S&P rates Kinetic loan BBB-, notes B+

Standard & Poor's said it assigned a BBB- senior secured debt rating on Kinetic Concepts Inc.'s proposed $300 million revolving credit facility due 2013 and $1 billion term loan, with 1 recovery rating indicating expectation of 90% to 100% recovery.

The agency also assigned a B+ senior unsecured debt rating and 6 recovery rating on the company's $600 million 3.25% senior unsecured convertible notes due 2015.

The outlook is stable.

Proceeds will be used to finance the acquisition of LifeCell Corp. for $1.7 billion in cash.

The rating reflects significant dependence on the vacuum assisted closure device, which is subject to competitive technological developments and potential third-party pricing pressure, according to the agency.

These concerns are offset partially by strong sales momentum and cash flow related to the device, product diversification from LifeCell and the company's willingness to maintain an appropriate financial profile while executing its acquisition strategy, S&P said.

Following the proposed deal, the issuer's lease-adjusted debt-to-EBITDA ratio is expected to be about 3 times.

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