Moody's rates Mallinckrodt B3

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default to Mallinckrodt International Finance SA. Concurrently, Moody's assigned B3 ratings to the planned first-lien senior secured term loans, and a B3 rating to the $495 million of senior secured first-lien notes due 2025. The agency also assigned Caa2 ratings to the $323 million and $375 million of senior secured second-lien notes due 2025 and 2029.

Additionally, Moody's assigned an SGL-2 speculative grade liquidity rating reflecting Mallinckrodt's good liquidity.

On Wednesday, the High Court of Ireland confirmed Mallinckrodt's scheme of arrangement, which follows the U.S. Bankruptcy Court confirmation of Mallinckrodt's plan of reorganization on March 2.

"Mallinckrodt's post-emergence balance sheet remains highly levered in consideration of declining earnings in the branded pharmaceuticals segment, a challenging operating environment in the specialty generics, and a significant liability related to the opioid settlement," said Vladimir Ronin, Moody's lead analyst for the company, in a press release.

"However, Mallinckrodt's resolution of key litigation issues, refinancing of a material portion of its funded debt, and strengthening of its liquidity, will allow the company to execute on its strategic priorities and commercialize products in its pipeline," added Ronin.

The outlook is stable.

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