S&P rates Alliance Imaging notes B-

Standard & Poor's said it assigned a B- rating to Alliance Imaging Inc.'s $125 million senior subordinated notes.

The issuer has a corporate credit rating at B+ and has ratings of BB- for its $70 million senior secured revolving credit facility bank loan due 2010 and its $390 million senior secured term C bank loan due 2011.

The outlook is stable.

Proceeds will be used to repay a $50 million bridge financing for two recent acquisitions and to provide liquidity for potential acquisitions.

S&P said the rating reflects the fragmented and competitive operating environment, relatively low barriers to entry, reimbursement risk and the relatively high fixed-cost nature of the business.

These weaknesses are partly offset by favorable longer term demand trends for the company's services, the agency said.

The issuer's total debt-to-EBITDA ratio was 3.4 times at the end of the third quarter and is expected to remain at between 3.5 times and 4 times, S&P said.

Moody's rates Alliance Imaging notes B3

Moody's Investors Service said it assigned a B3 rating (LGD5, 83%) to Alliance Imaging, Inc.'s proposed $125 million senior subordinated notes due 2012.

Moody's affirmed the company's corporate family and probability-of-default ratings at B1 and the B3 rating (LGD5, 83%) on the $150 million 7¼% senior subordinated notes due 2012.

Upgraded to Ba2 (LGD2, 27%) from Ba3 (LGD3, 35%) are the $70 million senior secured revolver due 2010 and the $367 million senior secured term loan B due 2011.

The outlook is stable.

Proceeds will be used to repay a $50 million bridge facility and for potential future acquisitions.

The B1 corporate family rating reflects the high capital requirements and operating leverage, modest free cash flow and high financial leverage, pro forma for the transaction, the agency said.

Factors mitigating these concerns include the company's substantive scale, the dispersion of its footprint, the diversification of its customer base as well as the company's low bad debt experience, Moody's said.

Ratings could be downgraded if the total debt-to-EBITDA ratio rises above 5.5 times or upgraded if it falls to 3.6 times on a sustained basis accompanied by material positive growth in revenue, the agency said.

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