S&P rates Mallinckrodt loan BB+

Standard & Poor's said it assigned its BB+ issue-level rating to the $500 million of incremental term loan B-1 co-issued by Mallinckrodt International Finance SA and Mallinckrodt CB LLC.

Proceeds will be used to partly fund parent Mallinckrodt plc's purchase of Questcor.

The recovery rating is 1, reflecting an expectation of very high (90% to 100%) recovery in the event of payment default.

The BB+ issue-level and 1 recovery ratings on the existing $250 million senior secured revolving credit facility and the existing $1.3 billion senior secured term loan B facility (also co-issued by Mallinckrodt International and Mallinckrodt CB) are unchanged.

S&P said it continues to view the business risk as "fair." The debt issuance is within its expectations and, along with the financing mix that includes equity and cash, the agency expects leverage to quickly decline to less than 5x. It continues to assess financial risk as "aggressive."

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