Moody's confirms Apria

Moody's Investors Service said it confirmed Apria Healthcare Group Inc.'s corporate family and probability-of-default ratings at Ba3, $700 million A-1 notes due 2014 at Ba2 (LGD3, 35%) and $317.5 million A-2 notes due 2014 at B1 (LGD5, 81%).

This concludes the review for possible downgrade that began on March 31. The outlook is negative.

The review followed the announcement that the company was pursuing a consent agreement from its lenders to fund a one-time distribution of up to $500 million to its equity holders with new debt and balance sheet cash. It is Moody's understanding that the company is no longer pursuing the consent.

However, the agency believes there continues to be a risk that Apria and its equity sponsors will pursue a similar transaction, which is why the outlook is negative.

The Ba3 corporate family rating is supported by Apria's scale as the leading provider of home health-care products and services in the United States, good diversity by geography and payor and a reimbursement environment that appears to be considerably more stable than it was when the original ratings were assigned in October 2008, Moody's said.

The ratings consider risks related to the ongoing restructuring program and the longer-term risk of future reimbursement pressure, the agency added.

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