S&P lowers King Pharma

Standard & Poor's said it lowered its corporate credit and senior secured bank loan ratings on King Pharmaceuticals Inc. to BB from BB+ and its senior unsecured debt rating to BB- from BB.

S&P also removed the ratings from CreditWatch, where they were placed May 5 after the specialty pharmaceutical company announced significantly lower-than-expected sales and earnings for 2004. These lower sales and earnings were due to excess inventory of the company's key drugs at the wholesaler level.

The outlook is stable.

S&P said the rating actions reflect growing uncertainties about King Pharmaceuticals' business profile, including excess wholesaler inventory of key products and potential near-term generic competition to the company's core drugs Levoxyl and Skelaxin. In addition, the company's CEO has recently resigned. These uncertainties are partially offset by the company's still-solid drug portfolio, led by Altace, and its significant financial flexibility.

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