Moody's lowers ABB/Con-Cise

Moody's Investors Service said it downgraded ABB/Con-Cise Optical Group LLC's corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and the rating on the senior secured first-lien credit facility to B3 (LGD 3) from B2 (LGD3).

The agency also said it affirmed the Caa2 (LGD 5) rating on the second-lien credit facility.

The outlook was revised to stable from negative.

The downgrades reflect the company's significant operating underperformance, Moody's said.

The company will remain challenged to mitigate the impact of the price increase, resulting in reduced liquidity and higher financial leverage with a debt-to-EBITDA ratio likely to higher than 7x, the agency said.

The ratings reflect the company's very high financial leverage, pressure on profitability and cash flow generation and significant intra-quarter working capital needs, Moody's said.

Risks associated with its narrow business line, limited supplier diversity and the competitive nature of the contact lens distribution sector also are constraining factors, the agency said.

The ratings are supported by ABB/Con-Cise's leading scale and market position among U.S. distributors of soft contact lenses and good diversity across customers and geographies, Moody's said.

The company also benefits from long-term fundamentals of the optical industry, as well as increased technological innovation within the contact lens market, the agency said.

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