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Moody’s could cut Endo
Moody's Investors Service said it placed the ratings of Endo Luxembourg Finance I Co. Sarl and subsidiaries under review for downgrade, including the Ba3 corporate family rating, Ba3-PD probability of default rating, Baa3 senior secured rating and B1 senior unsecured rating.
At the same time, the agency affirmed the SGL-2 speculative grade liquidity rating, reflecting good liquidity prior to the acquisition of Par.
Moody's will evaluate Endo's liquidity based on its post-acquisition financing structure and the SGL may change as part of its analysis.
The review was prompted by Endo's announcement that it will acquire Par Pharmaceutical Holdings, Inc. for $8.05 billion in cash and equity. The acquisition will meaningfully increase financial leverage to a level that is well above Endo's target debt-to-EBITDA range of 3 times to 4 times.
Moody's estimates pro forma adjusted debt to EBITDA will be in the mid-5 times range at year-end 2015.
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