The ratings on HORNBECK-LEEVAC Marine Services Inc. reflect the company's position in the deep-water offshore supply vessel (OSV) market and the diversification provided by its tug and tank barge business. Solid near-term fundamentals are providing good financial results and cash flow generation. However, high debt leverage, contract-renewal risk, and a speculative new-vessel program temper these strengths. During 2002, Hornbeck will face significant contract renewal risk in its OSV operations at a time when many other participants in the offshore vessel industry are announcing additions to their fleets. In addition, three remaining new vessels from its prior new-vessel program, due in 2002, have yet to be contracted. Standard&Poor's believes that recent strong day rates could erode at a time
