Moody's rates Surgical Care loan Ba3

Moody's Investors Service said it rated Surgical Care Affiliates' new $100 million term loan B Ba3 (LGD3, 31%) and affirmed the Ba3 (LGD3, 31%) rating on the $342 million existing senior secured term loan facility due 2017 and $125 million senior secured revolving credit facility due 2016.

Moody's affirmed the corporate family rating at B2, the speculative-grade liquidity rating at SGL-2, $165 million of senior payment-in-kind toggle notes at B3 (LGD5, 77%) and $150 million of senior subordinated notes at Caa1 (LGD6, 92%).

The outlook is stable.

Proceeds from the incremental term loan will be used to fund the debt and equity funded acquisition of a 49% ownership stake in the Ambulatory Surgery Center operations of a sizeable health system for about $123 million.

The ratings consider the opportunity associated with the company's investment in the Ambulatory Surgery Center operations of a sizable health system, the agency said. While leverage neutral at inception, supported in part by an equity contribution from TPG Partners, there will likely be incremental benefits as a result of the combination including the expansion of EBITDA from synergies as well as increased scale and geographic diversification.

The ratings reflect the company's considerable financial leverage, limited interest coverage and modest free cash flow generation, the agency added.

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