S&P rates ExamWorks loan BB-, notes B-

Standard & Poor's said it affirmed its B+ corporate credit rating on ExamWorks Group Inc.

The outlook is stable.

At the same time, the agency assigned its BB- issue-level rating and 2 recovery rating to ExamWorks' proposed $300 million revolving credit facility, which refinances an existing unrated $262.5 million revolving facility. The 2 recovery rating indicates an expectation for substantial (at the lower end of the 70% to 90% range) recovery on this debt in the event of payment default.

S&P also assigned its B- issue-level rating and 6 recovery rating to ExamWorks' proposed $500 million senior notes, which refinance $250 million in existing unsecured debt and repays about $150 million drawn on the existing revolver. The 6 recovery rating indicates an expectation for negligible (0% to 10%) recovery on this debt in the event of default.

The affirmation follows the company's announcement that it will increase total debt by about $100 million in a debt refinancing that provides the company with about $75 million in additional balance sheet cash to pursue its growth strategies.

"We view this action as largely consistent with our expectation that the company will remain very acquisitive, and that internally generated cash flow and some debt capacity will be used to grow the business," S&P credit analyst Tulip Lim said in a news release.

Pro forma for the refinancing, leverage increases to 4.3 times from 3.5 times and funds from operations to total debt remains in the high teens, which is still consistent with the agency’s assessment of an "aggressive" financial risk profile.

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