S&P rates VCVH notes CCC+

S&P said it assigned its CCC+ issue-level rating to VCVH Holding Corp.'s announced offering of $1.15 billion senior notes maturing in 2026.

The agency also assigned a 6 recovery rating to the debt, indicating an expectation of negligible (0%-10%; rounded estimate: 0%) recovery of principal in the event of payment default.

VCVH Holding is a subsidiary of VCVH Holding II Corp. (Verscend Technologies Inc.).

The ratings on Verscend remain on CreditWatch, including the B- issuer credit rating, where they were placed with positive implications on June 19, after the company announced its plan to acquire Cotiviti Corp. for $4.9 billion.

S&P said it expects the company to use proceeds from the new senior unsecured notes, along with the recent secured term loan issuance, to finance the acquisition as well as the refinancing of Verscend's existing debt.

“We view the combination of Cotiviti and Verscend as significantly enhancing Vescend's business profile. We believe the acquisition strengthens Verscend's market position in the health care payment integrity market, significantly increases scale, improves product diversity, and bolsters the company's competitive advantage,” the agency said in a news release.

“These factors outweigh the increase in debt leverage, which we expect will be in the 9x range.”

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