Rating Action: Moody’s assigns ratings to Perrigo’s new senior secured credit facilities; affirms Ba1 CFR, outlook remains negativeGlobal Credit Research – 29 Mar 2022New York, March 29, 2022 — Moody’s Investors Service (“Moody’s”) today took several rating actions on Perrigo Company plc (“Perrigo”) in connection with the refinancing of its existing debt and financing of the Hera SAS (“HRA”) acquisition, including affirming the Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, and continuing the negative outlook. Moody’s assigned Baa3 ratings to the proposed senior secured revolver and term loans issued by new borrower Perrigo Investments LLC., and downgraded Perrigo’s senior unsecured notes to Ba2 from Ba1. Perrigo’s SGL-3 Speculative Grade Liquidity rating is unchanged.”Today’s actions recognize the benefits of Perrigo refinancing near term maturities, which is a credit positive as it enhances liquidity,” stated Moody’s VP/Senior Credit Officer Charlie O’Shea. “Included is its financing for the pending acquisition of HRA for total consideration of roughly $2 billion, which we view as a long-term positive as it enhances Perrigo’s product and geographic diversity. The negative outlook reflects in part the execution risk to reducing the high leverage upon completion of the HRA acquisition.”Moody’s affirmed Perrigo’s Ba1 CFR because the company’s good growth prospects, a more normal cough and cold season, and free cash flow provide a means to reduce the very high leverage resulting from the HRA acquisition. Moody’s projects debt-to-EBITDA will decline to around 4.5x in 2023 from approximately 6.0x as of December 2021 pro forma for the HRA acquisition with the company also likely to focus on reducing leverage in advance of the acquisition close, which is expected to be during Q2 2022The Baa3 credit facility ratings reflect the company’s announced plan to issue approximately $500 million of other incremental unsecured debt. The downgrade of the senior unsecured notes to Ba2 from Ba1 reflects the introduction of a significant amount of secured debt to the debt structure that weakens recovery prospects for unsecured debt in the event of a default.Ratings Affirmed:..Issuer: Perrigo Company plc…. Corporate Family Rating, Affirmed Ba1…. Probability of Default Rating, Affirmed Ba1-PDNew Assignments:..Issuer: Perrigo Investments LLC….GTD Senior Secured Term Loan A, Assigned Baa3 (LGD2)….GTD Senior Secured Term Loan B, Assigned Baa3 (LGD2)….GTD Senior Secured Delayed Draw Term Loan B, Assigned Baa3 (LGD2)….GTD Senior Secured Multi Currency Revolving Credit Facility, Assigned Baa3 (LGD2) Ratings Downgraded: ..Issuer: Perrigo Company plc ….Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 (LGD5) from Ba1 (LGD4)..Issuer: Perrigo Finance Unlimited Company ….Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 (LGD5) from Ba1 (LGD4) Outlook Actions: ..Issuer: Perrigo Company plc ….Outlook, Remains Negative ..Issuer: Perrigo Finance Unlimited Company….Outlook, Remains Negative..Issuer: Perrigo Investments LLC….Outlook, Assigned NegativeRATINGS RATIONALEPerrigo’s Ba1 CFR is supported by its leading positions in the relatively stable over-the-counter (OTC) market in the US and Europe. Perrigo has meaningful scale in its key product categories, as well as good product and customer diversity, which the HRA acquisition will enhance. Earnings growth will outpace revenue growth for the next few years, driven by cost savings and portfolio mix shifts towards higher margin products. The credit profile is constrained by its elevated leverage, which proforma for the HRA acquisition debt will be around 6x, and the rating is based on Moody’s expectations that the company will make substantive progress toward achieving 4.5x by the end of 2023 due to improved organic earnings, as well as contribution from HRA and the related cost synergies. Moody’s forecasts mid-single digit earnings growth through 2023, with potential improvement in the critical cough and cold segment a key driver of that view. The positive resolution of the Irish tax liability for around 266 million, with more than sufficient funds coming from a favorable settlement relating to its Belgian divestiture, removes a significant risk component.The SGL-3 reflects Perrigo’s adequate liquidity and considers the execution risk relating to Moody’s projection for free cash flow exceeding $200 million over the next 12 months because of cost pressures and integration risks. Liquidity is bolstered by an approximate $300 million cash balance pro forma for the financing transactions, an undrawn $1 billion five-year revolver, and good projected covenant headroom.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe negative outlook reflects the execution risk for Perrigo to deleverage to 4.5x by the end of 2023. Risks to Perrigo’s earnings include a slower recovery for the products sold by HRA, some of which have been negatively impacted by the pandemic. The negative outlook also reflects that cost pressures including labor and materials, and continued acquisition activity could slow deleveraging.Given the negative outlook, there is little upward rating pressure. Over time, ratings could be upgraded if Perrigo generates good operating performance including consistent organic revenue growth, stable to higher EBITDA margin, and solid free cash flow. Debt/EBITDA is sustained below 3.5x, and a firm commitment to an investment grade capital structure and financial strategy would also be necessary for an upgrade.Ratings could be downgraded if substantive deleveraging does not occur over the next 12-18 months because of factors such as revenue weakness, higher costs or additional acquisitions, any of which lead to debt/EBITDA sustained above 4.5x. A deterioration in liquidity could also lead to a downgrade.ESG considerations are material to the rating. Social considerations include Perrigo’s legal exposures, as evidenced by the recently resolved Irish Tax Assessment litigation and alleged drug price-fixing. Governance considerations include Perrigo’s aggressive approach to M&A during a time of unresolved tax liabilities. Perrigo is targeting a net debt to EBITDA leverage ratio of 3.0x (based on the company’s calculation) within 18-to-24 months of the HRA closing. Because pro forma leverage on this basis is 5.1x, the target indicates the company is focused on material deleveraging.As proposed, the new credit facilities are expected to provide covenant flexibility that if utilized could negatively impact creditors. Notable terms include the following:Incremental debt capacity up to the greater of $625 million and 100% of consolidated EBITDA for the last four quarters, plus unlimited amounts subject to a first lien secured net leverage ratio not to exceed the ratio at close plus 0.5x. Amounts up to the greater of $390 million and 62.5% of LTM EBITDA may be incurred with an earlier maturity date. The credit agreement permits the transfer of assets to unrestricted subsidiaries, up to the carve-out capacities, subject to “blocker” provisions which prohibit the transfers of any material intellectual property from any Loan Party to an unrestricted subsidiary. Non-wholly-owned subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees subject to protective provisions which only permit guarantee releases if such disposition or other transaction was entered into for bona fide business purposes. The credit agreement provides some limitations on up-tiering transactions, including the requirement of the consent of each lender directly and adversely affected to subordinate the obligations or the liens securing such obligations to any other indebtedness.Perrigo, with registered offices in Dublin, Ireland and principal executive offices in Allegan, Michigan, develops, manufactures, and distributes over-the-counter drugs, infant formulas, and nutritional products. Perrigo has agreed to acquire Hera SAS (“HRA”) for total consideration of around $2 billion, which is expected to close in Q2 2022. FYE 2021 revenues were approximately $4.1 billion and will increase to approximately $4.6 billion pro forma for the HRA acquisition.The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020 and available at Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Charles O’Shea VP – Senior Credit Officer Corporate Finance Group Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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