Moody's rates RadNet loans prospective B2, Caa1

Moody's Investors Service said it assigned a prospective B2 rating to the proposed first-lien credit facilities of RadNet Management, Inc., a subsidiary of Primedex Health Systems, Inc., consisting of a $45 million senior secured first-lien revolving credit facility due 2011 and a $225 million senior secured first-lien term loan due 2012.

Moody's concurrently assigned a prospective Caa1 rating to the proposed $135 million senior secured second-lien term loan due 2013 and a speculative grade liquidity rating of SGL-2.

Moody's also affirmed the corporate family rating of RadNet at B3 and changed its outlook to positive.

Assignment of the prospective ratings on the first-lien debt at prospective B2 and the affirmation of the B3 corporate family rating primarily reflect Moody's belief that the liquidity of the merged company will be stronger than Primedex on a standalone basis.

Moody's said liquidity aided by cost savings and substantial net operating loss carryforwards partially offset the impact of a material, albeit manageable effect of forthcoming Medicare reimbursement changes on the combined company; RadNet's high capital requirements and operating leverage; and its modest free cash flow and high financial leverage.

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