Moody's: King Pharma uncertain

Moody's Investors Service said it adjusted its review of the debt ratings of King Pharmaceuticals Inc. to direction uncertain from possible downgrade.

Ratings under review with direction uncertain include King's $400 million senior secured revolving credit facility due 2007 at Baa3, $345 million senior unsecured guaranteed convertible debentures due 2021 at Ba1, senior implied rating of Ba1, and senior unsecured issuer rating of Ba2.

This rating action follows King's announcement Monday that it has agreed to a stock-for-stock merger with Mylan Laboratories Inc. Given the current un-levered nature of Mylan the combined credit profile initially could be viewed as stronger than King's existing credit profile. Moody's does not maintain ratings on Mylan.

Moody's said it is placing King's ratings under review with direction uncertain given that King may now become part of an organization with significantly lower debt levels and potentially higher credit quality relative to King's current ratings, as well as the unclear treatment at this time of the existing King debt securities.

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