Fitch cuts Fleming ratings

Fitch Ratings lowered Fleming Cos. Inc.'s ratings, including the 5.25% convertible senior subordinated notes due 2009 to B from B+ following announced plans to divest its retail business. The outlook remains negative.

Over the last year difficult competitive and economic environment has weakened performance of retail operations. The April acquisitions of two convenience store distribution companies plus organic business growth will help mitigate the exit from retail, Fitch said.

However, additional operating profits generated will not offset the lost EBITDA from its higher margin retail operations and EBITDA in 2002-2003 will be significantly below expected levels.

While the application of the anticipated $450 million in sale proceeds to reduce debt is viewed positively, the improvement in credit protection measures Fitch had anticipated has been delayed.

The outlook continues to reflect uncertainty surrounding Kmart, as its contract with Kmart has not yet been confirmed in the bankruptcy process. In addition, the inherent integration risks associated with acquisitions made earlier this year also persist.

Moody's keeps Vivendi on review

Moody's acknowledged positive events at Vivendi Universal, but said it is keeping the ratings (senior unsecured B1) on review for possible downgrade.

Recent announcements include the company has agreed asset sales for total headline proceeds of €1.1 billion, received a commitment from banks for a new €3 billion facility and expects that it can extend a $1.6 billion bridge facility shortly.

Once documentation for the €3 billion facility at Vivendi Universal and the $1.6 billion facility has been finalized, Moody's will consider confirming the ratings.

Major liquidity outflows are scheduled for March when the company's €1.8 billion exchangeable bond into Vivendi Environment can be put to Vivendi Universal, for July when the €1.5 billion exchangeable bond into BSkyB matures and November when the first tranche of the expected new €3 billion facility falls due.

S&P revises Micron outlook

Standard & Poor's affirmed the BB- corporate credit rating on Micron Technology Inc. but revised the outlook to negative from stable following Micron's announcement that pricing pressures in the semiconductor memory industry have accelerated.

Micron had $454 million of debt outstanding at Aug. 31.

Ratings continue to reflect conservative financial policies and that industry conditions are very challenging with severe pricing pressures, S&P said.

Still, because of conservative capitalization, debt-protection measures have remained good for the rating level.

Debt was 7% of capital at Aug. 31.

Micron had about $484 million of debt and capitalized leases at Aug. 31, while cash and other assets totaled $1.1 billion. Capital expenditures have been high, in addition to Micron's purchase of Toshiba Corp. in April for $250 million cash plus 1.5 million shares of stock.

Fitch affirms AT&T Comcast ratings

Fitch Ratings affirmed its March 4 indicative BBB rating on the senior unsecured debt of AT&T Comcast, the holding company for the newly merged Comcast and AT&T Broadband.

Also confirmed were the indicative BBB senior unsecured ratings assigned to the proposed restricted group, which represents Comcast Cable Communications, AT&T Broadband (formerly TCI Communications) and MediaOne Group.

The outlook is expected to be stable. However, a negative watch will continue pending the successful completion of the merger, Fitch said.

Primary rating concerns include the risks associated with the integration and performance of the AT&T Broadband properties and the event risk associated with the IPO of the company's 21% interest in TWC.

From a credit protection measure perspective, Fitch expects leverage at year-end 2003 to be below 4.0x and coverage in excess of 3x, improving thereafter.

Comcast will have over $4.0 billion availability under its bank facilities after the close of the transaction.

Along with the new facilities established for the transaction, Comcast has a $4.2 billion bank facility and commercial paper program, of which $700 million of bank debt and $400 million of commercial paper was outstanding at June 30.

Additionally, there is about $1.5 billion of public debt maturing in 2003.

S&P keeps Tyco on watch

Standard & Poor's said Tyco International Ltd. remains on CreditWatch with negative implications including its corporate credit rating at BBB-.

The announcement follows disclosures made by the company in a conference call on Sept. 25.

During the call, the company announced an estimated $2.5 billion write-down in its telecommunications business. Of this amount, $400 million to $500 million will be cash outlays over an 18-month period. The company also lowered its earnings guidance for the current quarter.

S&P said Tyco's ratings could be lowered if there are significant negative developments in connection with the internal accounting investigation or ongoing investigations by law enforcement and regulatory agencies or debt is not refinanced in a timely manner.

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