Moody's downgrades Surgery Center first-lien loans

Moody's Investors Service said it lowered Surgery Center Holdings, Inc.'s proposed $30 million senior secured first-lien revolving credit facility due 2018 and $315 million senior secured first-lien term loan due 2019 to B2 (LGD3, 35%) from B1 (LGD3, 33%) and changed the loss-given-default rate assigned to its proposed $120 million senior secured second-lien term loan due 2020 to 86% from 84% while keeping the rating on the loan at Caa2 (LGD5).

The B3 corporate family rating and B3-PD probability of default rating were affirmed, and the outlook is stable.

The company upsized the proposed first-lien credit facilities to $345 million from $335 million and downsized the second-lien loan to $120 million from $130 million. The agency said the downgrade reflects the greater amount of senior debt within the capital structure. The proceeds from the new facilities will be used to refinance existing debt and to pay up to a $135 million special dividend.

The B3 corporate family rating reflects Surgery Partners' high leverage, its relatively small scale and an aggressive financial policy, Moody's said.

The agency said the rating also incorporates the positive long-term growth prospects of the sector, as many patients and payors prefer the outpatient environment (primarily due to lower cost and better outcomes) for certain specialty procedures.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.