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21 May 2004
MOODY'S ASSIGNS (P)Ba1 RATING TO PROPOSED SENIOR SECURED GUARANTEED BANK FACILITY OF FISHER SCIENTIFIC; FISHER'S RATINGS REMAIN ON REVIEW FOR POSSIBLE UPGRADE AND RATINGS OF APOGENT REMAIN ON REVIEW FOR POSSIBLE DOWNGRADE.
Approximately $3.5 Billion of existing and proposed Debt Securities Affected
New York, May 21, 2004 -- Moody's Investors Service has assigned a (P)Ba1 rating to Fisher Scientific
International Inc.'s (Fisher) proposed senior secured bank
facilities. While, Fisher's (Ba3 senior implied) existing
ratings remain on review for possible upgrade, Moody's expects
that they will move up by one level (see list below) upon completion of
the proposed merger in early July 2004.
Apogent Technologies Inc.'s (Ba1 senior implied) ratings remain
on review for possible downgrade. The ultimate structure for the
Apogent securities remains unclear but it is unlikely that any security
would be rated higher than Fisher's prospective Ba2 senior implied
rating. Moody's review of Apogent's ratings will also consider
the extent to which Apogent's operations will be merged into Fisher's
organizational structure, the position of Apogent's debt in the
new capital structure, and an evaluation of any support mechanisms
related to Apogent's debt. For these reasons Apogent's ratings
will not be decided until more details are known.
Moody's rating actions follow the receipt of enough information on the
proposed bank facilities and the ultimate deal structure to provide the
information necessary to rate the proposed bank securities and provide
guidance on existing ratings. Moody's ratings recognize Fisher's
material use of equity in two of its most recent large acquisitions and
this demonstration of financial prudence was a key factor in the proposed
ratings. The prudently levered nature of these acquisitions improves
the likelihood that enhanced cash flow generation will allow for substantial
debt reduction in the medium term. Moody's believes that despite
risks associated with integrating the companies, the combined company
should generate significant cash flow that would allow for significant
debt reduction in the first 12-24 months. By merging with
its second largest vendor, Fisher will increase sales from proprietary
products, which carry better margins, to approximately 60%
and significantly enhance its position in life-sciences.
In time, Moody's expects that the combined company will be able
to reduce costs, by as much as $100 million, by eliminating
redundant functions, consolidating manufacturing capabilities,
and streamlining its distribution facilities.
In its ongoing review of Fisher's and Apogent's ratings, Moody's
will focus on ensuring that the assumptions that were provided in making
our rating determinations will not materially change in either the transaction
structure as proposed or the company and its operations, as presented
through the execution period. Moody's actions are predicated
on the following assumptions, and if there are changes in these
assumptions, the ratings may change: (1) no material change
in debt or legal organizational structures as presented; (2) the
terms of the proposed capital structures are not changed in any material
amounts; (3) the proposed bank transactions occur without any material
structural or other changes; (4) the merger will receive the necessary
regulatory approvals in a timely fashion; (5) the merger will close
within the suggested time frame.
The proposed bank Ba1 ratings are a function of the facilities benefiting
from subsidiary guarantees and significant pledges of assets and in a
distressed scenario Moody's believes that recovery would likely
be material given the nature of this security. Moody's notes
that this security package is designed to "spring away" in
the event that Fisher is rated investment grade by two nationally recognized
Moody's placed Apogent's ratings under review for possible downgrade based
on concerns that Apogent will become part of an organization with significantly
higher debt levels and potentially lower credit quality relative to Apogent's
current ratings, as well as the unclear treatment at this time of
the existing Apogent debt securities. Moody's review of Apogent's
ratings will also consider the extent to which Apogent's operations will
be merged into Fisher's organizational structure, the position of
Apogent's debt in the new capital structure, and an evaluation of
any support mechanisms related to Apogent's debt.
Prospective Ratings Assigned
Fisher Scientific International Inc. --
(P)Ba1 $400 million Senior Secured Guaranteed Revolver due 2009
(P)Ba1 $150 million Senior Secured Guaranteed US Dollar Term Loan
A due 2009
(P)Ba1 $250 million Senior Secured Guaranteed US Dollar Term Loan
B due 2011
Ratings remaining under review for possible upgrade:
Fisher Scientific International Inc. --
Ba3 senior implied rating, would likely move to Ba2
B1 issuer rating, would likely move to Ba3
Ba3 $190 million guaranteed senior secured revolving credit facility
due 3/31/2008, would likely be withdrawn
Ba3 $440 million guaranteed senior secured tranche C term loan
due 03/31/2010, would likely be withdrawn
B1 $ .4 million 7.125% senior notes due 12/15/2005,
would likely move to Ba3
B1 $300 million 2.50% senior unsecured convertible
notes due 2023, would likely move to Ba3
B2 $304 million 8.125% senior subordinated notes
due 2012, would likely move to B1
B2 $300 million 8% senior subordinated notes due 2013,
would likely move to B1
B2 $300 million senior subordinated convertible notes due 2024,
would likely move to B1
Ratings remaining under review for possible downgrade:
Apogent Technologies Inc. --
Ba1 senior implied
Ba1 issuer rating
Ba1 $300 million senior convertible contingent notes due 2021
Ba1 $345 million senior convertible contingent notes due 2033
Ba2 $250 million senior subordinated notes due 2013
Fisher Scientific International, Inc., based in Hampton,
New Hampshire, distributes and manufactures an array of products
to the scientific research, clinical laboratory and industrial safety
markets, both domestic and international. Revenues in 2003
were approximately $3.5 billion.
Headquartered in Portsmouth, New Hampshire, Apogent Technologies
manufactures and markets laboratory and life science products used in
healthcare diagnostics and scientific research.
Corporate Finance Group
Moody's Investors Service
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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