S&P rates AmeriPath facility, notes

Standard & Poor's said it assigned its B+ secured bank loan rating and its recovery rating of 2 to anatomic pathology laboratory AmeriPath Inc.'s proposed $190 million six-year credit facility. S&P also assigned its B- subordinated debt rating to the company's proposed $75 million 10-year senior subordinated note issue.

At the same time, S&P affirmed its B+ corporate credit rating on AmeriPath.

The outlook is stable.

The proposed bank loan and senior subordinated notes will replace the company's current term loan. S&P said the restructuring should give AmeriPath more flexibility with respect to its financial covenants while the company makes operational improvements. AmeriPath will have about $480 million of debt outstanding, pro forma for the transaction.

S&P said the speculative-grade ratings reflect concern with AmeriPath's aggressive growth through acquisitions in the U.S. market for anatomic pathology services, a niche segment of the diagnostic services market that is subject to reimbursement risks and competitive uncertainties. The ratings also reflect new management's challenge to improve performance, while saddled with a debt burden related to a 2003 leveraged buyout.

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