Moody's: Generic Drug loans B1, negative

Moody's Investors Service said it rated Generic Drug Holdings, Inc.'s new first-lien term loan and extended secured revolver at B1.

Proceeds will be used to refinance existing term debt and mezzanine debt (unrated) as well as provide a special dividend to sponsors.

At the same time, Moody's affirmed the company's B2 corporate family rating and its B2-PD probability of default rating.

The outlook was changed to negative from stable.

Upon close of this transaction, the ratings on the existing term loan B and secured revolver will be withdrawn.

Moody's said the negative outlook reflects its view that the company's debt-financed dividend and recent acquisition signal more aggressive financial policies. As a result, leverage is more likely to be sustained above levels consistent with its current B2 rating.

Although EBITDA will benefit from last year's Rugby acquisition and the recent increase in sales force, there is a likelihood that management will continue to pursue debt-financed acquisitions to improve scale.

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