Alpharma, the Fort Lee, N.J.-based pharmaceutical company, is facing refinancing risk from $154 million of convertible notes that must be reduced to less than $10 million by Dec. 1. "There is a provision in their bank agreement that they have to reduce convertible notes by the end of the year," said Michael Levesque, a pharmaceutical analyst at Moody's Investors Service. "We believe they will have to look at some form of refinancing because free cash flow this year will probably not be enough to reduce those convertibles."
Matthew Farrell, cfo and executive v.p., and Albert Marchio, treasurer and v.p., did not return calls. Moody's is assuming that management will address this and complete a refinancing plan by the due date of its quarterly report for the second quarter. If this does not occur, Moody's said it will downgrade the company's ratings. The bank debt is rated B1 and the senior implied is B2. "For us to be comfortable to be holding this rating we would hope for them to address this soon," Levesque said. In 2001 the company borrowed $622 million in bank debt. Last September, the outstanding amount was $321.6 million, including a $150 million revolver.