S&P lowers Team Health, rates loan B

S&P said it lowered the corporate credit rating on Team Health Holdings Inc. to B from B+ and removed the rating from CreditWatch, where it was placed with negative implications in November.

The outlook is stable.

The agency also said it assigned a B rating and 3 recovery rating to the proposed $3 billion senior secured credit facilities, consisting of a $400 million five-year revolving credit facility and $2.6 billion seven-year term loan B.

Tennessee Merger Sub Inc. is the borrower of the debt and will be merged into Team Health Holdings upon close of the transaction.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The downgrades reflect Team Health's significant increase in leverage following the going-private transaction, as well as a belief that the company's financial policies under financial sponsor ownership are likely to be aggressive, resulting in only limited de-leveraging over time, S&P said.

While the company increased leverage to more than 5x in late 2015 to finance the acquisition of post-acute and hospitalist service provider IPC, the agency said it previously expected that the company would reduce leverage to less than 5x within about a year of transaction close.

The change in ownership does not affect a view of the company's business risk profile, S&P added.

Team Health is the second-largest participant in the narrow, highly fragmented health care staffing market with significant market positions in emergency medicine, hospitalist and anesthesiology staffing segments, the agency said.

© 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.