S&P rates Skilled Healthcare loans B, CCC+

Standard & Poor's said it assigned its B bank loan rating and a recovery rating of 3 to Skilled Healthcare Group Inc.'s proposed $225 million senior secured first-lien credit facility due 2012 and $50 million revolver due 2010. In addition, a CCC+ rating and recovery rating of 5 were assigned to the company's proposed $145 million senior secured second-lien term loan due 2012.

The company will use the proceeds from the senior secured loans to refinance existing debt and pay a $107 million dividend to its owners.

At the same time, S&P said it revised its outlook on Skilled Healthcare to stable from positive. The B corporate credit rating on the company was affirmed.

S&P said the low speculative-grade ratings on Skilled Healthcare Group Inc. reflect the risks associated with the company's concentration in two difficult states (California and Texas), its exposure to uncertain third-party reimbursement, and an aggressive financial policy. The company, previously known as Fountain View Inc., emerged from bankruptcy in August 2003.

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