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Moody’s drops B&L debt to junk status

Moody’s drops B&L debt to junk status

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Bausch & Lomb Inc.’s debt ratings have been downgraded to junk status by Moody’s Investors Service.
The cuts affect some $800 million of rated debt.
The eye-care company’s poor performance in the market and weak outlook prompted the decision, Moody’s officials said. The company’s short-term rating also was downgraded to Not-Prime from Prime-3.
Loans, debt maturities and other transactions could be affected by the downgrade. It also could trigger the repayment of a $200 million loan, Moody’s officials said.
In response to the report, Bausch & Lomb officials said the company does not anticipate liquidity issues as a result of the downgrade, given its strong balance sheet and healthy cash flows from operations.
“It is disappointing to have Moody’s take this action on the basis of past operating performance. Today’s action by Moody’s will not alter our focus on improving our performance and reducing costs,” said Ronald Zarrella, chairman and CEO of Bausch & Lomb.
Moody’s joins Standard & Poor’s which also gave Bausch & Lomb its lowest investment grades.
“While we note that the presence of new senior management brings a new opportunity for the company to execute a turnaround … we believe that external constraints including strong competition and underlying industry trends will continue to present significant challenges,” Moody’s report states. “For instance, within the lens care and surgical businesses, Moody’s believes it may be difficult for the company to regain market share lost in 2001.”
Including special charges, Bausch & Lomb (NYSE: BOL) posted a loss of 15 cents a share for its fourth-quarter. Revenues fell 3 percent to $452 million from $465.1 million.

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