S&P downgrades Calpine

Standard & Poor's downgraded Calpine Corp. including cuttings its senior unsecured debt to B+ from BB+ and its convertible preferred stock to B from B+. The outlook is stable.

S&P said the action follows Calpine's decision to secure $2 billion ahead of its unsecured bondholders.

The rating agency noted that to shore up its liquidity position, Calpine has added about $1.5 billion of debt beyond its forecast in October 2001, bringing adjusted minimum and average funds from operations to interest coverage ratios to about 1.9 times and 2.4 times, respectively, from 2002-2005.

This deviates substantially from the previous forecast ratios of 2.3 times and 2.8 times, respectively, S&P said.

"While the $2 billion in secured debt may improve Calpine's short-term liquidity position, the additional debt will increase interest expense, refinancing risk, and interest-rate risk," S&P commented.

The amount of secured debt also caused S&P to increase the notching of the unsecured debt.

Moody's puts Solectron on downgrade review

Moody's Investors Service put Solectron Corp. on review for possible downgrade. Ratings affected include Solectron's $500 million 9 5/8% senior notes due 2009, $150 million 7 3/8% senior notes due 2006, 2¾% LYONs due 2020, 3¼% LYONs due 2020, $250 million senior secured revolving credit facility due 2004 and $250 million 364-day senior secured revolving credit facility, all rated Ba1, $1.05 billion 7¼% subordinated adjustable-conversion-rate equity security units due 2006 rated Ba2.

Moody's said it began the review in response to Solectron's second quarter operating loss and company guidance for a third quarter loss as well as "a much slower ramp than previously anticipated of revenues derived from incremental customer platforms."

The rating agency said it will consider Solectron's continued weak operating performance, the latest phase of its restructuring effort to reduce costs and its ongoing erosion of returns on capital and assets in excess of what has been typical among its Tier One electronic manufacturing services peers.

Solectron's increasing debt leverage, the struggling performance of certain of its leading customers and continuing weakness in some end markets, including telecommunications - where its exposure actually increased to 57% in the second quarter from 54% in the first quarter - and computing, will also be scrutinized, Moody's said.

Fitch cuts Solectron to junk

Fitch Ratings downgraded Solectron Corp. including lowering its senior bank facility and senior unsecured debt to BB from BBB- and its Adjustable Conversion Rate Equity Security Units (ACES) to B+ from BB+. The outlook remains negative.

Fitch said it downgraded Solectron because of the prolonged, significant reduction in demand from the company's customers, which continues to weaken operational performance and credit protection measures.

In addition, with the delay in new business as customers defer ramping new projects in the face of continuing weak end-markets, Fitch said it believes any sustainable recovery will not materialize in 2002.

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 planned cost reductions the ratings may continue to be negatively impacted,. Fitch said.

Moody's rates aaiPharma's credit facility B2, notes Caa1

Moody's Investors Service assigned ratings of B2 to aaiPharma's proposed senior secured credit facility and Caa1 to the company's senior subordinated guaranteed notes. The company also received a senior implied rating of B2 and an issuer rating of B3. The outlook is stable.

The credit facility consists of a senior secured guaranteed $75 million revolver due 2007 and a $100 million senior secured guaranteed term due 2007. The $175 million of senior subordinated guaranteed notes are due 2010.

The credit facility rating is based mainly on the collateral package. "Moody's believes that in a distress situation the value of the collateral may not cover the outstanding loans, and therefore the credit facility is rated the same as the senior implied rating," the Moody's release said. The loan will be guaranteed by all U.S. domestic subsidiaries and will be secured by all assets belonging to the company and its subsidiaries, by the capital stock of the guarantors and by 65% of capital stock of all subsidiaries.

The senior subordinated notes rating "reflects their contractual subordination to the senior debt, including the secured credit facility, and is therefore rated two notches below the senior implied rating," the release said.

Proceeds will be used to fund the purchase of Darvon and Darvocet, two pain treatment pharmaceuticals, from Eli Lilly, to repay outstanding debt and to repay a synthetic lease, which expires in September 2002, the release said.

Fitch rates new JohnsonDiversey notes B+

Fitch Ratings assigned a B+ rating to S.C. Johnson Commercial Markets, Inc.'s (JohnsonDiversey) new $500 million of senior subordinated notes and a BB rating to its new $1.2 billion senior secured credit facility made up of a $300 million revolver and $900 million in term loans. The outlook is stable.

S.C. Johnson Commercial Markets' acquisition of Unilever's $1.6 billion DiverseyLever business will create the world's second largest institutional and industrial cleaning company, Fitch said.

The rating agency commented that the institutional and industrial cleaning market is characterized by relatively stable sales and operating income margins for the largest market participants.

Fitch said its ratings reflect the cyclical stability of JohnsonDiversey's predecessor company earnings, diversification across institutional and industrial cleaning market segments, diversification geographically and the likelihood that the newly formed company will be able to improve its cost structure to the point that free cash flow improves strongly in two to three years.

Concerns surround the significant use of debt in the capital structure, merger execution risk and the potential impact on the goal to realize $150 million in mainly cost-related synergies over the next two to three years, Fitch said.

S&P downgrades Sotheby's

Standard & Poor's downgraded Sotheby's Holdings Inc. and kept the company on CreditWatch although now with negative implications instead of developing. Ratings affected include Sotheby's $100 million 6.875% notes due 2009 and $250 million credit facility, both lowered to B+ from BB+.

S&P said it cut Sotheby's ratings because it expects the worldwide art auction market will experience difficulties in 2002 and that Sotheby's will continue to be challenged by heightened competition for consignments of significant collections and valuable individual properties.

Sotheby's worldwide auction business was hurt in 2001 by a slowing economy, loss of wealth due to stock market setbacks and by a substantially more competitive environment in part due to the repercussions of domestic litigation stemming from price fixing allegations, S&P noted.

Art buyers and sellers were less aggressive during 2001, and Sotheby's encountered difficulties in attracting sellers of private collections, S&P said, adding that the company's auction revenue fell 15% to $286 million from $336 million in 2000.

While Sotheby's "made substantial progress in cutting costs" it also spent nearly $20 million to retain key employees, S&P said. As a result, there was insufficient EBITDA to cover interest expense for the year.

Moody's puts PTC on upgrade review

Moody's Investors Service put Polska Telefonia Cyfrowa Sp zoo on review for possible upgrade. Ratings affected include PTC's $253 million senior subordinated guaranteed discount notes due 2007, €200 million 10.875% senior subordinated guaranteed due 2008, $150 million 11.25% senior subordinated guaranteed due 2009 and €300 million 11.25% senior subordinated guaranteed due 2009, all rated B2.

Moody's said it began the review in response to PTC's strong operating and financial progress over the last few trading quarters, despite a subdued economic climate and increasingly challenging competitive landscape.

PTC remains the market leader in the Polish mobile market with a 38% market share, Moody's said.

Moody's added that PTC has strong internally generated cash flow to support debt service and second generation capital expenditure requirements.

At the end of 2001, PTC's leverage was 2.8 times on net debt to EBITDA basis, down from 3.3 times at the end of 2000, the rating agency said.

S&P puts Railtrack on positive watch

Standard & Poor's changed its CreditWatch on Railtrack plc to positive from developing.

Ratings affected include Railtrack's £135 million 9.125% bonds due 2006, £100 million 9.625% bonds due 2016, £300 million 7.375% bonds due 2022, £250 million 5.875% bonds due 2028, £400 million 3.5% exchangeable bonds due 2009, £1 billion five-year revolving credit facility and £350 million 5.875% bonds due 2009, all rated BB+.

S&P puts Alfa Laval on positive watch

Standard & Poor's put Alfa Laval AB on CreditWatch with positive implications.

Ratings affected include Alfa Laval Credit Finance AB's €161 million term loan A due 2007, €329.6 million term loan B due 2008 and €351 million bank loan due 2008, all rated BB, and Alfa Laval Special Finance AB's €220 million 12.125% notes due 2010, rated B+.

Fitch rates BCE Teleglobe notes B+

Fitch Ratings began coverage of BCE Teleglobe, assigning a B+ rating to its $1.3 billion of senior unsecured notes and putting them on Rating Watch Evolving. Fitch said the rating is a service to users and is based on public information.

Fitch said the evolving watch will remain until Teleglobe's parent BCE Inc. offers a greater indication of support to debtholders and/or Teleglobe's credit facility is extended.

The rating assigned implies "very little" in the way of continued financial support from BCE, Fitch said, adding that it also incorporated the uncertainty surrounding Teleglobe's ability to negotiate an extension for its credit facility with favorable terms, and the difficult conditions in Teleglobe's telecommunications market sector.

At this time, Teleglobe is slightly EBITDA positive but is not generating sufficient cash flow to cover its operating needs, Fitch noted. "Given its lack of liquidity, the company is completely reliant on BCE to provide additional funding to meet its obligations."

S&P rates new Boyd Gaming notes B+, raises outlook

Standard & Poor's assigned a B+ rating to Boyd Gaming Corp.'s upcoming offering of $200 million senior subordinated notes and raised the outlook to stable from negative.

S&P said it raised Boyd's outlook because of its positive operating momentum since the second quarter of 2001 and the expectation that debt leverage will continue to decline in 2002 as Boyd benefits from the February 2002 opening of Delta Downs Racetrack and Casino in Vinton, La.

The rating agency said it expects the Borgata project will be Boyd's primary growth vehicle over the intermediate term and that management will otherwise favor debt reduction and de-leveraging over additional investment opportunities.

S&P said EBITDA for the quarter ended March 31, 2002 is expected to be between $67 million - $70 million, compared with $55 million in the first quarter of 2001, which did not benefit from six weeks of Delta Downs.

S&P said it expects debt leverage to decline to the low- to mid-4 times area by year-end 2002, from about 5 times at year-end 2001.

S&P puts Telewest on negative watch

Standard & Poor's put Telewest Communications plc on CreditWatch with negative implications.

Ratings affected include Telewest's various series of notes rated B, its £300 million convertible notes due 2007, also rated B, Telewest Finance (Jersey) Ltd.'s $500 million 6% convertible bonds due 2005 rated B and Telewest Communications Networks Ltd.'s £250 million senior secured bank loan due 2008 and £2 billion senior secured bank loan due 2007, both rated BB.

S&P rates new Biovail notes BB-, upgrades existing

Standard & Poor's assigned a BB- rating to Biovail Corp.'s upcoming offering of $275 million subordinated notes due 2010, upgraded the company's existing ratings and revised the outlook to positive from stable.

Existing ratings raised include Biovail's $400 million senior secured revolving credit facility due 2002, lifted to BB+ from BB.

S&P rates new Mendenhall Millennium notes B-

Standard & Poor's assigned a B- rating to Mendenhall Millennium, LLC's $75 million of first mortgage notes due 2009. The outlook is negative.

Moody's withdraws Golden Northwest ratings

Moody's Investors Service withdrew its ratings for Golden Northwest Aluminum, Inc. Ratings affected include its $75 million senior secured revolving credit facility at B2 and $150 million 12% guaranteed first mortgage notes due 2006.

Moody's said Golden Northwest deregistered its 12% guaranteed first mortgage notes, stopped filing public reports with the SEC and does not intend to provide financial and other information to Moody's.

"Therefore, Moody's is unable to maintain debt ratings on the company," the rating agency said.

S&P rates new Veridian bank loan BB-

Standard & Poor's assigned a BB- rating to Veridian Corp.'s new bank credit facility including its $70 million revolver due 2007 and $130 million term loan due 2008. The outlook is stable.

S&P said its ratings reflect Veridian's moderate but predictable earnings and cash flow from a diversified portfolio. They also reflect an improved capital structure following its $175 million initial public offering, S&P said.

However, the rating agency said Veridian has an active acquisition strategy.

Veridian is competing in a consolidating industry with many participants, some of which are much larger, S&P said. But its risks are partly mitigated by its diversity of programs and customers. In addition, many programs are structured as lower-risk, cost-plus contracts. Recent acquisitions should help broaden the company's technical capabilities as well as add to its healthy order pipeline.

EBITDA margins are stable in the 8% area, benefiting from the additional scale from acquisitions, operating synergies and program mix, S&P said.

S&P rates new Foamex loan BB-

Standard & Poor's assigned a BB- rating to Foamex LP and Foamex Capital Corp.'s $25 million term F bank loan due 2005.

Moody's cuts Evercom to Ca

Moody's Investors Service downgraded Evercom Inc.'s $115 million 11% guaranteed senior notes to Ca from Caa1. The outlook is negative.

Moody's said its action follows Evercom's recent financial performance which continues to underperform the rating agency's earlier expectations.

Moody's said it is concerned that prolonged economic weakness and competition will continue to pressure Evercom's overall performance and "place considerable strain on its current liquidity position."

Moody's rates new Dresser notes B2

Moody's Investors Service assigned a B2 rating to Dresser, Inc.'s new $250 million 9.375% senior subordinated add-on notes due 2011 and confirmed the B2 rating on its existing $300 million 9.375% senior subordinated notes due 2011 and the Ba3 on its $476 million of senior secured bank facilities. The outlook is stable.

Moody's said Dresser's ratings are restrained by high leverage; expected significantly softer 2002 EBITDA, potentially firming later in the year; a degree of execution risk associated with Dresser's ongoing rationalization in pursuit of improved margins and reduced capital intensity; a high goodwill/intangible asset component; and low tangible fixed asset component.

The rating agency noted Dresser had expected to reduce debt by $120 million by year-end 2001 but it instead rose $37 million. Net debt did fall $69 million - cash rose $88 million - but higher working capital and the $70 million Entech purchase, partly with $29 million of equity, kept Dresser from hitting its target.

Helping the ratings are seasoned management; manageable cash flow cycles for the ratings and leverage; long-established business practices, controls, and customer base; strong, long-standing, diversified worldwide positions equipment and services critical to natural gas and crude oil production, petrochemicals, power, natural gas distribution, and industrial sectors; leading products and services in key segments and, Dresser believes, second positions in most other segments; deep financial strength of much of Dresser's customer base; and fairly low capex needs, Moody's said.

Moody's downgrades SF Holdings

Moody's Investors Service downgraded SF Holdings Group, Inc. and its subsidiaries Sweetheart Cup Co. Inc. and The Fonda Group, Inc. Ratings lowered include SF Holdings' $144 million 12.75% discount notes due 2008, cut to Ca from Caa3, Sweetheart Cup's $110 million 10.5% senior subordinated notes due 2003, cut to Caa2 from Caa1, and Fonda's $120 million 9.5% senior subordinated notes due 2007, cut to Caa2 from B3. The outlook is negative.

Moody's said it lowered the ratings because it expects SF Holdings' operating environment and financial flexibility are likely to remain challenged for the near-to-medium term.

Despite the benefits of lower costs for raw materials and transportation, first quarter results were weaker than expected due to competitive pressures and a slowdown in leisure travel, the rating agency sadi.

The ability to rapidly respond to these difficult conditions in a low growth industry, as well as to ongoing volatility in energy and raw materials prices, is materially constrained by the company's thin fixed charge coverage and high leverage, Moody's added.

For the 12 months to Dec. 30, 2001, EBITA-plus-rent covered cash interest and rent only 1.3 times, while the company's debt adjusted for the capitalization of operating leases and the inclusion of exchangeable preferred stock was around 8.7 times EBITA-plus-rent, Moody's said.

Moody's puts MediaNews on downgrade review

Moody's Investors Service put MediaNews Group, Inc. on review for possible downgrade. Ratings affected include MediaNews' $300 million of senior subordinated notes due 2009 rated B1 and $200 million of senior subordinated notes due 2011 rated B1.

Moody's said it began the review because of concerns about the continued deterioration in MediaNews' cash flow mostly as a result of the weak economic environment and its impact on the company's advertising revenues.

Moody's said it had anticipated some improvement in the company's cash flow by December 2001 following some easing of the highly competitive Denver market where Scripps' Rocky Mountain News and MediaNews' Denver Post have entered into a Joint Operating Agreement. The anticipated benefits from this agreement were offset by weakness in the Denver market, Moody's commented.

As a consequence, MediaNews' credit profile appears weak for its current ratings and is not likely to be sustainable in the absence of a material de-leveraging event, Moody's said.

S&P takes Wolverine Tube off watch

Standard & Poor's removed Wolverine Tube Inc. from CreditWatch with negative implications and confirmed its ratings including its $150 million 7.375% senior notes due 2008 and $120 million senior unsecured notes due 2009 at BB-. The outlook is negative.

S&P rates DaVita bank loan BB-

Standard & Poor's assigned a BB- rating to DaVita Inc.'s $800 million term B loan due 2009, its $150 million revolving credit facility due 2007 and its $200 million term A loan due 2007.

S&P upgrades Plains Resources

Standard & Poor's upgraded Plains Resources Inc. including its $50 million 10.25% senior subordinated notes series C due 2006, $150 million 10.25% senior subordinated notes series B due 2006 and $75 million 10.25% subordinated notes series E due 2006 to B+ from B.

S&P downgrades Vintage Petroleum

Standard & Poor's downgraded Vintage Petroleum, Inc., took it off CreditWatch with negative implications and assigned a negative outlook.

Ratings affected include Vintage's $150 million 9% senior subordinated notes due 2005, $100 million 8.625% senior subordinated notes due 2009, $150 million 9.75% senior subordinated notes due 2009 and $200 million 7.875% senior subordinated notes due 2011, all cut to B from BB-.

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