Moody's downgrades Angiotech

Moody's Investors Service said it downgraded Angiotech Pharmaceuticals, Inc.'s corporate family and probability-of-default ratings to B1 from Ba3, $325 million senior unsecured notes to B1 (LGD3, 46%) from Ba3 and $250 million senior subordinated notes to B3 (LGD6, 91%) from B2. The SLG-3 speculative grade liquidity rating and LGD4 (65%) family loss-given-default assessment were affirmed.

The outlook is stable.

The agency said the B2 corporate family rating reflects lower revenue and EBITDA guidance for 2007 related to a drop in royalty revenue from Boston Scientific's Taxus drug-eluting stent. In 2006, royalties from the sale of Taxus accounted for almost 50% of the company's annual revenues. Based on updated cash flow projections, Moody's believes that the company's cash flow coverage of debt and other financial metrics are more reflective of a B2-rated company.

Angiotech's SGL-3 speculative grade liquidity rating reflects the absence of access to external liquidity, lower revenue and cash flow guidance and deteriorating operating trends, the agency said. While Moody's expects that Angiotech will have sufficient coverage of working capital, capital expenditures and other expenses over the next 12 months, the company's financial flexibility remains limited.

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