S&P boosts Mallinckrodt

S&P said it boosted Mallinckrodt plc’s issuer rating to B+ from D and assigned BB+ issue-level and 1+ recovery ratings to its $229 million first-out term loan and B+ issue-level and 3 recovery ratings to its $642 million second-out secured notes and $779 second-out term loan, issued by Mallinckrodt International Finance SA and Mallinckrodt CB LLC.

The agency does not rate the company's $200 million asset-based lending facility.

The outlook is stable.

“While our view of the company's business is largely unchanged, the B+ rating reflects its lower debt levels and improved discretionary cash flow (DCF). Mallinckrodt emerged from bankruptcy with about $1.9 billion less secured debt. Additionally, the company resolved its claims with the Opioid Master Trust for about $1 billion less than it originally promised, eliminating the annual cash settlement payments of between $125 million and $200 million.

“Under its revised capital structure, we expect leverage in the 4x-4.5x range, FOCF to debt of generally above 5%, and EBITDA interest coverage of less than 2.5x,” S&P said in a press release.

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