Moody's rates Aspen loans B2

Moody's Investors Service said it assigned B2 (LGD3, 44%) ratings to Aspen Dental Management Inc.'s proposed senior secured credit facilities, including a $40 million revolving credit facility and a $330 million first-lien term loan B. Its B2 corporate family rating and B2-PD probability of default rating are unchanged, and the outlook is stable.

The proceeds will be used primarily to refinance outstanding debt under the company's existing credit facilities and add balance sheet cash.

The agency said Aspen's B2 corporate family rating reflects the company's relatively small size, high financial leverage and weak interest coverage relative to other single-B rated companies. In Moody's view, the company's rating is further constrained by its aggressive de novo growth strategy, which the agency expects will constrain profitability margins and free cash flow.

However, the rating is supported by the company's flexibility to reduce de novo growth if necessary and its ability to then generate positive free cash flow that could be used to reduce debt, Moody's said. The credit profile also benefits from the large population of people that are underserved in terms of access to dental care, which the agency believe supports Aspen's growth prospects.

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