Moody's downgrades Chiron

Moody's Investors Service said it downgraded the ratings of Chiron Corp., including the senior unsecured rating to Baa2 from Baa1.

Moody's also downgraded Chiron's $500 million senior unsecured 1.625% convertible debentures due 2033 to Baa2 from Baa1 and $80 million senior unsecured LYONs due 2031 to Baa2 from Baa1. Moody's does not rate Chiron's $385 million senior unsecured 2.75% convertible debentures due 2034.

The outlook is negative.

Moody's said the downgrade is based on: (1) the large erosion in Chiron's free cash flow expected to result from lost Fluvirin sales during the 2004-2005 season; (2) uncertainty that Chiron's manufacturing deficiencies will be remedied in time for the company to manufacture and market Fluvirin during the 2005-2006 flu season; and (3) Moody's concern that Chiron's longer term market position may be negatively affected - even if deficiencies are remedied - resulting from potential new entrants to the flu vaccine market.

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