S&P cuts OHI to B, gives Osmose loans B

Standard & Poor's said it lowered its corporate credit rating on OHI Intermediate Holdings Inc. to B from B+ and removed the rating from CreditWatch, where it was placed with negative implications on April 24.

The outlook is stable.

At the same time, the agency assigned its B issue-level rating and 3 recovery rating to Osmose Holdings Inc.'s proposed $25 million revolver due 2019 and $235 million second-lien loan due 2021. Osmose is a subsidiary of OHI.

"The downgrade reflects OHI's weaker credit measures because of the company's sale of its wood preservation and railroad services businesses, and its subsequent debt refinancing," S&P credit analyst Robyn Shapiro said in a news release.

"Pro forma for the transaction, we expect debt to EBITDA of about 5x."

S&P assesses the equity sponsor's financial policy as "aggressive," reflecting the payment of two debt-financed dividends and the proposed sale of more than half of the business within less than two years after OHI was acquired.

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