S&P rates Amneal loan B+

Standard & Poor’s said it assigned a B+ rating and 4 recovery rating to Amneal Pharmaceuticals LLC’s proposed $200 million term loan B.

The 4 recovery rating indicates 30% to 50% expected default recovery.

The agency also said it revised the recovery rating on the existing secured term loan to 4 from 3, reflecting the increased amount of senior secured debt in the capital structure.

The proceeds will fund an owner dividend, the agency said.

The company’s B+ corporate credit rating and positive outlook are unchanged, S&P said.

The ratings reflect the company’s position as a small generic pharmaceutical company and its lack of scale compared with other larger generic companies, the agency said.

Although S&P said it currently incorporates an expectation that Amneal’s leverage will range between 4x and 5x to accommodate cash-based shareholder returns, stronger-than-expected performance and modest-size dividends have led to leverage levels of less than 4x.

Pro forma for the additional debt, leverage increases only modestly to 4.1x and is expected to decline to about 3.9x over the next 12- to 18-months, S&P said.

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