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S&P: Bausch & Lomb unaffected
Standard & Poor's said Monday that the ratings and outlook on Bausch & Lomb Inc. (BBB-/stable/--) would not be affected by the company's offer to exchange up to $160 million of its currently outstanding floating-rate convertible senior notes due 2023 (old notes) for an equal amount of 2004 senior convertible securities due 2023 (new securities).
S&P said it views contingent convertible securities as 100% debt, in contrast to certain mandatory convertibles that are viewed as hybrid equity instruments. A new accounting standard, EITF Issue No. 04-08, The Effect of Contingently Convertible Debt on Diluted Earnings per Share, requires that convertible securities with certain contingent conversion features be included in the diluted earnings per share regardless of whether the contingent feature has been met.
As a result, the old notes would have been dilutive to earnings per share calculations, where the new securities will be dilutive only above the conversion price of $61.44.
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