Moody's cuts King Pharma loan to Ba2, converts to Ba3

Moody's Investors Service said it downgraded the ratings of King Pharmaceuticals Inc. (senior implied to Ba3 from Ba1).

Moody's cut King Pharma's $400 million senior secured revolving credit facility due 2007 to Ba2 from Baa3, $345 million senior unsecured guaranteed convertible debentures due 2021 to Ba3 from Ba1, senior implied rating to Ba3 from Ba1 and senior unsecured issuer rating to B1 from Ba2.

The ratings were placed under review for possible downgrade on May 7 and the direction of the review was changed to uncertain from possible downgrade on July 26. Following this rating action, King's ratings remain under review for possible further downgrade.

Moody's said the downgrade to Ba3 from Ba1 reflects recent news that King's 10-Q filing for the quarter ended Sept. 30 will be late as the company reviews its reserves for product returns, deterioration in King's revenue, earnings and cash flow during 2004, uncertainty related to unresolved legal matters and Moody's belief that there is uncertainty as to whether King's pending acquisition by Mylan Laboratories Inc. will be completed.

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