Research: Rating Action: Moody's downgrades Endo's PDR to D-PD following Chapter 11 filing & More Latest News Here – Up Jobs

New York, August 19, 2022 — Moody’s Investors Service (“Moody’s”) downgraded Endo Luxembourg Finance I Company S.a.r.l., and other subsidiaries of Endo International plc (together, “Endo”) Probability of Default Rating (PDR) to D-PD from Ca-PD following company’s filing for protection under Chapter 11 of the US Bankruptcy Code on August 16th. Moody’s affirmed Endo’s all other ratings including the Corporate Family Rating (CFR) at Caa3, the company’s senior secured debt at Caa2, the secured 2nd Lien Regular Bond/Debenture at Ca, and the unsecured ratings at C. Concurrently, Moody’s downgraded Speculative Grade Liquidity Rating to SGL-4 from SGL-3. The outlook remains stable.

Governance and social risk considerations are material to the rating action. The company operates with aggressive financial policies reflected in very high debt levels of more than $8 billion, resulting in very high financial leverage and a capital structure that is untenable. At current levels of performance, with significant erosion in Vasostrict franchise, ongoing cash outflows related to various legal proceedings, and exposure to material opioid-related litigation claims, the company entered into a restructuring support agreement (“RSA”) with Endo’s first lien debt holders to reduce outstanding indebtedness. As part of the RSA, the stalking horse bidder (the initial bidder on Endo’s assets) will establish voluntary trusts to be funded with $550 million over 10 years, with future proceeds set aside for certain opioid claims.

The stable outlook reflects Moody’s view that the current ratings adequately reflect Endo’s recovery prospects.

Downgrades:

..Issuer: Endo Luxembourg Finance I Company S.a.r.l.

…. Probability of Default Rating, Downgraded to D-PD from Ca-PD

…. Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3

Affirmations:

..Issuer: Endo Finance LLC

….Senior Secured 2nd Lien Global Notes, Affirmed Ca (LGD4)

….Senior Secured Global Notes, Affirmed Caa2 (LGD2)

….Senior Unsecured Global Notes, Affirmed C (LGD5)

..Issuer: Endo Luxembourg Finance I Company S.a.r.l.

…. Corporate Family Rating, Affirmed Caa3

….Senior Secured Bank Credit Facilities, Affirmed Caa2 (LGD2)

….Senior Secured 1st Lien Global Notes, Affirmed Caa2 (LGD2)

..Issuer: Par Pharmaceutical Inc.

….Senior Secured Global Notes, Affirmed Caa2 (LGD2)

Outlook Actions:

..Issuer: Endo Finance LLC

….Outlook, Remains Stable

..Issuer: Endo Luxembourg Finance I Company S.a.r.l.

….Outlook, Remains Stable

..Issuer: Par Pharmaceutical Inc.

….Outlook, Remains Stable

RATINGS RATIONALE

Endo’s Chapter 11 filing resulted in the downgrade of its Probability of Default Rating to D-PD. The rating action reflects Endo’s social and corporate governance risks, specifically significant litigation related to opioids which contributed to its bankruptcy filing and will result in meaningful cash outflows once it emerges.

Subsequent to the rating action, Moody’s will withdraw all the ratings of Endo Luxembourg Finance I Company S.a.r.l., and other subsidiaries of Endo International plc (together, “Endo”). Please refer to the Moody’s Investors Service Policy for Withdrawal of Credit Ratings, available on its website, https://ratings.moodys.com.

Headquartered in Luxembourg, Endo Luxembourg Finance I Company S.a.r.l. is a subsidiary of Endo International plc, which is headquartered in Dublin, Ireland. Endo is a specialty healthcare company offering branded and generic pharmaceuticals. Endo’s reported revenue for the twelve months ended June 30, 2022 was approximately $2.8 billion.

The principal methodology used in these ratings was Pharmaceuticals published in November 2021 and available at https://ratings.moodys.com/api/rmc-documents/356413. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of  the guarantor entity.  Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.

Vladimir M. Ronin, CFA
Vice President – Senior Analyst
Corporate Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Ola Hannoun-Costa
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

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