S&P cuts Twinlab

Standard & Poor's downgraded Twinlab Corp. including cutting its $100 million 10.25% senior subordinated notes due 2006 to CC from CCC-. The outlook remains negative.

S&P said the downgrade is because of Twinlab's anticipated breach of covenants related to its mortgage debt, the refinancing risk of its current senior debt, its poor profitability and litigation matters.

As a result, Twinlab's auditors have issued a qualified opinion indicating that the company may be unable to continue as a going concern.

Sales for the first quarter ended March 31, 2003 fell 17% from the previous year, and operating income was negative $3.3 million, S&P said. Twinlab has discontinued sales of diet products containing ephedra, a compound that has been at the center of wrongful death lawsuits and is under review by the U.S. Food and Drug Administration. Past sales of ephedra-containing products caused the company's insurance costs to rise significantly.

S&P cuts Grupo TMM

Standard & Poor's downgraded Grupo TMM SA including cutting its $200 million 10% notes due 2006 and $200 million 9.25% notes due 2003 to D from CC.

S&P said the downgrade follows Grupo TMM's announcement that it did not make the interest and principal amount payments due May 15 on the 2003 and 2006 notes.

The company also announced that it has initiated a legal proceeding in a court of local jurisdiction in Mexico. TMM indicated that the proceeding is a commercial matter and is not a "Concurso Mercantil" (a Mexican proceeding equivalent to Chapter 11 in the U.S.). The proceeding petitioned the court for an order effectively imposing a grace period during which creditors of the company, including the holders of the aforementioned notes and the receivable securitization trust certificates, would be prevented from pursuing in Mexico the exercise of remedies based on a breach of the company's existing debt obligations.

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