Bergen Brunswig Downgraded Again
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A major New York credit rating agency downgraded all unsecured debt owed by Bergen Brunswig Corp., which has seen its debt securities lowered three times in the past year over concerns about its cash-flow problems.
But Moody’s Investors Service wasn’t as worried this time about the Orange drug distributor’s cash flow as it was about the $1.5-billion line of credit the company has arranged to ease those problems.
Moody’s lowered Bergen’s senior unsecured debt and all other unsecured obligations to Ba3 from Ba2, citing the structure of the loan arrangement.
Moody’s said that the secured nature of the new loans, scheduled to close in April, will weaken the credit position of unsecured bondholders. Structural concerns aside, Moody’s said, the commitment for the new bank line is viewed favorably. The agency said it has finished its review of the company, which began Feb. 8.
Moody’s said its ratings assume that the company will be carefully monitoring future cash flows and will begin to reduce debt levels.
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