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Moody's could lower Advanced Medical
Moody's Investors Service said it will keep Advanced Medical Optics, Inc. ratings on review for possible downgrade following its bid to buy Bausch & Lomb, Inc. for $5 billion, or $75 per common share, including $830 million of debt.
The issuer has corporate family and probability-of-default ratings of B1, $300 million senior secured revolver due 2013 and $450 million senior secured term loan B due 2014 both rated Ba1 (LGD2, 14%), $250 million senior subordinated notes due 2017 at B1 (LGD4, 50%) and $251 million convertible senior subordinated notes due 2024 at B3 (LGD5, 81%).
The review reflects "the belief that if the business combination is completed, the pro forma leverage of the combined entity would be considerably higher than AMO's leverage on a standalone basis," analyst Sidney Matti said in a written statement.
Fitch said it could downgrade the issuer more than one notch if the merger is financed with a significant amount of debt. The review also will review the financial impact of recalling its contact lens solution product.
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