S&P rates Mallinckrodt loan B, notes CCC

S&P said it assigned a preliminary B rating to Mallinckrodt International Finance SA’s first-lien term loan and a preliminary CCC rating to its second-lien secured notes. The first-lien debt carries a preliminary recovery rating of 2 and the second-lien notes have a preliminary recovery rating of 6.

The agency said it plans to rate the issuer’s parent, Mallinckrodt plc, B- with a stable outlook once it emerges from bankruptcy. The company’s reorganization plan was confirmed in March.

The B- rating reflects the company's high product concentration, expected revenue declines in 2022 and 2023 from significant pricing and competitive pressures, and a forecast for adjusted debt to EBITDA to be at or above 7x over the next couple of years, S&P said.

The agency said it expects Mallinckrodt to emerge from bankruptcy in May.

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