S&P: Extendicare Health Services on watch

Standard & Poor's said it placed its ratings for Extendicare Health Services Inc., including the BB- corporate credit rating, on CreditWatch with negative implications.

This follows the announcement of a reorganization of the parent company, Extendicare Inc., into a Canadian REIT and the spin-off of all of Extendicare's assisted living businesses into a new, separate public company, the agency said, adding that it believes that the result of this reorganization, including the loss of its assisted living operations, could weaken both Extendicare's business and financial positions.

Extendicare's assisted living operations generate an estimated 25% of its EBITDA, the agency said, noting that the loss of this business will lessen the company's business diversity and could weaken its business risk profile due to the consequent larger dependency on government payors.

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