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When using the Geodatabase to Coverage conversion tool with the merge option to convert annotation feature class coverages, the subclass names convert to upper case.
This happens when you drag and drop a third input feature class that has the same name as an existing feature class, click in the subclass of one of the duplicates, then click outside the text box. The subclass value turns to upper case.
If you click in the text box again and erase the value, enter a new unique value in lowercase, then click outside the box, the name turns to upper case again.
This is a known issue.
The uppercase names are not an issue. The output filenames are saved in lowercase. However, make sure that each output name is unique.