Moody's downgrades Williams Communications

Moody's Investors Service downgraded Williams Communications Group, Inc. and its subsidiaries, affecting $7.3 billion of debt. Ratings affected include Williams Communications Group's senior unsecured rating, cut to Ca from Caa3, and preferred stock, cut to C from Ca, and Williams Communications, LLC's senior secured bank facility, cut to Caa3 from Caa1.

Moody's said it lowered Williams Communications because it expects the company to restructure its balance sheet, converting substantial portions of its debt to equity.

The rating agency said it expects the proposed restructuring will likely result in a substantial dilution in the value of unsecured debt-holder's original investment.

Moody's upgrades Entercom, rates new notes Ba3

Moody's Investors Service upgraded the existing ratings of Entercom Communications Corp. and its subsidiaries and assigned a Ba3 rating to Entercom Radio, LLC's proposed issue of $150 million senior subordinated notes due 2014. Ratings affected include Entercom's $650 million senior secured credit facilities due 2007, raised to Ba1 from Ba3 and Entercom Communications Capital Trust's $125 million TIDES due 2014, raised to B2 from B3. The outlook is stable.

Moody's said Entercom's ratings reflect its "strong cash flow coverage, the size and market presence of the company's geographically diverse station clusters, and the high underlying asset value of the company's station portfolio."

Entercom's broadcast cash flow margins are at or above its peers, particularly in its more mature markets. This performance coupled with the company's larger market focus provides noteholders and bank lenders more than ample asset coverage, Moody's said.

However the rating agency also said Entercom has high leverage through its TIDES, its highly acquisitive nature and the company's tendency to pay high cash flow multiples to acquire under-performing stations.

Moody's said the upgrade depends on the successful sale of $150 million of equity to finance the announced acquisitions. In addition, Moody's said it expects management to continue to maintain its conservative risk tolerance.

Moody's puts Woolworths on downgrade review

Moody's Investors Service put Woolworths Group plc on review for downgrade to junk, affecting £250 million of debt include the company's senior unsecured rating at Baa3.

Moody's said the review follows "disappointing sales figures over the Christmas period.

"Although progress has been made in improving the working capital and debt profile of the group, the review reflects Moody's concerns that Woolworth's financial flexibility is likely to be more constrained than anticipated at the time the rating was assigned," the rating agency said.

With a more challenging operating environment, the original turnaround strategy may take longer than previously expected, the rating agency added.

Moody's puts Encompass on downgrade review

Moody's Investors Service put Encompass Services Corp. on review for a possible downgrade. Ratings affected include Encompass' $130 million senior secured term loan A due 2006, $170 million senior secured term loan B due 2006 and $300 million senior secured revolving credit facility due 2005, all rated Ba3, its $335 million 10.5% senior subordinated notes due 2009, rated B2, and its $284.3 million (accreted amount) 7.25% mandatorily redeemable convertible preferred stock, rated B3.

Moody's said it put Encompass on review in response to the company's "reduced near-term prospects for profitability, the possibility that it may violate its bank debt covenants by mid-year 2002, and the likelihood that a significant portion of its $1.3 billion of goodwill will have to be written off in the near term."

The review also reflects "the substantial debt burden that the company assumed during its acquisition phase of the last few years, the pressures on its end markets, particularly technology and telecommunications, and the continuing challenges in integrating the numerous acquired entities," Moody's added.

S&P rates Accredo Health loan BB

Standard & Poor's assigned a BB rating to Accredo Health Inc.'s corporate credit and its proposed $275 million senior secured revolving credit facility consisting of a $75 million revolving credit facility due 2007, a $75 million term loan A due 2007 and a $125 million term loan B due 2009.

S&P said that under its simulated default scenario the distressed enterprise value is not sufficient to cover the entire credit facility. However, the bank line is secured by all the company's assets, which should provide some measure of protection to the lenders, and there is reasonable confidence of substantial recovery of the principal in the event of a default, S&P said.

S&P added that its ratings on Accredo Health reflect the company's leading position in the specialty pharmaceutical distribution business, offset by concerns about the company's concentration on a single business segment, its relatively fast growth from a small base and the risks associated with assimilating a larger rival.

S&P takes British Airways off watch

Standard & Poor's removed British Airways plc from CreditWatch with negative implications and confirmed its BB+ senior unsecured debt and BBB- long-term corporate credit. The outlook is negative. Ratings affected include British Airways' £100 million 10.875% bonds due 2008 and £250 million 7.25% bonds due 2016, both at BB+, and British Airways Finance (Jersey) LP's €300 million 6.75% guaranteed non-voting cumulative preferred securities series A at BB.

S&P said its action follows a significant restructuring in British Airways' operations.

"The ratings on BA will be protected if management succeeds in lowering the breakeven level while maintaining a strong share of long- and short-haul premium markets out of the U.K.," S&P added.

The rating agency said its negative outlook reflects the uncertain industry prospects and British Airways' challenges in implementing cost-cutting measures and asset disposals over the coming 24 months.

Moody's cuts GT Group

Moody's Investors Service downgraded GT Group Telecom Inc. Ratings affected include GT Group Telecom's $855 million senior discount notes due 2010, lowered to Ca from Caa1, and GT Group Telecom Services Corp.'s C$100 million guaranteed senior secured term loan due 2007 and C$120 million guaranteed senior secured revolving credit facility due 2007, both lowered to Caa2 from B2. The outlook is negative.

Moody's said it cut GT because the company's performance has fallen short of the rating agency's expectations.

In addition, Moody's said it is concerned about GT's ability to meet its expected revenue growth and cost objectives, to remain within revised covenant limitations and to achieve self-funding status given its current liquidity position.

However, the rating agency also recognized the limited number of competitors in the Canadian local telecom market and the company's success to date in managing the cost side of its operations.

"However, Moody's believes Canada remains a very competitive environment and despite management efforts, operating leverage remains high and revenue growth has slowed considerably over the past two quarters," Moody's said.

S&P puts Colt on negative watch

Standard & Poor's put COLT Telecom Group plc on CreditWatch with negative implications. Ratings affected include its notes and convertible notes at B+ and its bank loan at BB-.

S&P upgrades Commemorative Brands

Standard & Poor's upgraded Commemorative Brands Inc. including raising its $90 million 11% senior subordinated notes due 2007 to B- from CCC+.

S&P puts Colt on negative watch

Standard & Poor's put COLT Telecom Group plc on CreditWatch with negative implications. Ratings affected include its notes and convertible notes at B+ and its bank loan at BB-.

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