Moody's rates Community Health upcoming convertibles B3

Moody's Investors Service assigned a B3 rating to the planned $250 million convertible subordinated notes due 2008 of Community Health Systems, Inc. The outlook is stable.

Moody's said the ratings reflect the company's high leverage and modest interest coverage, historical weak free cash flow relative to debt, acquisitive nature and significant intangibles on the balance sheet.

It added: "Also incorporated in the ratings are concerns over the challenges of operating in a highly competitive and regulated industry, including managed care pricing pressures and increasing costs for labor and supplies. Factors supporting the ratings include positive operating trends, the company's leading market position, an improved reimbursement environment relative to previous years and the expected strengthening of the credit profile following the pending equity offering."

Moody's anticipates Community Health will continue to increase revenues and EBITDA through new acquisitions and organic growth and will further improve cash flow from operations but that the improvements will be offset by the continued use of cash and debt to finance future acquisitions.

Fitch revises rating outlook on Carnival Corp. to negative

Fitch said Friday it has affirmed the ratings of Carnival Corp. and revised the rating outlook to negative from stable following the Sept. 11 attacks on the World Trade Center and the Pentagon. Fitch currently rates Carnival's senior debt at A. Fitch said it also affirmed the BBB+ rating for Carnival's P&O Princess Cruises PLC and its rating outlook remains negative.

Yields, especially in the luxury segment, were already under pressure as a result of the slowing economy and significant increases in capacity in the industry, Fitch noted. As a result of the attacks, Fitch expects further severe declines in the near term in both price and occupancy resulting in a dramatic yield contraction.

Carnival will embark upon an aggressive fleet expansion program over the next several years, Fitch said, which consists of 15 new vessels at an investment of some $6.6 billion. Fitch had expected a majority of the fleet program to be funded primarily through internally generated funds with periodic borrowings, and will focus on Carnival's cash flow and ability to internally fund capital expenditures. Carnival's financial position was relatively solid at the time of the terrorist attacks with comparatively low leverage (net debt/EBITDA of approximately one time) and high EBITDA margins (32.5%) for the trailing 12 months ended Aug. 31, 2001. Carnival's strong liquidity position includes $1.2 billion cash and short-term investments and full availability under its $1.625 billion revolving credit facilities at Aug. 31, 2001. Debt maturities include $160 million in 2001 and $22 million in 2002.

© 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.