Moody's lowers Fresenius

Moody's Investors Service said it lowered ratings of Fresenius AG as a result of the announced debt-funded acquisition of Renal Care Group, Inc. (RCG) by Fresenius' subsidiary, Fresenius Medical Care AG (FME).

Moody's said its ratings reflect the high reliance of Fresenius on distributions from FME, which is its largest subsidiary and accounted for approximately 73% of FY04 consolidated operating cash flow.

As a result of its acquisition of RCG, FME's leverage profile will increase materially, thereby increasing the leverage profile of Fresenius, the agency said. Moody's expects Fresenius' pro forma FY05 lease adjusted leverage to be close to 5.0 times compared to 3.7 times in FY04.

Fresenius' ratings continue to be supported by the group's global scale and strong market shares commanded by each of its operating subsidiaries and diversification of its revenue streams through its other two principal subsidiaries, Kabi and ProServe, Moody's noted.

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