S&P puts Mallinckrodt on positive watch

S&P said it placed all its ratings for Mallinckrodt plc on CreditWatch with positive implications. The placement follows a global agreement-in-principle to pay $1.6 billion in cash over eight years to plaintiffs in its opioid litigation; the first payment is due at the emergence from bankruptcy of the specialty generics business, which is expected to be in about a year.

Under the agreement, entities related to Mallinckrodt's specialty generic segment will file for Chapter 11 bankruptcy protection. “We do not expect to consider this a credit rating default,” said S&P in a press release.

The company has agreed with lenders to refinance certain issues of debt, providing ample liquidity to meet near-term capital requirements. “We expect to resolve the CreditWatch placement at the close of the refinancing transactions,” said S&P.

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