NEW YORK, Aug. 18, 2009–Standard & Poor's Ratings Services said today that it assigned its preliminary 'BBB-' rating to senior unsecured securities and preliminary 'BB' rating to preferred stock filed by Watson Pharmaceutical Inc.'s under a WKSI shelf. At the same time, Standard & Poor's assigned its issue-level rating of 'BBB-' to Watson's proposed $850 million senior unsecured notes drawn down from the WKSI shelf. The notes will be issued in two parts with five- and 10-year maturities, respectively. Amounts and rates will be determined by market conditions.
"In contrast to the 'BB+'-rated $575 million convertible contingent senior notes (CODES), these notes are rated the same level as the 'BBB-' corporate credit rating, because there will be a smaller amount of priority bank debt and an expanded base of tangible assets following the acquisition of Arrow Group," said Standard & Poor's credit analyst David Lugg. All other ratings are unchanged. The proceeds will be used to prepay $100 million of its term loan due 2011 and the $575 million CODES issue, with the remainder providing a portion of the funding for the $1.75 billion acquisition of Malta-based Arrow Group.
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