Moody's rates Cross Country's loan Ba1

Moody's Investors Service assigned a Ba1 rating to Cross Country Healthcare Inc.'s proposed senior secured credit facilities, consisting of a $75 million revolver due 2008 and a $125 million term loan B due 2009. The outlook is stable.

Proceeds from the facility will be used to help fund the acquisition of MEDStaff Inc. As a result of obtaining the new loans, leverage will be approximately 1.6 times for pro forma FYE 2002, coverage is anticipated to be at 12.7 times and total debt/capitalization will be at approximately 31%, Moody's said.

The ratings reflect the company's profitable organic and acquired growth trends and its leadership position in the industry, Moody's said. Furthermore, the company has limited direct exposure to government and third-party payors, which eases direct reimbursement pressures, and has an experienced management team.

This is partially offset by a proposed increase in leverage, potential integration issues related to the proposed acquisition of MEDStaff and the potential for near-term softness in demand for temporary healthcare personnel, which is the largest contributor to the company's operations, Moody's added.

S&P lowers Denny's outlook

Standard & Poor's lowered its outlook on Denny's Corp. to negative from stable and confirmed its ratings including its corporate credit at B.

S&P said the outlook revision is based on Denny's deteriorating operating performance and credit measures.

Operating performance has been negatively affected by a weak economy and intense competition in the restaurant industry. Same-store sales decreased 0.4% in the first quarter of 2003, following a 1% decline in all of 2002. Moreover, operating margins fell to 10.5% in the first quarter of 2003, from 13.5% the year before, S&P said.

Operating margins were negatively affected by a decline in sales leverage and higher labor and utilities costs. As a result, EBITDA fell 25% to $24.6 million in the first quarter of 2003. Cash flow protection measures are thin, with EBITDA covering interest by only 1.5x for the 12 months ended March 26, 2003, S&P noted.

The ratings on Denny's reflect the challenges of improving the operations of Denny's restaurants in a highly competitive restaurant industry, the company's weak cash flow protection measures, and its significant debt burden, S&P said. These risks are somewhat offset by the company's relatively well-known brand name and regional market position.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.