S&P ups Teva to BBB

Standard & Poor's raised the senior unsecured debt ratings for Teva Pharmaceutical Industries Ltd. and Teva Pharmaceutical Finance BV to BBB form BBB- following the conversion to equity of virtually all of its $550 million of 1.5% convertible senior debentures due 2005. The outlook is stable.

Ratings reflect expected continued solid operating performance and a strong position in the growing generic drug market, S&P said. Teva is also expected to maintain a moderate finance profile and S&P has increasing confidence in its ability to cope with financial uncertainties.

These factors are partially offset by Teva's aggressive efforts to expand its market presence.

Teva's operating performance and credit protection measures are strong for the rating, considering the substantial potential effect of acquisitions and product uncertainty. EBITDA operating margins are roughly 25%, EBITDA interest coverage typically exceeds 10x and funds from operations to total debt is 26%.

These measures should further improve after Teva retired the 1.5% convertible. After the conversion, Teva still has outstanding $360 million of convertible senior notes due 2021 that are putable in August 2004.

At June 30, Teva had more than $1.1 billion in cash and short-term investments on hand. Cash flow is expected to remain strong.

Teva is acquisitive but following the note conversion and the expectations of growing cash flows, the company has significant financial capacity to grow while maintaining credit measures, S&P said.

Moody's cuts Allergan outlook

Moody's Investors Service confirmed the ratings of Allergan Inc., including the senior convertible notes at A3, following its announcement to acquire Oculex Pharmaceuticals Inc. for $230 million in cash, but revised the outlook to stable from positive.

The change in outlook is based on the uncertain future cash flow generation of Oculex, combined with the expected reduction in Allergan's net cash position following this transaction, Moody's said.

Moody's noted the Oculex acquisition follows several recent acquisitions that already somewhat eroded its net cash position. As a result, cash balances have declined over the last 12 months from $855 million to $644 million at June 30, prior to the Oculex acquisition.

Allergan's capital structure at June 30 included $560 million of debt.

The company said it expects to fund the acquisition with $50 to $100 million of cash on hand plus new debt of $130 million to $180 million.

Moody's believes that following the Oculex transaction, Allergan's balance sheet may shift from a net cash to a modest net debt position.

Confirmation of the ratings reflects Allergan's still good balance sheet and solid liquidity, as well as continuation of positive sales trends.

Fitch confirms Allergan converts at A

Fitch Ratings confirmed Allergan Inc.'s ratings, including the convertibles at A, following its announcement to acquire Oculex Pharmaceuticals for $230 million in cash. The outlook is stable.

Allergan's leverage will increase in conjunction with the debt financing for the acquisition, but is anticipated to decrease as the company pays down the outstanding commercial paper over a 12-month period from repatriated cash, Fitch said.

Ratings are supported by high liquidity, strong cash flow generation and a net cash position.

Allergan had cash and cash equivalents of $644 million at the end of second quarter. Free cash flow was $126 million for the 12-month period at June 27.

Fitch's primary concerns center on the dependence of revenues on two product franchises and the replacement of lost revenues and EBITDA from the spinout of Advanced Medical Optics Inc.

Fitch expects revenue generation from the current product portfolio to offset the loss of revenues from the Advanced Medical Optics spinoff within the near term. However, mitigation of revenue concentration is contingent on revenue generation from newly commercialized products.

S&P rates new Halliburton notes BBB

Standard & Poor's assigned a BBB rating to Halliburton Co.'s recent issue of $1.05 billion senior unsecured notes, which is viewed as a partial funding of the roughly $2.8 billion cash portion of its proposed settlement with asbestos claimants.

Halliburton's ratings remain on negative watch, however, pending the outcome of the asbestos settlement agreement outlined in December 2002.

The settlement is subject to the approval of Halliburton's board of directors and bankruptcy court. Furthermore, the plan is contingent on Halliburton obtaining adequate financial arrangements. The company is not expected to fund the trust until a final and nonappealable injunction is granted.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.