Moody’s cuts Cheplapharm, view to stable

Moody’s Investors Service said it downgraded the corporate family rating of Cheplapharm Arzneimittel GmbH to B2 from B1 and its probability of default rating to B2-PD from B1-PD.

The agency also downgraded to B2 from B1 the ratings of the €980 million senior secured term loan, and €310 million of senior secured revolver.

“The downgrade to B2 follows the 30 September announcement whereby AstraZeneca PLC (A3 stable) said it had agreed to sell Losec – a proton pump inhibitor – and associated brands to Cheplapharm for approximately $243 million. The acquisition will be partly funded by debt and increase Cheplapharm’s reported leverage to again above 5x by the end of 2019 (it was 5.1x at the end of 2018). This is equivalent to 5.2x Moody’s gross debt/EBITDA compared to our expectations that leverage would improve to below 4.5x,” said Moody’s in a press release.

The outlook has been changed to stable from negative.

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