S&P affirms Mallinckrodt

S&P said it affirmed its BB- corporate credit rating on Mallinckrodt plc and all issue-level ratings except for one recovery rating.

The agency also removed the ratings from CreditWatch, where they were placed with negative implications on Dec. 29, 2017.

The outlook is negative.

In addition, S&P revised its recovery rating on Mallinckrodt's senior unsecured debt to 4 from 3, reflecting an expectation of average (rounded estimate: 40%) recovery in the event of payment default. The revision reflects the agency’s reduced valuation of Mallinckrodt's emergence EBITDA in a hypothetical default scenario.

The recovery rating on Mallinckrodt's senior secured debt remains 1, reflecting an expectation of very high (rounded estimate: 95%) recovery, while the 6 recovery rating on Mallinckrodt's subordinated debt is also unchanged and reflects an expectation of negligible (rounded estimate: 0%) recovery.

S&P said the actions reflect an expectation that Mallinckrodt's 2018 leverage will increase to about 5x following the Sucampo acquisition but will improve to below 5x in the first half of 2019 and 4.7x by the end of 2019.

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