Walgreen Co. Message Board
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Moody's downgrades Walgreen's sr unsecured rating to Baa1; outlook negative
Aug 2012
Approximately $2.4 Billion of Debt Securities Affected
NOTE: On August 13, 2012, the press release was revised as follows: The second line under the following ratings are downgraded in the below debt list has been corrected to read: Senior unsecured shelf to (P) Baa1 from (P) A3. Revised release follows.
New York, August 02, 2012 -- Moody's Investors Service today downgraded Walgreen Co.'s senior unsecured rating to Baa1 from A3. At the same time, Walgreen's Commercial Paper rating of Prime-2 was affirmed. The rating outlook is negative. This rating action concludes the review for downgrade initiated on June 19, 2012.
The following ratings are downgraded
Senior unsecured rating to Baa1 from A3
Senior unsecured shelf to (P) Baa1 from (P) A3
The following rating is affirmed
Commercial paper rating of Prime-2-
Any improvement?
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Let's hope the market does not fall apart.
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Did you close your short position?
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Just?
- 1 Reply to jramp20023000
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No discussion? Why?
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Bad news is just beginning
- 1 Reply to dr_tjm42
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Care to elaborate?
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This is new
- 1 Reply to dr_tjm42
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No effect?
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The downgrade follows Walgreen's closing on its purchase of 45% of the equity of Alliance Boots which will weaken its credit metrics. Walgreen's funded debt level will more than double to about $6.0 billion from $2.4 billion currently in order to finance this transaction. This will result in Walgreen's debt to EBITDA increasing to around 4.0 times at August 31, 2012 from 3.3 times for the lagging twelve months ended May 31, 2012. In addition, the downgrade acknowledges the substantial amount of debt at Alliance Boots (about $12.4 billion at March 31, 2012) and Alliance Boots substantial debt maturities in 2014 and 2015. The downgrade also considers that the pharmacy wholesale business of Alliance Boots is outside Walgreen's current retail focus and generates significantly lower margins than retail. The equity investment also exposes Walgreen's to the economic difficulties in Europe. Finally, the downgrade expects that Walgreen will complete the second part of the transaction and will over the longer term ultimately wholly own Alliance Boots.
- 3 Replies to fastmoney_2011
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Any Update?
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Any upgrade?
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This is going to hurt earnings
"In addition, the downgrade acknowledges the substantial amount of debt at Alliance Boots (about $12.4 billion at March 31, 2012) and Alliance Boots substantial debt maturities in 2014 and 2015. The downgrade also considers that the pharmacy wholesale business of Alliance Boots is outside Walgreen's current retail focus and generates significantly lower margins than retail"
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