Moody's rates Rotech Healthcare notes B1

Moody's Investors Service said it placed Rotech Healthcare, Inc.'s Caa2 corporate family rating and Caa2 probability-of-default rating under review for possible upgrade, and assigned a prospective B1 rating to the new $225 million in first-lien notes.

Moody's said it also placed Rotech's Caa3 rated $225 million senior subordinated notes due 2012 under review for possible upgrade. The agency said it expects to upgrade Rotech's corporate family and probability of default ratings to Caa1 and the senior subordinated notes rating to Caa2, following the close of the transaction and review of the final documents.

The upgrade review will consider the improvement in Rotech's operating performance, most notably over the past two quarters, the agency said, although leverage remains high at 5.5x.

Moody's said it anticipates that Rotech will be able to de-lever modestly over time through EBITDA growth.

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