Bausch & Lomb Inc.â€™s debt ratings have been downgraded to junk status by Moodyâ€™s Investors Service.
The cuts affect some $800 million of rated debt.
The eye-care companyâ€™s poor performance in the market and weak outlook prompted the decision, Moodyâ€™s officials said. The companyâ€™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, Moodyâ€™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.
â€œIt is disappointing to have Moodyâ€™s take this action on the basis of past operating performance. Todayâ€™s action by Moodyâ€™s will not alter our focus on improving our performance and reducing costs,â€ said Ronald Zarrella, chairman and CEO of Bausch & Lomb.
Moodyâ€™s joins Standard & Poorâ€™s which also gave Bausch & Lomb its lowest investment grades.
â€œWhile 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,â€ Moodyâ€™s report states. â€œFor instance, within the lens care and surgical businesses, Moodyâ€™s believes it may be difficult for the company to regain market share lost in 2001.â€
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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