Allegiance Corp. Upgraded,Off S&PWatch; Outlook Stable.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/19/97--Standard & Poor's today raised its ratings on Allegiance Corp. (see list below) and removed them from CreditWatch, where they were placed July 28, 1997. In addition, Standard & Poor's assigned its triple-`B' rating to the company's $1.5 billion bank credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities . The upgrade and CreditWatch removal reflects the company's strong performance and improved financial profile. The investment-grade ratings incorporate the McGaw Park, Ill.-based company's important positions in the medical supply and distribution markets, offset by competitive and pricing pressures. Spun-off from Baxter International Baxter International Inc. (NYSE: BAX), is a global healthcare company with 48,000 employees and 2006 sales of US$10.4 billion. Its headquarters is in Deerfield, Illinois. Inc. in September 1996, Allegiance is a major distributor and manufacturer of medical supplies to hospitals, clinics, and diagnostic laboratories. Leading market positions, economies of scale, and long-term contracts with major group purchasing organizations A group purchasing organization is an entity that leverages the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members. Many GPOs are funded by administrative fees that are actually paid by the vendors. provide competitive advantages. Execution of cost-containment and improved working capital initiatives coupled with lower-than-expected capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. led to the company generating free cash flow exceeding Standard & Poor's expectations. The company's capital structure has improved, as debt to capitalization has declined to about 50% from 60% last September, as Allegiance has deployed its free operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. to reduce debt. Still, competition is intensifying as companies continue to consolidate. Pricing is expected to remain under pressure as health care providers seek ways to reduce costs and competitors wish to increase market share. Additionally, Allegiance may become more acquisitive as it attempts to jump-start its lethargic revenue performance. Importantly, funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to lease-adjusted debt is expected to approximate 30%. The bank loan rating is the same as the corporate credit rating. Since the facility is unsecured, the bankers will fare the same as other senior creditors in the event of default. Ample asset coverage currently may be expected to dwindle dwin·dle v. dwin·dled, dwin·dling, dwin·dles v.intr. To become gradually less until little remains. v.tr. To cause to dwindle. See Synonyms at decrease. in the default scenario. OUTLOOK: STABLE Credit protection levels likely will stay near its current levels in the near term as incremental working capital management improvement will become increasingly difficult to realize, Standard & Poor's said. -- CreditWire -0-
OUTSTANDING RATINGS RAISED AND REMOVED FROM CREDITWATCH
Rating
To From
Corporate credit rating BBB BBB-
$550 million senior unsecured notes
and debentures BBB BBB-
CONTACT: Elie Radinsky, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-8910 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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