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Moody's may upgrade Ameripath
Moody's Investors Service said it placed Ameripath, Inc.'s B2 corporate family and probability-of-default ratings, Ba2 (LGD2, 13%) senior secured revolving credit facility and term loan B, B3 (LGD4, 62%) senior subordinated notes and AmeriPath Intermediate Holdings, Inc.'s Caa1 (LGD5, 88%) floating-rate PIK toggle notes on review for possible upgrade.
The review follows the recent announcement that Quest Diagnostics Inc. (Baa2) has signed a definitive agreement to acquire AmeriPath in an all-cash transaction valued at approximately $2 billion, including the assumption of $770 million in AmeriPath debt. Quest will also refinance AmeriPath's outstanding debt.
The agency estimated that Quest is paying over two times projected 2008 annual revenue and over 10 times projected 2008 annual EBITDA, including synergies, for AmeriPath and said it expects Quest will seek to improve the profitability and internal growth rate of AmeriPath through cost synergies, leveraging Quest's sales resources, distribution and infrastructure and the benefits of an expanded testing portfolio.
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