S&P cuts Harvard Drug loan, rates new loan B

Standard & Poor's said it assigned its B issue-level rating (the same as the corporate credit rating) to Generic Drug Holdings Inc.'s (the holding company of Harvard Drug Group LLC) proposed $380 million first-lien term loan.

The first-lien recovery rating is 3, indicating the expectation for meaningful (50%-70%) recovery in the event of payment default.

At the same time, the agency lowered the issue-level rating on the company's $35 million revolver to B from B+. The recovery rating is 3, revised from 2.

S&P said it will withdraw the existing B+ senior secured issue-level rating on Generic Drug Holdings existing term loan once the new facilities are funded.

The agency also affirmed the B corporate credit rating on Harvard Drug.

The outlook is stable.

S&P said the ratings on Harvard Drug reflect a weak business risk and highly leveraged financial risk. The business risk profile incorporates Harvard Drug's relatively small scale and niche position, while the financial risk profile predominantly reflects leverage of more than 5x and funds from operations to total debt of less than 12%.

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