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Moody's downgrades Matria Healthcare
Moody's Investors Service said it affirmed Matria Healthcare Inc.'s B1 corporate family rating and downgraded its probability-of-default rating to B2 from B1, $30 million revolving credit facility due 2011 to B1 (LGD3, 33%) from Ba3 (LDG3, 38%) and $330 million senior secured term loan B due 2012 to B1 (LGD3, 33%) from Ba3 (LDG3, 38%).
The outlook was changed to stable from negative
Matria recently upsized its senior secured first-lien term loan to $330 million from $265 million and used the proceeds to prepay all outstandings under its $65 million second-lien term loan.
The downgraded ratings reflect the new capital structure and Moody's belief that the first-lien bank debt would fully absorb losses in the event of a payment default since Matria's capital structure now lacks the cushion afforded by the presence of junior capital, which suggests a higher expected loss and results in lowered ratings.
The outlook change reflects the company's revenue growth, margin improvement, Facet Technologies and Dia Real divestitures, the use of such proceeds to reduce debt, the company's integration of CorSolutions and its realization of expected cost synergies.
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