Research Update: Mallinckrodt PLC Downgraded To 'SD' On Missed Interest Payments, 2028 And 2029 Secured Note Ratings Lowered To 'D'

Mallinckrodt PLC recently disclosed that it did not make the interest payments due on its 11.5% first-lien senior secured notes maturing 2028 and 10% second-lien senior secured notes maturing 2029 in their 30-day grace periods. However, the company remains current on its other debt obligations. We view these missed payments as tantamount to a default under our criteria, given that the lenders did not receive the value they were initially promised in a timely manner (notwithstanding their entry into a forbearance agreement). Therefore, we lowered our issuer credit rating on Mallinckrodt to 'SD' (selective default) from 'CCC'. At the same time, we lowered our issue-level rating on the affected 2028 secured notes to 'D' from 'CCC+' and our issue-level rating

...- Mallinckrodt PLC recently disclosed that it did not make the interest payments due on its 11.5% first-lien senior secured notes maturing 2028 and 10% second-lien senior secured notes maturing 2029 in their 30-day grace periods. However, the company remains current on its other debt obligations. - We view these missed payments as tantamount to a default under our criteria, given that the lenders did not receive the value they were initially promised in a timely manner (notwithstanding their entry into a forbearance agreement). - Therefore, we lowered our issuer credit rating on Mallinckrodt to '##' (selective default) from '###'. At the same time, we lowered our issue-level rating on the affected 2028 secured notes to 'D' from '###+' and our issue-level rating on the 2029 secured notes to 'D' from '##'. - We expect to review our issuer credit rating on Mallinckrodt in the next month when we receive additional information about its intentions to meet these and other financial obligations....

Research Update