Moody's affirms Elan

Moody's Investors Service said it affirmed the B2 corporate family rating of Elan Corp. plc and the B2 (LGD4, 66%) senior notes due 2013 and 2016 rating of Elan's subsidiaries.

The outlook remains positive.

This rating action follows the announcement that Elan will sell its Elan Delivery Technologies business to Alkermes, Inc. for $500 million in cash and a 25% ownership stake in Alkermes, the agency said. The total consideration is valued at around $960 million and is expected to close in the third quarter of 2011.

The affirmation of Elan's ratings reflects the stated use of the $500 million of cash proceeds for debt repayment, the agency said. Following the transaction, Moody's anticipates that Elan's gross debt levels will decline by over 35%, from $1.3 billion reported as of March 31 to around $800 million.

Elan's B2 rating reflects the company's limited scale, high product concentration risk and modest free cash flow, offset by strong and rising sales of Tysabri, the agency added.

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