S&P: Elan on positive watch

Standard & Poor's said its B corporate credit rating on Elan Corp. plc remains on Creditwatch with positive implications.

The agency said that the rating was placed on Creditwatch on May 9, following the company's announcement that it will be selling its Elan Drug Technologies business to newly formed Alkermes plc.

"We will resolve the Creditwatch upon close of the transaction, which we expect will occur in September; at that time, the agency said it expects to raise the corporate credit rating to B+ and to assign a stable outlook to the rating," said S&P credit analyst Michael Berrian.

The possibility of a higher rating primarily takes into consideration its belief that the company will use cash proceeds from the transaction to reduce adjusted leverage, S&P said, adding that pro forma for the sale of Elan Drug Technologies and subsequent debt reduction, the agency expects adjusted leverage to decline to 5x at Dec. 31, 2011 from 8x in the prior year.

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