| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers K > Headlines for KCI USA Inc. > News item |
S&P: Kinetic Concepts loan B
S&P said it affirmed the B corporate credit rating on Kinetic Concepts Inc. and revised the outlook to positive from stable.
The agency also said it lowered the rating on the first-lien debt due 2021 to B from BB- and revised the recovery rating to 3 from 1.
The 3 recovery rating indicates 50% to 70% expected default recovery.
S&P also said it assigned a B rating to the new first-lien debt with a 3 recovery rating.
The debt consists of a $1.125 million first-lien term loan due 2024, a euro-equivalent $250 million first-lien term loan due 2024 and $300 million revolver due 2022, the agency said.
The borrowers are Kinetic Concepts and KCI USA Inc.
The agency also said it raised the rating on the third-lien debt to B- from CCC+ and revised the recovery rating to 5 from 6. The 5 recovery rating indicates 10% to 30% expected default recovery.
The rating actions follow news that Kinetic plans to sell its LifeCell business to Allergan plc for $2.9 billion and refinance its first-lien debt as part of its strategy to de-leverage, S&P explained.
While the asset sale and refinancing significantly lowers overall leverage and the LifeCell sale is meaningful in terms of Kinetic's business risk, the company still is highly leveraged and has a fair business risk profile, the agency said.
The divestiture of LifeCell has material implications on the company's overall profitability, S&P added.
The LifeCell division had margins that were significantly higher than overall company margins, which provided ballast while the company struggled to grow, the agency said.
However, the sale allows Kinetic to lower its leverage with an expectation for a debt-to-EBITDA of about 5.3x in 2017, compared with previous estimates of 7.4x, S&P 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.