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S&P cuts Rural/Metro, rates loan B, notes CCC+
Standard & Poor's said it lowered the corporate credit rating on Rural/Metro Corp. to B from B+.
The agency also said it removed the ratings from CreditWatch, which began in March following news that the company agreed to be acquired by Warburg Pincus in a leveraged buyout transaction.
The outlook is stable.
The agency also said it assigned a B rating and 3 recovery rating to the company's proposed $100 million senior secured revolving credit facility due 2016 and $325 million senior secured credit facility due 2018.
The 3 recovery rating indicates 50% to 70% recovery in a default.
The agency also said it assigned a CCC+ rating and a 6 recovery rating to Rural/Metro's $200 million senior unsecured notes due 2019. The 6 recovery rating indicates 0 to 10% expected recovery in a default.
The senior secured term loan and senior unsecured notes are being used to finance the buyout.
The low speculative-grade corporate credit rating reflects a highly leveraged financial risk profile, S&P said.
The company's weak business risk profile reflects exposure to the ongoing uncertainty of government reimbursement rates and sustainability of commercial payor price increases, modest operating margins and high levels of uncompensated care, the agency said.
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