Moody's ups MultiPlan loans, notes; rates notes Caa1

Moody's Investors Service said it affirmed the B2 corporate family rating and B2-PD probability of default rating of MultiPlan, Inc.

At the same time, Moody's assigned a Caa1 rating to the proposed $750 million senior PIK toggle notes which will be issued by MPH Intermediate Holding Co. 2, MultiPlan's indirect parent holding company.

Moody's also upgraded the ratings on the existing senior secured credit facilities to Ba2 from Ba3 and the existing rating on the 9 7/8 % senior notes due 2018 to B3 from Caa1 in accordance with Moody's Loss Given Default methodology.

Proceeds from the new notes, incremental term loan borrowings of $100 million and balance sheet cash, will be used to fund a one-time dividend distribution to shareholders of approximately $838 million and pay transaction fees and expenses.

The outlook is stable.

Moody's said the Caa1 assigned to the senior PIK toggle notes considers its structural subordination to all liabilities at MultiPlan, Inc., including a $75 million revolver, $1.13 billion term loan B-1 (to be upsized from $1.03 billion as part of the dividend recapitalization), and $675 million 9 7/8% senior notes.

The senior PIK toggle notes will be a senior unsecured obligation of MPH Intermediate Holding Co. 2, and will not be guaranteed by MultiPlan, Inc. or any of its subsidiaries. The company will be required to pay interest in cash so long as there is restricted payment capacity available under the credit agreement. If not, the company will have the option to pay interest in kind at a rate of 0.75% higher than the cash interest rate.

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