Moody's cuts Graceway loan

Moody's Investors Service said it affirmed Graceway Pharmaceuticals, LLC's probability of default rating at D and corporate family rating at Ca, along with the rating on its $330 million second-lien senior secured credit facility due 2013 at C (LGD 6, 100%).

Moody's also said it lowered its first-lien senior secured term loan of $600 million due 2012 to Ca (LGD 3, 40%) from Caa2 (LGD 2, 23%) and first-lien senior secured revolving credit facility of $30 million due 2012 to Ca (LGD 3, 40%) from Caa2 (LGD 2, 23%).

The outlook is stable.

Moody's also said it anticipates withdrawing all of Graceway's ratings shortly.

The downgrades follow news that Graceway will seek authority to sell its assets under Section 363 of the United States Bankruptcy Code, the agency said.

The downgrades also reflect estimates of proceeds and recovery for creditors based on the announced agreement that Graceway will sell its United States and Canadian assets to Galderma SA, Moody's said.

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