Aug 7 - Standard & Poor's Ratings Services said today that that all of its
ratings on Chadds Ford, Penn.-based Endo Health Solutions, including
the BB/Stable/-- corporate credit rating, are unchanged following Endo's
announcement that it will implement a $450 million share repurchase program. We
expect Endo to fund the program, expiring March 2015, through existing cash flow
without compromising its ability to reduce debt.
We expect free cash flow to increase modestly over the next 12 months and that
the company's share repurchase program will be significantly less than our
free cash flow expectation. Therefore, we expect the company to continue
applying free cash flow to debt reduction so that leverage should decline to
about 3x over the next 12 months.
The rating on Endo reflects its "significant" financial risk profile (as per
our criteria) and leverage of 3.4x as of March 31, 2012. The leverage results
from higher debt incurred for the $4.1 billion of acquisitions completed over
the past 18 months. We believe Endo has only a "fair" business risk profile,
given franchise and product concentrations.