Moody’s drops Lannett loans to B2

Moody's Investors Service said it affirmed the B2 corporate family rating of Lannett Co., Inc. and downgraded the rating on the senior secured revolver and term loans to B2 from B1.

The actions follow the announcement that the company will repay its 12% unsecured notes with proceeds from additional secured debt, namely an increase in the term loan B of $150 million and Lannett's fully drawn $125 million revolver. The change in capital structure removes the benefit of first loss absorption provided by the unsecured notes to senior secured lenders.

As a consequence of the now all first-lien capital structure, Moody's downgraded the probability of default rating to B3-PD from B2-PD.

The agency also affirmed the speculative grade liquidity rating of SGL-2, signifying good liquidity.

The outlook is stable.

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