Moody's confirms Fleming

Moody's Investors Service confirmed Fleming Cos., Inc., affecting $1.9 billion of debt. Ratings affected include Fleming's $729 million bank loan rated Ba2; $355 million 10 1/8% senior notes due 2008 rated Ba3; $250 million 10½% senior subordinated notes due 2004, $400 million 10 5/8% senior subordinated notes due 2007 and $150 million 5¼% convertible senior subordinated notes due 2009, all rated B2. The outlook is stable.

Moody's confirmation, ending a review begun Jan. 14, reflects the success of Fleming's efforts to minimize adverse financial consequences while continuing with its business plan in spite of Kmart Corp.'s bankruptcy filing.

The outlook is stable because Moody's believes Fleming's ratings will be constrained until the status of Kmart becomes clearer.

"Fleming has minimized the impact on its operations, balance sheet, and business plan, but Moody's believes that significant debt protection measure improvements resulting from higher revenue and greater efficiencies cannot reliably be expected over the intermediate term," the rating agency said.

Moody's puts American Tower on downgrade review

Moody's Investors Service put American Tower Corp. and its subsidiaries on review for possible downgrade, affecting $3.9 billion of debt and credit facilities. Ratings affected include American Tower's $1 billion of 9.375% senior notes due 2009, $213 million of 6.25% convertible notes due 2009, $203 million of 2.25% convertible notes due 2009 and $450 million of 5.0% convertible notes due 2010, all rated B3, and American Tower LP and American Towers, Inc.'s $650 million secured revolving credit facility, $850 million secured term loan A and $500 million secured term loan B, all at B1. Moody's withdrew the rating on the company's term loan C due to its cancellation.

Moody's said it is "concerned about the potential softness in the demand for tower space from the major wireless carriers in the US given the current outlook for slower subscriber growth going forward, and this concern applies to all the independent tower operators."

For American Tower, the potentially weak business environment combined with the reduced liquidity due to the cancellation of the recently received commitment for $250 million of incremental bank debt prompted the review for downgrade, Moody's said.

The additional term loan would have provided the company with "important operating and financial flexibility," the rating agency said.

Moody's puts CSC Holdings on downgrade review

Moody's Investors Service put Cablevision Systems Corp.'s subsidiary CSC Holdings on review for possible downgrade, affecting $8.1 billion of debt and preferred securities. Affected ratings include CSC's senior unsecured notes and debentures at Ba1, its senior subordinated notes and debentures at Ba2 and its preferred stock at Ba3. Moody's also withdrew the Baa3 ratings for the former bank credit facilities of CSC and subsidiary Cablevision MFR, which were refinanced by a new unrated facility for CSC.

Moody's said its review will focus on the "willingness and ability of management to take what is deemed to be necessary near-term action(s) to strengthen the company's financial flexibility in anticipation of its heavy requisite capital investment plan over the ensuing rating horizon, and the incremental balance sheet weakening that will result therefrom in the absence of a large equity injection and/or asset monetization."

Moody's upgrades Amazon.com

Moody's Investors Service upgraded Amazon.com, Inc., affecting $2.2 billion of debt. Ratings affected includes its senior unsecured notes, raised to B3 from Caa1, and its subordinated notes, raised to Caa2 from Caa3. The outlook is stable.

Moody's said its action reflects expectations that Amazon has sufficient cash on hand to finance its operations for the medium term and will not be required to access the capital markets in 2002.

The higher ratings also reflect improved operating measures and sharply lower cash drain from operations, Moody's said.

Amazon's financial performance has benefited from higher sales volume and the development of fee-based income from services to third parties, Moody's said. At the same time, spending to develop new business lines and maintain existing initiatives has fallen as a percentage of sales, and will likely continue to fall in absolute terms as the company matures.

Finally, Moody's said, inventory risk has declined as Amazon has gained experience in its current product lines and markets and as more orders are supplied by third parties.

Moody's downgrades Time Warner Telecom

Moody's Investors Service downgraded Time Warner Telecom Inc. affecting $1.8 billion of debt. Ratings affected include Time Warner Telecom's $400 million 9¾% senior notes due 2008 and $400 million 10 1/8% senior notes due 2011, both lowered to B3 from B2, and Time Warner Telecom Holdings Inc.'s $1 billion senior secured credit facility, lowered to B1 from Ba3. The outlook remains negative

Moody's said the downgrade reflects its "heightened concern that scaled-back enterprise spending plans and carrier network capacity re-grooming may persist in pressuring TWTC's operating performance further, from a level that already falls short of our expectations."

However Moody's said Time Warner Telecom's near-term liquidity position is sufficient and the company benefits from the implicit support of AOL Time Warner's 66% controlling interest. Moody's also noted the company's experienced management team has exercised financial prudence during a difficult period for the emerging wireline telecom sector.

Recent operating performance has remained generally stagnant, Moody's said. In the third quarter 2001, recurring revenues and EBITDA (adjusted for non- recurring revenues) experienced sequential

declines.

Moody's rates Bluewater's planned notes B1

Moody's Investors Service assigned a B1 rating to Bluewater Finance Ltd.'s planned offering of $200 million 10-year senior notes. The notes are guaranteed on a senior subordinated basis by Bluewater holding company Aurelia Energy NV. The outlook is stable.

Moody's said its rating reflects Bluewater's dependence on a small number of floating production, storage and offloading vessels, operational risks while on field, the challenge of redeploying the vessels as they reach the end of their contracts, the competitive market for new contracts, the risk of construction cost overruns, its growth ambitions and limited access to capital due to its being privately-held.

The note rating also takes into account the substantial actual and potential subordination of the bonds to other more senior debt, Moody's said.

On the positive side, Moody's noted Bluewater generates predictable cash flows from its long-term contracts with major oil companies, has tie-back opportunities provide potential earnings uplift and contract extensions, is seeing growing demand for its vessels in the upstream industry globally amid an absence of speculative newbuilds, has high quality vessels, and benefits from relatively strong interest and other financial coverages.

S&P rates planned Bluewater notes B+

Standard & Poor's assigned a B+ rating to Bluewater Finance Ltd.'s planned offering of $200 million senior notes due 2012 and assigned a BB rating to Bluewater parent Aurelia Energy NV. The outlook is stable.

S&P said its ratings on Bluewater reflect "the company's participation in the floating production, storage, and offloading vessel industry, meaningful recontracting risk between 2004 and 2005, and a somewhat aggressive debt burden."

Bluewater benefits from capable management and a good contract position through 2004, S&P said.

Its principal risks are the successful construction or refurbishment of vessels to customer specifications and budgets; safe operation of those vessels in service; the successful marketing of vessels to customers, including the capture of long-term contracts that enable the achievement of adequate returns on investment; and competent project selection as revenues can be linked to field production performance, S&P said.

"On all of these points, Bluewater has a fairly good record," the rating agency commented.

S&P confirms Georgia-Pacific

Standard & Poor's confirmed Georgia-Pacific Corp. at BBB- with a stable outlook.

S&P took the action after Georgia-Pacific announced fourth quarter results, which included a $221 million after-tax charge to increase reserves for asbestos product liability claims.

Disclosure that the company now estimates that it may have to pay $350 million (net of anticipated insurance recoveries) over the next 10 years to satisfy asbestos claims does not "in itself heighten concerns about credit quality, as the firm has more than sufficient cash flow to meet these needs," S&P said.

"Importantly, the company remains on track with plans to reduce debt levels that were elevated with the late 2000 acquisition of tissue maker Fort James Corp., despite weak operating conditions in GP's key markets," the rating agency continued.

"The ratings incorporate Standard & Poor's acknowledgement that the higher visibility of GP's asbestos issues could raise execution risk as the firm pursues divestiture opportunities and refinancing initiatives, but these risks should remain moderate," S&P added.

Moody's downgrades Philippine Long Distance, on review

Moody's Investors Service downgraded Philippine Long Distance Telephone Co. to Ba3 from Ba2 and put the ratings on review for further possible downgrade. The $1.6 billion of debt affected includes PLDT's senior unsecured ratings, lowered to Ba3 from Ba2 and its preferred stock, cut to B2 from B1.

Moody's said its action is because of concerns over PLDT's ability to service long term debt, especially in light of its exposure to foreign currency movements.

The review for further downgrade is pending developments in PLDT's near-term refinancing initiatives, in particular its ability to cover 2002 and 2003 debt maturities.

PLDT is currently negotiating with several groups of financiers, the outcome of which may not be fully known for a number of months, Moody's said.

At the same time, PLDT has stable returns and a sound operating profile, demonstrated by efficiency gains in the fixed line business and healthy growth in the cellular business, Moody's commented.

S&P raises JDN Realty outlook to stable

Standard & Poor's confirmed its ratings on JDN Realty Corp., including its $235 million of senior notes at B and $75 million of preferred stock at B-, and raised the outlook to stable from negative.

S&P said the outlook revision reflects settlement of a class action lawsuit, a strengthened management team and the quality and continued stability of the company's core portfolio.

The rating agency noted that after a February 2000 announcement of previously undisclosed compensation arrangements, JDN faced turnover of its senior management, a technical default on its unsecured line of credit and an uncertain contingent liability related to shareholder lawsuits.

Since then it has made the interim CEO and CFO permanent and named a seasoned shopping center developer was CEO and president of JDN Development Co.

"This new team set out to improve relationships with existing tenants and bankers, while proving the viability of its revised growth strategy," S&P said.

"Some progress" has been made towards those goals, the rating agency continued, most visibly the $46 million settlement of a class action lawsuit that had represented a potentially large contingent liability.

"It could take a while longer, though, for the company's modified business model to prove viable," S&P added. Shifting the development focus to grocery-anchored shopping centers from predominantly Wal-Mart and Lowe's anchored centers could further diversify JDN's tenant base and enhance the company's cash flow stability.

Moody's confirms Yell

Moody's Investors Service confirmed Yell Finance BV including its £250 million of 10.75% senior notes due 2011, $200 million of senior notes due 2011 and $288 million of 13.5% senior discount notes due 2011, all at B2 and its £1.05 billion senior bank facilities at Ba3.

Moody's added that the confirmation assumes the financing mix for Yell's proposed acquisition of McLeodUSA Publishing Co. for $600 million in cash will closely mirror its initial buy-out funding structure.

"Yell's management has indicated that its sponsors will contribute near-equity in the form of deeply discounted shareholder bonds of $125 million and that the company will fund another $500 million through issue of equal amounts in new bank and high yield debt," Moody's said, adding that all instruments are expected to have terms and conditions similar to those already in existence.

McLeodUSA Publishing is complementary to Yell's existing Yellow Book operations "both in geographic terms and in terms of the relative maturity of its business which is less geared towards new market development than Yellow Book," Moody's commented.

Modest initial cost savings should mean debt protection measures are similar to those at Yell's July 2001 buyout, Moody's added, although it also noted there is integration risk.

Fitch rates new Solectron notes BBB-

Fitch assigned a BBB- rating to Solectron Corp.'s planned offering of $500 million seven-year senior notes and confirmed the company's BBB- rated senior bank credit facility, BBB- senior unsecured rating and BB+ rated Adjustable Conversion Rate Equity Security Units (ACES) issued Dec. 27, 2001. The outlook remains negative.

Fitch said the replacement of its $100 million revolving credit facility with a $500 million line, the sale of the ACES and the proposed senior notes provides added liquidity and financial flexibility.

However it said it has a negative outlook on Solectron because ratings could fall further if adverse market conditions persist, if outsourcing contracts do not materialize from new customers, if the company makes significant cash acquisitions, or if it is unsuccessful in execution of planned cost reductions, facilities rationalizations and restructuring actions.

Moody's downgrades Unifi to junk, still on review

Moody's Investors Service downgraded Unifi, Inc. and kept the ratings on review for possible further downgrade, affecting $250 million of debt. Ratings affected include Unifi's senior unsecured debt, but to Ba2 from Baa3.

Moody's said it lowered Unifi's ratings because of the decline in revenues and profitability in its core fiber businesses due to weak demand from end user markets such as hosiery and home furnishings.

In addition, the downgrade reflects "the likely permanent reduction of Unifi's revenue base as the number of U.S. domiciled textile manufacturing plants continues to shrink due to the availability of lower cost labor rates elsewhere in the world and the continued incursion of lower priced foreign competition into many textile sectors," Moody's said.

The review for further downgrade is so that the rating agency can evaluate the potential for continued weakness in Unifi's business over the coming quarters and the ongoing impact on the market for polyester and nylon yarns due to foreign imports.

S&P downgrades Ntelos, still on watch

Standard & Poor's downgraded Ntelos Inc. and kept it on CreditWatch with negative implications. Ratings affected include Ntelos' $280 million 13% notes due 2010 and $95 million 13.5% subordinated notes due 2011, both lowered to CCC+ from B-, and its $100 million senior secured revolving credit facility due 2007, $75 million senior secured term A loan due 2007 and $150 million senior secured term B loan due 2008, all lowered to B+ from BB-.

S&P said Ntelos remains on watch because of concerns about its ability to meet financial covenants under its senior secured bank facility.

S&P said is lowered the company's ratings because it expects Ntelos to have a "significantly weaker" financial profile in 2002 than if it had closed on the acquisition of incumbent local exchange carrier Conestoga Enterprises.

S&P anticipates EBITDA interest coverage to be less than one time through 2002 and only about one time in 2003.

Through the third quarter of 2001, Ntelos experienced operating cash flow losses in its wireless business, in part due to the aggressive conversion of prepaid wireless customers in its Virginia East market to postpaid services, coupled with heightened competition from the larger national carriers in all of its wireless markets, S&P said.

S&P puts USEC on negative watch

Standard & Poor's placed USEC Inc. on CreditWatch with negative implications. Ratings affected include USEC's $700 million bank loan at BB+ and its $500 million senior unsecured notes due 2009, also at BB+.

S&P said the watch listing reflects the "still-uncertain outcome of USEC's protracted efforts to negotiate a new sourcing contract with its Russian supplier, Techsnabexport Co. Ltd..

S&P said questions raised about USEC's ability to sell a significant portion of its natural uranium inventory are also a concern.

The rating agency also said it would be reassessing USEC's prospects "amid continuing challenging industry dynamics."

S&P cuts Amerigas outlook to negative

Standard & Poor's lowered its outlook on UGI Corp. affiliates AmeriGas Partners LP and UGI Utilities Inc. and confirmed AmeriGas at BB+ and UGI Utilities at A-.

S&P said it lowered the outlook because the warm winter weather may hurt the companies' finances.

"Although Standard & Poor's recognizes the cyclical nature of the propane and natural gas industries, another warm heating season will be detrimental to AmeriGas' financial profile, which is weak for the rating category," the rating agency commented.

If that happens, AmeriGas could place a credit drag on its parent and its utility affiliate, S&P said.

S&P is also concerned that the growing proportion of debt dedicated to UGI Corp.'s non-regulated activities leads to a riskier credit position for all the companies under the corporate umbrella.

S&P downgrades Choice One, on negative watch

Standard & Poor's downgraded Choice One Communications Inc. and put the company on CreditWatch with negative implications. Ratings affected include Choice One's $350 million secured bank facilities due 2008, cut to CCC+ from B-.

S&P said it lowered Choice One's ratings because of increasing concerns its current funding "does not provide adequate cushion against potential execution risks in the near term."

At the end of 2001, the company had cash and bank availability of about $80 million, S&P estimated. That amount will have to fund operations and debt service into 2002 and beyond as Choice One will not generate free cash flow for some time and the capital markets are not favorable, S&P added.

S&P estimates Choice One will use $70 million of cash in 2002 but it may stay within that if it continues its record of good execution and benefits from reduced lease rates for unbundled network elements.

S&P downgrades Ispat

Standard & Poor's downgraded various Ispat companies and changed the watch to CreditWatch developing from CreditWatch with negative implications.

Ratings affected include Ispat Europe Group SA's €150 million 11.875% notes due 2011, lowered to CCC+ from B+; Ispat Inland Inc.'s 7.9% first mortgage bonds series R due 2007, lowered to CCC+ from B+; Ispat Inland LP's $850 million senior secured credit facility, lowered to CCC+ from B+; Ispat International NV's corporate credit rating, lowered to CC from B+ and Ispat Sidbec Inc.'s $400 million senior secured credit facility, lowered to CCC+ from B+.

S&P downgrades Tata Engineering

Standard & Poor's downgraded Tata Engineering & Locomotive Co. Ltd.to BB- and removed it from CreditWatch. The outlook is negative. Ratings affected include Tata Engineering's $66 million 7.875% notes due 2007, cut to BB- from BB.

S&P said the rating reflects "the extremely weak operational profitability arising from the persistent weak demand in the Indian commercial vehicle market, suboptimal asset utilization in the company's small car business, and strong competition from domestic manufacturers."

Tata Engineering has an aggressive capital structure offset by its dominant market position in the Indian commercial vehicle market and the recent completion of 4.65 billion rupee equity issue.

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