S&P rates Apria notes BB+

Standard & Poor's said it assigned a BB+ issue-level rating and recovery rating of 1 to Apria Healthcare Group Inc.'s proposed $600 million senior secured notes series A-1 due 2014. The BB- corporate credit rating was affirmed.

The outlook is stable.

The proceeds of the notes will be used to refinance $600 million of a $1.01 billion bridge loan that was incurred when the leveraged buyout was completed in October 2008. S&P expects the company to refinance the remaining $410 million of the bridge loan with series A-2 notes at a later date.

The agency said Apria's competitive advantage in bidding for large commercial contracts for services should be sustained by its national platform and its well-established reputation.

However, despite this position, the acquisition of the company by Blackstone Group leaves Apria with a more aggressive financial risk profile at a time when Medicare reimbursement cuts have been implemented, S&P said.

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