S&P rates Bausch & Lomb at BBB-

Standard & Poor's assigned a BBB- rating to Bausch & Lomb Inc.'s proposed $50 million senior unsecured notes due in 2008 and $140 million convertible senior unsecured notes due in 2023. The outlook remains negative.

Maintenance of Bausch & Lomb's solid liquidity position is essential to the rating. The company benefits from $426 million of cash and short-term investments and full availability of a $400 million senior unsecured bank credit facility maturing in 2008 at June 30.

Nearly $500 million of debt maturing in 2003, 2004, and 2005 will obligate some of this liquidity, although proceeds from the proposed new issues partly refinance these maturities.

In April, S&P noted, Bausch & Lomb halved its common dividend to $0.13 per share.

S&P rates new Veritas convertible B+

Standard & Poor's assigned a B+ rating to Veritas Software Corp.'s new $500 million 0.25% convertible subordinated notes due 2013 and confirmed its other ratings with a positive outlook.

The company has generated more than $400 million in free cash flow over the past two years, while total debt to EBITDA is below 2x. Profitability and cash flow measures are solid with operating margins in the low 20% area, but the growth strategy injects a degree of uncertainty around future performance, S&P said.

Strong free cash flow generation and $2.4 billion of cash and investments at June 30 provide ample financial flexibility. The company has no near-term debt maturities and no committed bank facilities.

Fitch confirms Brinker ratings

Fitch Ratings confirmed Brinker International Inc.'s ratings (senior at BBB+) with a stable outlook.

The ratings reflect strong growth and consistent operating performance, balanced against higher debt and the cyclical and competitive nature of the restaurant industry, Fitch said.

Adjusted leverage, as measured by total debt plus eight times rent divided by EBITDA plus rent, increased to a five-year high of 2.6x in fiscal 2002 from 2.1x in fiscal 2000. Strong EBITDA growth has partially mitigated the impact on leverage, as adjusted leverage for the last 12 months ended March 26 declined to 2.3x.

Going forward, Fitch expects Brinker will maintain current credit metrics either by continued EBITDA growth, or by moderating share repurchases.

S&P rates American Financial convertibles BBB

Standard & Poor's assigned a BBB rating to American Financial Group Inc.'s $175 million senior convertible notes. The outlook is negative.

S&P said the ratings reflect American Financial's good business position in its specialty property/casualty and life/annuity niche markets, improving operating results over the last 18 months and strong capital adequacy.

Partially offsetting these factors is diminished earnings diversification at American Financial following the IPO of its personal lines business in February 2003, poor historical operating performance and adequate financial flexibility.

American Financial first-quarter 2003 net earnings of $25.1 million were an improvement over the same period in 2002, S&P noted. However, they fell short of S&P's expectations because of the effect of an after-tax loss of $25.6 million related to the personal lines IPO.

Second-quarter earnings are also expected to be lower than initially anticipated because of a recent loss related to an arbitration, which is expected to cause the group to take an after-tax charge of about $29 million during the quarter.

However, S&P said it expects American Financial's operating results for full-year 2003 to be strong because of a substantial improvement to earnings expected in the second half of the year.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.