S&P rates Mallinckrodt notes BB-

Standard & Poor’s said it assigned its BB- issue-level rating to the proposed $900 million of senior unsecured notes 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 4, reflecting an expectation of average (30% to 50%) recovery in the event of payment default.

The B issue-level rating and 6 recovery rating on the $900 million of existing senior unsecured notes is unchanged. The existing senior unsecured notes do not have a guarantee from the domestic subsidiaries, and are effectively subordinated to the new senior unsecured notes, which is why the new notes have a higher recovery rating.

S&P said it continues to view the company’s business risk profile as “fair” and its financial risk as “aggressive.”

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