Moody's ups Fisher Scientific, cuts Thermo Electron

Moody's Investors Service said it upgraded Fisher Scientific International Inc.'s $300 million 2.5% senior unsecured convertible notes due 2023 to Baa2 from Ba1; $330 million 3.25% senior subordinated convertible notes due 2024, $300 million 6¾% senior subordinated notes due 2014 and $500 million 6 1/8% senior subordinated notes due 2015 to Baa3 from Ba2 and subsidiary Apogent Technologies, Inc.'s $345 million floating-rate senior convertible contingent notes (CODES) due 2033 to Baa2 from Ba1.

The agency downgraded Thermo Electron Corp.'s $150 million senior unsecured notes due 2008 to Baa2 from Baa1, $250 million 5% senior global notes due 2015 to Baa2 from Baa1 and $125 million convertible subordinated debentures due 2007 to Ba1 from Baa3.

This concludes the rating review for possible downgrade begun on May 8, 2006 for Thermo Electron, and the outlook is stable.

The rating actions follow the announcement that the merger between Thermo Electron and Fisher Scientific has been finalized. Thermo Electron is the surviving entity and its name was changed to Thermo Fisher Scientific Inc. The companies combined in a tax-free, stock-for-stock transaction.

The agency said the Baa2 senior unsecured debt rating for the combined entity reflects a capital structure, financial leverage and cash flow coverage of debt indicative of an investment-grade issuer. Moody's predicted that the company will reduce debt to $2.6 billion and $2.3 billion at the end of 2006 and 2007, respectively, from $3 billion as of Dec. 31, 2005.

The agency also predicted that the merger will offer the following benefits: greater scale and a broad portfolio of products and services, the ability to offer an end-to-end solution for laboratory customers and a more diverse geographic, product and customer mix.

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