Fitch Affirms 'BBB-' Rating on AmerisourceBergen; Outlook Stable.

CHICAGO -- Fitch Ratings has affirmed the 'BBB-' rating to AmerisourceBergen's (ABC) senior unsecured debt and senior unsecured bank facility following the company's announcement that it has received board authorization to repurchase up to $450 million in company stock. The ratings apply to approximately $958 million of debt. The Rating Outlook is Stable.

Fitch expects the share repurchase will be funded with cash and take at least two years to complete. Bond covenants that tie share repurchases to net income should provide a ceiling on ABC's ability to reduce share count on a quarterly basis.

While the amount of the repurchase plan is slightly more than Fitch's forecast, it remains within a manageable range with regard to its effect on leverage, coverage, and net debt.

Fitch still expects ABC to pay down the $100 million in debt maturing in June 2005 and continue to generate solid cash flow.

A major concern for ABC, and the drug distribution industry as a whole, is buy-side gross margins. Fitch continues to monitor the progress of ABC and its peers in transitioning to a model that should mitigate this risk.

Fitch has also withdrawn its subordinated debt rating, following its complete redemption in January 2005.

At March 31, 2005, ABC had approximately $1.15 billion in cash, $958 million of debt with $100 million maturing this year, $55 million in 2006, and the remainder in 2008 and 2012. ABC has $1.05 billion available on its receivables facility and $692 million available on its $700 million unsecured bank facility. Latest 12 months (LTM) at March 31, 2005, interest coverage (EBITDA/interest) was 9.4 times (x) and leverage (total debt/EBITDA) was 1.2x.