Moody's downgraded Akorn Inc.'s corporate family rating to Caa1 from B3 following a ruling by Delaware's top court that favored Fresenius SE & Co. KGaA's termination of a $4.3 billion deal with Akorn.
The ratings outlook was revised to negative from developing.
Moody's Vice President Morris Borenstein said the downgrade reflects Akorn's deteriorating stand-alone credit profile and uncertainty around its ability to reverse steep revenue and earnings declines. The rating also reflects Akorn's high financial leverage, weak free cash flow and declining portfolio of products.
The rating agency said the negative outlook reflects the high uncertainty around the company's ability to reverse revenue and earnings declines while managing the risks linked to outstanding manufacturing and compliance issues.
In its Dec. 7 ruling, the Supreme Court of Delaware upheld a lower court's verdict that allowed German healthcare company Fresenius to terminate its merger agreement with Akorn due to data integrity issues. The Lake Forest, Ill.-based generic drugmaker had filed a lawsuit in April when Fresenius decided to terminate the deal.
Earlier in November, S&P Global Ratings revised its outlook on Akorn to negative from stable and affirmed all of its ratings on the generic-drugs maker, including the B issuer credit rating.
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