DeCrane Aircraft Descends; American Axle Glides

DeCrane Aircraft Holdings may face substantial difficulty in either meeting near term debt repayment requirements or re-financing its credit facilities in the near future, according to Moody's Investors Service . Leverage has remained high through a difficult operating period in the jet market and Moody's has downgraded the company's $178.3 million credit facilities from B2 to B3. The debt consists of a $40 million revolver maturing in 2004, a $14.9 million "A" loan maturing in 2004, a $66.9 million "B" loan maturing in 2005 and a $56.5 million "D" loan maturing in 2006.

Moody's said the downgrade reflects the company's continued weakening operating performance, thin liquidity profile, restructuring of maturities and weaker cash flows relative to debt levels despite overall debt reduction. Officials at DeCrane did not return repeated calls for comment.

DeCrane undertook a substantial debt restructuring program in 2003. In May 2003, the company used the proceeds of its $140 million sale of its Specialty Avionics Group business to repay approximately $130 million in debt, which was scheduled to mature between 2004 and 2006. At that time, the company's revolver was also reduced by $10 million to $40 million. Senior secured debt will be reduced a further $69 million with the completion of a proposed $80 million second-lien term loan. The loan is led by Credit Suisse First Boston and is reportedly priced at 12%.

* American Axle & Manufacturing has significantly reduced leverage over the past year while having strong operating cash flow performance and steadily increased content per vehicle. These actions have led Moody's to place the company's ratings on review for possible upgrade. This affects the company's $618.8 million of remaining credit facilities rated Ba1. The facility consists of a $378.8 million revolver maturing in October 2004 and a $240 million outstanding "B" loan due April 2006. American Axle manufactures, engineers, validates and designs vehicle driveline systems.

The review will focus on the company's prospects for progressively reducing its approximately 81% customer concentration with General Motors . Calls to American Axle officials were not returned by press time.