Moody’s could drop Endo Luxembourg

Moody's Investors Service said it placed the ratings of Endo Luxembourg Finance I Co. Sarl and related entities under review for downgrade, including the Ba3 corporate family rating, Ba3-PD probability of default rating, Ba1 senior secured rating and B1 senior unsecured rating.

The action follows the disclosure that Endo has offered to buy Auxilium Pharmaceuticals, Inc. for about $2.2 billion in cash and stock.

The SGL-2 speculative grade liquidity rating was affirmed.

Endo's proposal is subject to the completion of its due diligence review and the negotiation of mutually acceptable definitive transaction agreements containing customary closing conditions.

"The review is prompted by concerns that Endo's financial leverage will increase with limited near-term EBITDA benefit, given pressures facing Auxilium's business profile, notwithstanding recent cost cutting initiatives," Moody's senior vice president Michael Levesque said in a news release.

Auxilium currently has a B3 corporate family rating.

"The review also reflects Endo's very rapid pace of acquisitions and debt increases."

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