S&P revises Surgical Care recovery to 4 from 3

Standard & Poor’s said it revised its recovery rating on Surgical Care Affiliates Inc.’s proposed first-lien credit facilities to 4 (at the high end of the 30% to 50% range) from 3, because the company plans to increase the size of the proposed term loan to $450 million from $350 million. This issue-level rating is unchanged at B+, the same as the corporate credit rating.

The proposed credit facilities will include a $250 million revolving credit facility and a $450 million term loan.

In addition, the company plans on decreasing the size of the planned unsecured notes to $250 million from $350 million. The B- issue-level rating on these notes are unchanged. The recovery rating on the notes also remains 6, indicating an expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default.

Since the company is increasing the size of the proposed term loan and decreasing the size of the proposed notes by a like amount, the transaction does not impact S&P’s leverage expectations or the corporate credit rating.

S&P said the B+ corporate credit rating continues to reflect S&P’s expectation that leverage will remain between 4x and 5x. The ratings also take into account the company’s narrow focus in a highly competitive industry and moderate reimbursement risk, the agency said.

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