S&P gives Lannett notes B

S&P said it gave Lannett Co. Inc.’s planned $350 million of senior secured notes B and 2 recovery ratings. The 2 rating indicates an expectation for substantial (70%-90%; rounded estimate 80%) recovery in default.

Lannett plans to use the notes with a new $190 million second-lien paid-in-kind (PIK) note and an upsize to its asset-based lending revolver to $45 million to refinance its debt.

“We expect the transaction, if completed as proposed, would improve Lannett's liquidity and address looming debt maturities in November 2022. However, given the recent underperformance, we expect adjusted debt to EBITDA to be well above 10x in 2021 and reduce to about 9x in 2022,” the agency said in a press release.

The outlook is negative.

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