NEW YORK Aug 3 Standard & Poor's and Fitch
Ratings on Friday cut their ratings on Boston Scientific Corp.
(BSX.N) into junk territory, citing the company's decision to
retain its endosurgery business after looking into selling a
minority stake through an initial public offering.
"We believe we can create more shareholder value with the
endosurgery group remaining wholly owned by Boston Scientific,
and we have concluded that an IPO would have reduced -- rather
than enhanced -- Boston Scientific's shareholder value," Chief
Executive Jim Tobin said in a statement on Thursday. For
details, see [ID:nN02444446]
Saddled with debt after its $27 billion acquisition of
Guidant Corp. and hampered by slowing sales of its most
lucrative heart devices, the company said in March it was
exploring the partial sale for more than $1 billion.
"Fitch's prior rating for BSX was highly dependent on the
timely paydown of debt with cash proceeds from the potential
divestiture," Fitch said in a statement. "More pressure has now
been placed on BSX's operations, which are currently
challenged, to reduce debt and leverage."
Both Fitch and S&P cut Boston Scientific's senior unsecured
debt one notch to "BB-plus," one level below investment grade,
S&P has the company on watch for an additional downgrade
while Fitch has a negative outlook on the company, indicating
an additional cut is likely over the next one to two years.
"Although Boston Scientific still plans to sell
nonstrategic assets, divest elements of its investment
portfolio, and reduce expenses and headcount, debt reduction
will proceed at a slower pace than previously anticipated," S&P
said in a statement.