S&P affirms Valeant Pharmaceuticals

Standard & Poor's said it affirmed its ratings on Valeant Pharmaceuticals International, including its BB- corporate credit rating, following its announcement that it is acquiring Xcel Pharmaceuticals for $280 million. The outlook is negative.

S&P also affirmed Valeant's BB- senior unsecured debt rating and B subordinated debt rating.

The transaction will be initially funded with on-hand cash or a combination of $230 million cash and $50 million in equity. Valeant is currently seeking to issue 7.2 million shares, raising roughly $170 million, proceeds of which will be used to ultimately fund a significant portion of the transaction.

S&P said the affirmation is based on the fact that Xcel adds several products to Valeant's product portfolio, as well as the promising epilepsy treatment, retigabine, to the company's improving product pipeline, increases Valeant's presence in central nervous system arena and the assumption that the equity offering will be successful.

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