Fitch may cut Schering-Plough

Fitch Ratings said it placed on Rating Watch negative Schering-Plough Corp.'s issuer default, senior unsecured debt and bank loan ratings at BBB+, convertible preferred stock rating at BBB- and short-term issuer default and debt ratings at F2.

The watch reflects concern that Schering-Plough will be unable to reduce its total debt-to-EBITDA ratio to below 2 times by the end of 2009 given potential sales erosion of the cholesterol-lowering medicines Vytorin and Zetia, according to the agency.

Leverage rose to 3.2 times at the end of 2007 from 1.2 times at the end of 2006, with the acquisition of Organon Biosciences NV for $16.1 billion in November.

Concerns also include integration costs as well as litigation and government investigations surrounding the release of the Enhance study data, the agency said.

Schering-Plough maintains solid liquidity provided by a new $2 billion revolving credit facility and sustained free cash flow generation, Fitch said.

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