Moody’s gives Global Medical loan, notes B3

Moody’s Ratings said it assigned B3 ratings to Global Medical Response, Inc.’s new first-lien term loan and senior secured notes. The agency also upgraded GMR’s corporate family rating to B3 from Caa2 and the probability of default rating to B3-PD from Caa2-PD.

The Caa2 ratings of GMR's existing senior secured first-lien term loan, term loan and notes, which may be withdrawn once the transaction closes are unchanged, Moody’s said. The outlook is revised to stable from negative.

On Tuesday, the company announced a transaction to amend and extend its $3.757 billion first-lien term loans maturing in March 2025 and October 2025 to a new $3.566 billion first-lien term loan that matures in October 2028.

Additionally, GMR will exchange its $600 million of 6½% senior secured notes maturing in October 2025 $600 million of new 9½% senior secured notes that mature in October 2028. GMR will also raise $948 million of new payment-in-kind preferred equity to repay the $600 million second-lien term loan in full, add about $85 million of cash to the balance sheet, cover about $71 million in PIK original issue discount, while shaving first-lien term loan by about $200 million.

Moody's considers components of this transaction, including the conversion of some interest payments to pay-in-kind, to represent an economic loss to the term loan and noteholders. Moody's will append an /LD to the PDR upon transaction close, signifying a limited default. It will remove the /LD in about three business days.

“The ratings upgrade reflects Moody's Ratings view that the company's financial leverage and liquidity will improve with this transaction. Further, the transaction will extend the company's debt maturities to October 2028. Despite upcoming reimbursement risk, specifically with the Veterans Affairs (VA), Moody's Ratings believes that GMR can withstand a material rate rebasing when the new VA rule goes into effect primarily driven by the company's diverse medical transportation segments and payor mix,” the agency said in a statement.

© 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.