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Moody's cuts American Renal
Moody's Investors Service said it assigned a Caa2 (LGD5, 88%) rating to American Renal Holdings Co., Inc.'s proposed issuance of $125 million of senior pay-in-kind toggle notes due 2016. The issuer is the parent holding company of American Renal Holdings, Inc.
Moody's lowered the corporate family and probability-of-default ratings at American Renal Holdings, Inc. to B3 from B2.
The agency also affirmed the ratings of the senior secured notes at American Renal Holdings, Inc. at B2 (LGD3, 35%) from B2 (LGD4, 53%) and lowered the rating of American Renal Holdings, Inc.'s revolving credit facility to B1 (LGD2, 24%) from Ba3 (LGD2, 23%). Moody's also affirmed the SGL-2 speculative grade liquidity rating.
The outlook is stable.
Proceeds will be used to pay a dividend to shareholders and pay fees and expenses.
The downgrade reflects the aggressive financial policy of the company characterized by the considerable increase in leverage and decapitalization of the company following the payment of the debt financed dividend, according to the agency.
Pro forma leverage will increase in excess of 1.5 times the level incurred when the ratings were initially assigned in April 2010 to over 7.1 times, the agency said.
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