S&P lowers Amneal to negative

S&P said it affirmed the BB- corporate credit rating on Amneal Pharmaceuticals LLC and revised the outlook to negative from stable.

The agency also said it affirmed the BB- rating on the company's senior secured term loan. The recovery rating remains at 4, indicating 30% to 50% expected default recovery.

The ratings reflect an expectation that Amneal will perform in line with the 2017 base-case scenario, including a top-line growth rate in the low teens, stable margins and about $100 million of free operating cash flow, along with leverage of less than 4.5x, S&P said.

The negative outlook is based on an uncertainty about Amneal's ability to improve its cash flow generation to the projected level, given cash flow deficits in 2015 to 2016 and the significant amounts of working capital and capital expenditures required to support Amneal's rapid top-line growth, the agency said.

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