S&P rates new Sepracor convertibles CCC

Standard & Poor's said it assigned its CCC subordinated debt rating to Sepracor Inc.'s $600 million in convertible senior subordinated notes, consisting of $200 million in zero coupon Series A convertible subordinated notes due 2008 and $400 million in zero coupon Series B convertible subordinated notes due 2010.

S&P also affirmed its B corporate credit rating and CCC subordinated debt ratings on Sepracor.

The outlook remains stable.

S&P said proceeds from the offering will be mainly used to redeem all outstanding 5.75% convertible subordinated notes due 2006, which, along with related unpaid interest, amount to about $435 million.

"The speculative-grade ratings on emerging specialty pharmaceutical company Sepracor Inc. reflect the significant cash outflows needed to fund ongoing R&D expenditures and increasing marketing costs," said S&P credit analyst Arthur Wong. "The ratings also reflect the company's heavy debt burden and the significant uncertainties inherent in drug development. These negative factors are partially offset by the growing sales of Sepracor's asthma drug Xopenex and the promise of the company's sleep disorder medication Estorra."

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