Moody's changes Par to stable, rates add-on B1

Moody's Investors Service said it changed Par Pharmaceutical Cos., Inc.’s outlook to stable from negative, assigned a B1 (LGD3) rating to its $425 million add-on term loan, changed the speculative grade liquidity rating to SGL-1 from SGL-2 and affirmed its corporate family rating at B2, probability of default rating at B2-PD, $150 million senior secured revolving credit facility and $1.44 billion senior secured term loan at B1 (LGD3) and $490 million senior notes at Caa1 (LGD6).

The company plans to use the add-on term loan and $110 million of cash on hand to distribute a $535 million shareholder dividend.

The agency said that despite the aggressive return of capital to shareholders being contemplated with the dividend, the change in the outlook reflects a number of recent launches of high-margin products that Moody's expects will result in higher near-term earnings and cash flow, the successful integration of JHP Pharmaceuticals (acquired in February 2014) and the resolution of litigation in late 2014 for an amount that was manageable in the context of Par's liquidity and cash flows. The prior negative outlook had incorporated risk associated with significant uncertainty around litigation-related cash outflows.

The revised speculative grade liquidity rating reflects the agency’s expectation for improved near-term cash flow as well as the expectation for reduced cash outflows for litigation in 2015.

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