S&P assigns Mallinckrodt notes BB-

Standard & Poor's said it assigned its BB- issue-level rating to the proposed $1.2 billion of senior unsecured notes co-issued by Mallinckrodt International Finance SA and Mallinckrodt CB LLC and guaranteed by parent Mallinckrodt plc and some of its subsidiaries.

Proceeds will be used to partly fund subsidiary Mallinckrodt Enterprises LLC's purchase of Ikaria Inc.

The recovery rating is 4, reflecting an expectation of average (30% to 50%) recovery – on the high end of the range – in the event of payment default.

The BB- issue-level rating and 4 recovery rating on the $900 million 5¾% senior unsecured notes due August 2022 are unchanged. The B issue-level rating and 6 recovery rating on the $300 million 3½% senior unsecured notes due April 2018 and the $600 million of 4¾% senior unsecured notes due April 2023 are also unchanged.

These tranches of senior unsecured notes are guaranteed only by parent Mallinckrodt plc, do not have a guarantee from its subsidiaries and are effectively subordinated to the new senior unsecured notes with respect to subsidiaries guaranteeing the new senior notes. That is the primary reason why the proposed new notes and the notes due August 2022 have a higher recovery rating.

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