S&P lowers Perrigo facility

S&P said it lowered its issue rating on Perrigo Investments LLC's expected upsized senior secured bank credit facility to BB+ from BBB- and revised the recovery rating to 2, indicating substantial (70%-90%; rounded estimate: 85%) recovery in the event of a payment default, from 1, which indicates full recovery.

“The downgrade reflects the revised transaction structure, which increases the senior secured credit facility to $2.6 billion from $2.1 billion while eliminating the previously contemplated $500 million senior unsecured notes. The lower rating is driven by the higher amount of senior secured debt outstanding at default in the capital structure under our simulated default scenario,” S&P said in a press release.

The upsized senior secured bank credit facility will consist of a $1 billion five-year revolving credit facility, $500 million five-year term loan A facility and $1.1 billion seven-year term loan B facility.

Concurrently, S&P affirmed the BB- issue rating on the outstanding $2.54 billion of senior unsecured notes. The 5 recovery rating, indicating that noteholders could expect modest (10%-30%; rounded estimate: 20%) recovery in default, remains unchanged.

The agency withdrew the rating on the previously planned $500 million of senior unsecured notes, which will not be issued.

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