Moody's: Omnicare loan Baa3

Moody's Investors Service said it assigned Baa3 (LGD 2, 14%) ratings to Omnicare, Inc.'s new $450 million unsecured term loan A and new $300 million unsecured revolver.

The agency also said it affirmed Omnicare's Ba3 corporate family and probability of default ratings, as well as its SGL-1 speculative-grade liquidity rating.

The outlook remains negative.

The proceeds are expected to be used to partially take-out the company's $525 million in callable 6 7/8% senior subordinated notes due 2015.

Moody's said it expects to withdraw the rating on the 2015 notes once they are fully repaid.

The agency also said it affirmed the company's senior subordinated notes at Ba3 (with LGD 4, 53% revised from LGD 3, 44%) and convertible senior notes at B2 (with LGD 5, 84% revised from LGD 5, 85%), along with Omnicare Capital Trust I's Piers trust preferreds at B2 (LGD 6, 94%) and Omnicare Capital Trust II's Piers trust preferreds at B2 (LGD 6, 94%).

The ratings consider an expectation that the company will continue to see improvements in operating performance, Moody's said.

Because of uncertainty associated with the reimbursement environment for long-term care pharmacy operators, the ratings assume that Omnicare's credit metrics will trend toward those above a Ba3 rating level, including a debt-to-EBITDA ratio below 3.5x, the agency said.

Declining bed counts, competitive pricing pressures and the potential for negative effects from recent cuts in nursing home reimbursement rates are concerns, Moody's said.

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