S&P revises Osmose recovery rating after add-on

Standard & Poor's said it revised a recovery rating on Osmose Holdings Inc.'s secured term loan and revolving credit facility to 3 from 4 after news of the company's proposed $50 million add-on to its existing senior secured term loan due 2018.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The rating on the term loan and revolver remains at B+, which is the same as the corporate credit rating on parent company OHI Intermediate Holdings Inc. That rating is unchanged.

The proceeds will be used to pay another dividend to its owners, following a $54 million dividend in November 2012, S&P said.

The ratings reflect a leverage that is expected to peak at 4.5x despite the very aggressive financial policy of the equity sponsor, which reflects the payment of two debt-financed dividends less than one year after acquiring OHI, the agency said.

The company is expected to continue generating positive free cash flow with credit metrics consistent with an aggressive financial risk profile, S&P said.

The ratings reflect the company's weak business risk profile and aggressive financial risk profile, the agency said.

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