Moody's cuts Mississippi Chemical

Moody's Investors Service downgraded Mississippi Chemical Corp. including cutting its $200 million guaranteed senior notes due 2017 to Caa2 from B3. The outlook remains negative.

Moody's said the action reflects Mississippi Chemical's continuing losses since 1999, the adverse impact on the company of volatile U.S. natural gas prices, and Moody's expectation of continuing competition from imports of low-cost nitrogen fertilizer products.

Nitrogen fertilizer products represented 68% of the company's 2001 sales and therefore are the primary driver of its earnings, although the company also produces phosphate and potash products. Natural gas is the primary raw material used in the production of ammonia, which is the base product for the production of its other nitrogen products.

Moody's said it believes that U.S. ammonia producers will continue to face a difficult market over the next several years, as additional lower cost international capacity becomes available from the monetization of foreign natural gas reserves or as the result of co-product natural gas production. These low cost imports will continue to pressure the cash margins of domestic producers, in particular those near the gulf coast that do not have significant additional transportation costs, such as Mississippi Chemical, and will lead to further idling and shutdowns of the plants of higher cost domestic producers.

Consolidation of domestic producers is also anticipated, Moody's said.

The rating action also takes into account the fact that the company's $200 million senior secured asset-based credit facility matures on Nov. 25, 2002, and the company is in the process of negotiating a new credit facility, Moody's added.

Moody's puts Softbank on review

Moody's Investors Service put Softbank Corp. on review for downgrade including its senior unsecured debt at B1.

Moody's said it began the review because it has growing concern that Softbank's earnings and cash flow will remain under pressure due to the increasingly competitive operating environment for its asymmetric digital subscriber line-based internet access service.

The major providers of ADSL services have been consistently lowering their prices to expand their individual subscriber bases, Moody's said. The lower prices have contributed to rapid growth of subscribers in Japan's broadband data-transmission services. However, the competition has also been intensifying.

S&P cuts Northland Cable

Standard & Poor's downgraded Northland Cable Television Inc. and maintained a negative outlook on the company. Ratings lowered include Northland's $100 million 10.25% senior subordinated notes due 2007, cut to CC from B-, and its $100 million senior credit facility due 2005, cut to CCC from BB.

S&P said the action reflects Northland's limited liquidity position and the weak fundamentals of the rural television cable industry.

As of June 30, 2002, Northland had a cash balance of $3 million and availability under its $75 million secured bank facility was $4.7 million, S&P said. With secured debt per subscriber of about $630, the bank facility was lowered to the same level as the corporate credit rating due to weakened asset valuations for rural cable TV properties and the uncertainty for full recovery under S&P's simulated distressed scenario.

As a rural cable TV operator and with digital penetration trailing that of most of the larger multiple system operators, Northland has been more vulnerable to challenges from direct broadcast satellite, S&P said. However, in 2000, the company commenced offering digital television in some of its larger systems to thwart the decline in basic subscribers. As of June 30, 2002, more than 85% of its subscribers had digital television availability.

Nevertheless, revenue and EBITDA growth have been relatively stable over the past year, reflecting the decline in basic subscribers and increased programming costs, offset by rate increases, increased penetration of new product tiers, and increased advertising revenue.

Moody's lowers some Air2Us ratings

Moody's Investors Service downgraded two classes of notes issued by Air 2 US and put two others on review. Securities affected include Air2US's $127.1 million series C enhanced equipment notes due Oct. 1, 2020, downgraded to B3 from B1, $76.2 million series D enhanced equipment notes due Oct. 1, 2020, downgraded to Caa2 from Caa1, $637.6 million series A enhanced equipment notes due Oct. 1, 2020 rated A1 put under review for possible downgrade and $226.4 million series B enhanced equipment notes due Oct. 1, 2020 rated Ba1 put under review for possible downgrade.

Moody's said the action follows its downgrade of United Air Lines and confirmation of the senior implied rating of American Airlines, the two lessees in the transaction.

S&P cuts Doman

Standard & Poor's downgraded Doman Industries Ltd. and put it on CreditWatch with negative implications.

Ratings lowered include Doman's $425 million 8.75% notes due 2004 and $125 million 9.25% due 2007, cut to C from CC, and Doman's $160 million senior secured notes due 2004, cut to CCC- from CCC.

S&P raises Pinnacle Entertainment outlook

Standard & Poor's raised its outlook on Pinnacle Entertainment Inc. to stable from negative and confirmed its ratings including its senior secured bank loan at B and subordinated debt at CCC+.

S&P said the outlook revision follows Pinnacle's improved operating results for the six months ended June 30, 2002.

S&P said it expects the positive momentum to continue in the near term, leading to an improvement in credit measures from the previous year.

The company's southern Indiana riverboat facility, Belterra, which opened in late 2000, struggled during 2001 due to competitive market conditions, a disadvantaged location, and weak economy, S&P noted.

But it added that a lower cost structure and refined marketing programs have led to a significant improvement in EBITDA. For the six months ended June 30, 2002, the property generated $5.4 million in EBITDA, compared to an EBITDA loss of $1.8 million during the prior-year period. The addition of a 300-room hotel tower within the next 18 months is expected to enhance performance further.

In Louisiana, the Bossier City facility was negatively affected during 2001 by the additional capacity in the market and the intense competitive environment. The substantial completion of the company's $25 million renovation and re-branding project should help to improve operations, S&P said.

The Boomtown Reno property has performed well, despite a very competitive market environment, S&P commented. Still, the property's operating performance could be negatively affected over the next few years as a result of the increase in Native American gaming in northern California.

The Boomtown New Orleans and Casino Magic Biloxi properties have been steady performers, despite competitive market environments, S&P said.

EBITDA for the six months ended June 30, 2002, rose 20%, to $40.3 million, from the prior-year period on improved performance at Belterra and lower corporate expenses. Based on current operating trends, EBITDA coverage of interest expense and total debt to EBITDA are expected to be more than 1.5 times and approximately 6x, respectively, for 2002, S&P said.

S&P raises AmeriGas outlook, cuts notes

Standard & Poor's raised its outlook on AmeriGas Partners LP to stable from negative confirmed its corporate credit rating at BB+ and downgraded its senior unsecured debt including cutting its $100 million 10.125% senior notes due 2007 and $200 million 8.875% notes due 2011 to BB- from BB+.

S&P said the senior unsecured rating at the master limited partnership now reflects an increasing amount of debt at a level that is not supported by the co-obligor arrangement with the general partner, and the subordination of the MLP debt to the debt burden of the operating limited partnership, where the assets of the company reside.

S&P added that it views the business profile of the domestic propane industry in general to be worsening. While ratings for retail propane providers are based upon average weather conditions, the significantly negative deviation from normal in recent years has proven to create significant hardship for companies throughout the sector.

Poor conditions have caused lower asset valuations for potential acquisitions, but players will nevertheless be challenged to create synergies worthy of expansion premiums going forward, S&P said.

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