S&P lifts Greenway

S&P said it raised its rating on Greenway Health LLC to B- from CCC and assigned B-issue-level ratings to its planned revolver and first-lien term loan. The recovery ratings (rounded estimate 60%) are 3.

“The higher rating reflects both the extended maturity profile and our belief that the business is improving and can consistently generate some positive free cash flow. The proposed revolver and term loan will extend Greenway's maturities by five years and lower the debt balance by about $125 million. The financial sponsors are contributing about $125 million of preferred equity as part of the transaction, and, although we believe this equity has debt-like characteristics, we also recognize the paid-in-kind (PIK)-payment feature is friendly to creditors,” S&P said in a statement.

Post transaction, the agency said it estimates Greenway’s S&P Global Ratings'-adjusted debt to EBITDA in the 7x range, around 5x if excluding preferred equity from adjusted debt, and almost $20 million in free cash flow in 2024, excluding transaction fees.

The outlook is stable.

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