Fitch assigns Mallinckrodt B-

Fitch Ratings said it assigned a first-time long-term issuer default rating of B- to Mallinckrodt plc (MNK or Mallinckrodt refers to this entity and its subsidiaries). The outlook is stable.

The agency also assigned BB-/RR1 ratings to ST US AR Finance LLC's asset-based lending facility and Mallinckrodt International Finance SA's and Mallinckrodt CB LLC's first-out, first-lien term loans. Mallinckrodt International Finance's and Mallinckrodt CB's second-out, first-lien loans and notes were assigned B/RR3 ratings.

“The rating reflects Fitch's expectation that the company will emerge from bankruptcy with a significantly repaired balance sheet and elimination of its opioid settlement obligations. However, the rating also reflects the operating challenges the company is facing regarding its two largest revenue-generating products, Acthar and INOmax, which are significant contributors to FCF and margins. In addition, the company needs to successfully commercialize Terlivaz and StratGraft,” the agency said in a press release.

Fitch said it sees Mallinckrodt emerging from Chapter 11 with EBITDA leverage around 3.5x and annual free cash flow ranging between $180 million to $250 million.

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