Playtex Weaker; American Tower Upgraded

Playtex Products' announcement of challenges in sales, liquidity and profitability in the third quarter led Moody's Investors Service to downgrade the company's $125 million revolver and $450 million term loan "C" one notch to B1. The ratings outlook remains negative. Moody's believes the company's debt protection measures are unlikely to materially improve over the near-term and could decline further.

Debt-to-EBITDA was 6.82 times at the end of the quarter and the company has a 7.1 times maximum leverage covenant under its credit agreement. "We expect to meet the covenants but they will be tight based on the guidance that we gave," said Laura Kiernan, director of investor relations for the consumer and personal products company. Playtex reported 7% declines in sales and 28% declines in EBITDA for the third quarter ended September. Still, Kiernan said the company has "ample liquidity" under an accounts receivable facility, revolving credit facility and cash balance.

A new product launch by Proctor & Gamble Co. hurt Playtex's feminine care line, while poor weather conditions affected the company's Banana Boat suncare line, notes Moody's. "This year was one of the worst weather years ever," Kiernan said. "This was the first year since we owned Banana Boat that the category has declined."

* Moody's upgraded the secured debt ratings of American Towers' and American Tower, LP's four-year, $397 million "A" loan; four-year, $268 million "B" loan and four-year, $343 million revolver one notch to B1. The upgrade is a result of the company refinancing a substantial portion of this debt with unsecured debt. The parent holding company, American Tower Corp., is an independent operator and owner of wireless communications and broadcast towers.

* Standard & Poor's has lowered Cornerstone Family Services' corporate credit and senior secured bank loan ratings from B- to CCC+. "The downgrade reflects the company's insufficient financial capacity to meet the amortization requirement of its bank term loan beginning in June 2004, and the potential loss of liquidity with the upcoming September 2004 termination of its revolving credit facility," said S&P analyst David Peknay. As of Sept. 30, the cemetery operator had approximately $132 million of outstanding debt. The quarterly amortization requirement increases from $1.25 million to $7.5 million in June 2004. The rating on Cornerstone reflects the company's constrained financial position and weak cash flow. The outlook remains negative and the rating could be lowered if the company does not refinance its bank debt as the increased amortization requirement and revolver maturity dates approach, S&P said. A Cornerstone official did not return calls by press time.