Moody's axes GenesisCare

Moody's Investors Service said it downgraded Genesis Care Finance Pty Ltd.'s corporate family rating to Caa2 from B3. The agency also slashed the senior secured ratings to Caa2 from B3 on the loans borrowed by subsidiaries Genesis Specialist Care Finance UK Ltd. and GenesisCare USA Holdings, Inc.

"The downgrade reflects Moody's view that GenesisCare's capital structure has become unsustainable due to lower revenues, higher costs and continued capital spending, and that the company will experience material liquidity issues over the next 12-18 months without further shareholder support," said Maadhavi Barber, a Moody's analyst, in a press release.

The agency noted that Genesis has drawn nearly 40% of its multicurrency A$200 million revolver and cannot draw more than 40% without breaching financial covenants under the senior facilities agreements, given that the senior secured leverage ratio, based on the company's calculations, exceeds 7.5x.

The outlook remains negative.

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