proceeds from the offering will be used for general corporate purposes and to increase liquidity. Fitch said it believes that the company could in the future reduce higher coupon debt or possibly call the 7 7/8% $200 million issuance in April 2003.

The negative outlook indicates that if adverse market conditions persist, outsourcing contracts do not materialize from new customers, the company makes significant cash acquisitions, or if it is unsuccessful in execution of announced restructurings, the ratings may be negatively impacted, Fitch said.

Unisys's credit profile and balance sheet metrics have improved considerably since 1999. While that progress has been modestly reversed in the current industry downturn, Fitch said it believes credit protection measures remain satisfactory for the BBB- rating category.

Clearly, the increased gross debt levels from the offering strain the capital structure at the current rating, but the improved liquidity and operating performance counterbalance this risk, Fitch added. Fitch recognizes that most of the larger diversified IT services companies remain cautious for 2003 as the geopolitical environment could cause additional strains in the economy.

S&P cuts Copamex

Standard & Poor's downgraded Copamex SA de CV including cutting its $130 million bank loan due 2004 and $200 million 11.375% bonds due 2004 to B+ from BB-. The outlook is stable.

S&P said the downgrade reflects Copamex's inability to improve its operating performance and reduce debt in a material way, resulting from the highly competitive environment and current market conditions that have deteriorated its financial profile.

The company has not been able to improve its operating margins due to the increased price competition from imports in the packaging division; lower prices in the international paper markets; and to a lesser extent, competitive pressures in the consumer products division. As of December 2002, operating margins decreased to 15% compared to 17% as of December 2001, S&P noted.

Although during the past year, the company was able to reduce debt by around $15 million and to refinance an important portion of its short-term debt, leverage ($508 million as of December 2002) remains high with a total debt to EBITDA and EBITDA interest coverage ratios of 4.5x and 2.4x respectively, as of December 2002, compared with 3.6x and 2.4x as of December 2001, S&P said. Current total debt to EBITDA is 4.19x.

Liquidity is tight. At December 2002, Copamex had around $8 million in cash and short-term investments, and about $29.6 million in short-term lines of credit available. The company has $123 million in short term debt for 2003.

Moody's cuts McDermott

Moody's Investors Service downgraded McDermott International, Inc., McDermott Inc. to B3 from B2 and J. Ray McDermott, SA to B3 from Ba3. The outlook for all ratings is negative. The downgrade ends a review for possible downgrade begun on Nov. 8, 2002.

The downgrade of J. Ray McDermott is based on continuing operating problems and a continuing lack of liquidity, Moody's said.

Moody's notes that management has made efforts to improve profitability and manage cash needs at J. Ray McDermott, however, Moody's believes that the benefit of these efforts will not be realized in the near to medium term.

McDermott Inc. was lowered because of continued constrained liquidity, driven by the operating problems at J. Ray McDermott and the incremental debt related to the proposed asbestos settlement.

Moody's said it expects to maintain a negative outlook on the ratings of McDermott Inc. and McDermott International until the terms and conditions of the asbestos settlement are finalized.

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