Moody's Investors Service upgraded the senior secured debt rating for Nextel Partners to B1 from B2 because of solid operating performance over two years. Nextel has consistently exceeded Moody's expectations for network deployment and subscriber additions. The company, based in Kirkland, Wash., has $1.3 billion in debt and credit facilities.
The rating also notes that the company's operating performance shows it's on track to achieve its goal of being positive on earnings before interest, taxation, depreciation and amortization.
Moody's is concerned after the recent announcement by Nextel Communications that its subscriber and EBITDA results would be lower than previous levels. However, Moody's believes Nextel Partners is somewhat sheltered from the competitive forces facing Nextel Communications. Nextel Partners is an affiliate of Nextel Communications, formed to build out the Nextel network in second and third tier markets.
* Moody's downgraded the senior debt rating for Raytheon Company to Baa3 from Baa2 due to the company's low cash flow performance. According to the rating, even after recent moderate improvements, the company faces various challenges. Raytheon, based in Lexington, Mass., is a major aerospace and defense company. It has $13 billion in debt securities and bank facilities.
The outlook remains negative, reflecting the possibility that it may take longer than expected for Raytheon to improve returns from its businesses and achieve needed debt reduction, as well as uncertainties about the timing and size of its exposure to liabilities stemming from Raytheon Construction & Engineering.
Supporting the rating is the improving long-term fundamentals of the defense industry as a result of recent growth in defense spending.
* NationsRent Inc.'s $925 million in credit facilities was downgraded to B3 from B2 by Moody's due to the ripple effect of a slowing economy. According to the rating, the equipment rental industry will seek to correct the over-expansion and over-fleeting that occurred over the past three years. The process will probably result in increased price competition and further margin pressure. The Fort Lauderdale, Fla.-based company provides rental equipment to the construction industry.
Moody's notes that, in the event of rapid fleet liquidations, the fleet valuation could decline. NationsRent is required to file monthly reporting statements with the bank, versus the quarterly filings it had made previously.
* Aladdin Gaming Holdings' $410 million in senior secured credit facilities was downgraded to B3 from B2 by Moody's due to concerns that cash resources won't meet debt payments. Aladdin is a casino resort based in Las Vegas, Nev.
According to the rating, the company is relying on an agreement with its sponsors to make cash equity contributions if Aladdin fails to comply with minimum fixed charge coverage ratios mandated by the bank agreement.
Moody's will focus on the management's plan to seek alternatives to improving the company's liquidity profile. Possible alternatives include asset sales, additional debt to the extent it is available under the company's credit agreements, and the possibility of additional equity contributions from Aladdin's sponsors.