Mallinckrodt PLC Downgraded To 'B+' From 'BB-'; Outlook Stable

Specialty pharmaceutical company Mallinckrodt PLC has reported operating results for the first quarter of 2018 below our expectations. Its underperforming specialty generics business has been moved to discontinued operations. Based on our revised base-case projections, leverage is increased to over 5.5x in 2018 and 5.2x in 2019. The projections reflect lower-than-expected 2018-2019 EBITDA, which excludes the generics business, and a projected debt reduction by an estimated $1 billion in sales proceeds from the prospective sale of the generics business. As a result, we are lowering our corporate credit rating on the company to 'B+' from 'BB-'. The outlook is stable. We are also lowering all issue-level ratings on the company's debt by one notch. The stable outlook reflects our expectation

... PLC has reported operating results for the first quarter of 2018 below our expectations. Its underperforming specialty generics business has been moved to discontinued operations. + Based on our revised base-case projections, leverage is increased to over 5.5x in 2018 and 5.2x in 2019. The projections reflect lower-than-expected 2018-2019 EBITDA, which excludes the generics business, and a projected debt reduction by an estimated $1 billion in sales proceeds from the prospective sale of the generics business. + As a result, we are lowering our corporate credit rating on the company to 'B+' from '##-'. The outlook is stable. We are also lowering all issue-level ratings on the company's debt by one notch. + The stable outlook reflects our expectation that low-single-digit revenue growth of the company's branded products portfolio and EBITDA margins of around 40% will result in solid free cash flow generation of around $500 million in 2018-2019...

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