Moody's gives Padagis, loans B1

Moody's Investors Service said it gave first-time ratings to Padagis LLC, the prescription drug business of Perrigo, including a B1 corporate family rating, a B1-PD probability of default rating and a B1 rating on the senior secured credit facilities.

“Padagis' B1 corporate family rating reflects its pure-play focus as a U.S. generic pharmaceutical company with moderate size of around $900 million in revenue (excluding generic ProAir) compared to larger generic pharmaceutical peers. About 10%-15% of sales are generated in Israel. The U.S. generic pharmaceutical market will continue to be highly competitive, with risk of high earnings volatility. These risks are partially reduced by Padagis' focus on smaller niche products in dosage forms that generally tend to have fewer competitors,” Moody’s said in a press release.

Moody’s said it forecasts Padagis' debt/EBITDA at close will be around 4x.

Proceeds from the $850 million senior secured term loan, together with sponsor equity, will be used by Altaris Capital, to finance the $1.55 billion acquisition of the generic pharmaceutical business of Perrigo Co. plc. Padagis will also have a $100 million revolver, expected to be undrawn at close.

The outlook is stable.

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