Moody's lowers Axcan

Moody's Investors Service said it lowered the ratings of Axcan Intermediate Holdings, Inc., the parent of Axcan Pharma Inc. and Axcan Pharma US, Inc., including the corporate family rating and probability of default rating to B2 from B1, and various instrument ratings.

Following these actions, the ratings remain under review for possible downgrade, the agency noted.

According to Moody's, the ratings downgrade follows two recent announcements: (1) that Axcan has commenced a tender offer to acquire Eurand NV for $583 million; and (2) that the FDA has issued Complete Response letters for Axcan's Ultrase and Viokase, again delaying the approval of these products.

Affected ratings include the company's $115 million senior secured revolving credit facility due 2014 to Ba3 (LGD2, 27%) from Ba2 (LGD2, 27%); $175 million senior secured term loan A due 2014 to Ba3 (LGD2, 27%) from Ba2 (LGD2, 27%);

• $228 million 9.25% senior secured notes due 2015 to Ba3 (LGD2, 27%) from Ba2 (LGD2, 27%); and $235 million 12.75% senior unsecured notes due 2016 to Caa1 (LGD5, 82%) from B3 (LGD5, 82%).

The downgrade to B2 from B1 reflects the continuing delay in attaining FDA approval for Ultrase and Viokase, which Moody's previously cited as a potential factor leading to a downgrade of Axcan's ratings.

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