Moody’s assigns B1 to Impax CFR, loans

Moody's Investors Service said it assigned a B1 corporate family rating and B2-PD probability of default rating to Impax Laboratories, Inc.

The agency also assigned a B1 rating to the proposed $485 million senior secured credit facility, including a $435 million term loan and a $50 million revolving credit facility.

The outlook is stable.

The speculative grade liquidity rating is SGL-2, signifying good liquidity.

Proceeds, along with cash on hand, will be used to fund the acquisition of Tower Holdings, Inc. (including operating subsidiaries CorePharma LLC and Amedra Pharmaceuticals LLC) and Lineage Therapeutics, Inc. for $700 million.

Moody’s said the B1 corporate family rating reflects significant near-term uncertainty due to Impax’s ongoing regulatory issues. Because of the company's inability to launch new products out of its Hayward, Calif., facility there will be volatility in operating results until the FDA warning letter is resolved.

In addition, the rating reflects Impax's modest size and scale in a rapidly consolidating industry that faces pricing pressure and increasing legal and regulatory costs. It also incorporates the agency’s expectation that Impax will continue to be acquisitive which – though potentially adding scale and diversity – could further increase leverage and integration risk.

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