S&P assigns B+ to Endo, loans

S&P said it assigned B+ ratings to Endo Inc., its planned $400 million revolving credit facility and $1.25 billion term loan B to be issued by subsidiary Endo Finance Holdings Inc. following its emergence from Chapter 11. The outlook is stable.

The B+ issuer rating reflects the substantially improved credit measures following its emergence from bankruptcy. The reorganization shaved outstanding debt by more than $5 billion compared to the prepetition capital structure. Additionally, S&P said it expects that all aggregate opioid liabilities, totaling over $2 billion as of Dec. 31, will be fully settled and repaid at emergence with the proceeds from the proposed debt, removing the legal overhang.

“We expect that these reductions will result in adjusted leverage of 4.3x for full-year 2024 (excluding bankruptcy fees) and 3.8x in 2025. Lower interest expense will also improve free operating cash flow (FOCF) generation, which we now estimate at $150 million-$300 million annually,” S&P said in a press release.

The agency said it also estimates that Xiaflex sales growth and new sterile injectable launches will contribute to revenue growth of mid-single-digit percent during 2025.

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