Moody's rates Omnicare notes Ba3, convertibles B1

Moody's Investors Service said it lowered the debt ratings of Omnicare, Inc. in conjunction with the company's proposed permanent financing plans related to its acquisition of NeighborCare.

At the same time, Moody's said it assigned a Ba3 rating to Omnicare's new $750 million senior subordinated notes and a B1 rating to the company's $750 million in convertible senior debentures.

The agency said these rating actions are based on the increase in financial leverage relative to cash flow following the acquisition of NeighborCare, Omnicare's relatively large appetite for acquisitions, uncertainties associated with the transition to a new reimbursement system for a large portion of the combined company's revenues and ongoing competitive pressures.

Downgraded ratings include Omnicare's corporate family rating to Ba2 from Ba1, $375 million 8.125% senior subordinated notes to Ba3 from Ba2 and $250 million 6.125% senior subordinated notes to Ba3 from Ba2 as well as Omnicare Capital Trust II's $334 million convertible trust preferred securities due 2033 to B2 from Ba3 and Omnicare Capital Trust I's $11 million convertible trust preferred securities due 2033 to B2 from Ba3.

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