Mallinckrodt plc recently provided an update on its planned spin-off of its specialty generics business, stating the branded business intends to retain Amitiza and the generic spinco expects to raise up to $300 million in debt. Regardless of whether or not the spin-off is successful, we believe Mallinckrodt's core specialty brands business is weakening because of growing threats to four of five key branded products, litigation, and constraints from debt repayment on organic and inorganic investment. We now expect debt to EBITDA in the 4x-5x range (previously expected above 5x) because the company is emphasizing debt repayment with its strong cash flow (approximately $600 million annually), in some cases reducing principle at a discount. S&P Global Ratings affirmed its 'B+'
