S&P upgrades Extendicare

Standard & Poor's said it raised its credit ratings on Extendicare Health Services Inc., including the corporate credit rating to BB- from B+. Other ratings raised include secured bank loan to BB from BB-, senior unsecured debt to B+ from B and subordinated debt to B from B-.

The outlook is stable.

The recovery rating of 1 on the company's secured bank loan was affirmed.

The upgrade is attributable to Extendicare's improving financial profile, the better-than-expected results from its acquisition of Assisted Living Concepts and more stable reimbursement environment for nursing homes relative to earlier expectations, S&P said.

The speculative-grade ratings reflect the volatile reimbursement environment that is characteristic of this industry, S&P said.

This factor is tempered by the geographical dispersion of Extendicare's facilities and the January 2005 acquisition of Assisted Living Concepts, which lowered Extendicare's overall exposure to government reimbursement, the agency said.

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