Catalent Pharma Solutions Inc.'s Proposed 2028 Euro Notes Rated 'B+'
NEW YORK (S&P Global Ratings) Feb. 19, 2020--S&P Global Ratings today assigned its 'B+' rating to Catalent Pharma Solutions Inc.'s proposed senior unsecured Euro-denominated notes due 2028. The recovery rating is '5', which indicates our view of modest (10%-30%; rounded estimate: 15%) recovery in the event of a payment default.
The company intends to use the proceeds to redeem its approximately $420 million Euro-denominated notes due 2024, cover fees and expenses, and contribute about $55 million of cash to the balance sheet for general corporate purposes. The transaction is neutral for leverage on a net-debt basis and provides additional liquidity.
Our long-term issuer credit rating on parent Catalent Inc. remains 'BB-' and the outlook is stable. The ratings reflect our view that the company has a top-tier reputation and meaningful scale in the contract development and manufacturing organization (CDMO) industry and strong revenue visibility from long-term contracts from a diversified customer base. These positive factors are somewhat offset by the company's small size relative to its large pharmaceutical customers and the narrow focus on pharmaceutical manufacturing.
We generally expect adjusted debt to EBITDA (excluding preferred equity) to remain in the 4x to 5x range, likely in the higher half of the range given the expectation for future acquisitions and capital investment. Catalent has demonstrated willingness to, at least partially, finance acquisitions through the issuance of equity, including its recent acquisition of MaSTherCell Global Inc.
Related Criteria
- Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- Criteria | Corporates | General: Recovery Rating Criteria For Speculative-Grade Corporate Issuers, Dec. 7, 2016
- Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Dec. 16, 2014
- Criteria | Corporates | Industrials: Key Credit Factors For The Pharmaceutical Industry, April 8, 2014
- General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
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- Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
- General Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities, Nov. 13, 2012
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Related Research
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Primary Credit Analyst: | Matthew D Todd, CFA, New York + 1 (212) 438 2309; matthew.todd@spglobal.com |
Secondary Contact: | David A Kaplan, CFA, New York (1) 212-438-5649; david.a.kaplan@spglobal.com |
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