Moody's lowers RadNet to SGL-3

Moody's Investors Service said it lowered the speculative-grade liquidity rating of RadNet Management, Inc. to SGL-3 from SGL-2 and affirmed its corporate family and probability-of-default ratings at B2, its $55 million senior secured revolving credit facility due 2011 and senior secured first-lien term loan due 2012 at Ba3 (LGD2) with a revised loss-given-default rate of 27% (formerly 26%) and its senior secured second-lien term loan due 2013 at Caa1 (LGD5, 78%).

The outlook is stable.

The lowering of the SGL rating reflects Moody's view that scheduled stepdowns in financial covenants under its credit agreement will result in tight compliance with covenants and limit revolver availability over the intermediate term. The SGL-3 rating also reflects the agency's belief that RadNet will maintain adequate liquidity over the next 12 months.

RadNet's B2 corporate family rating continues to balance its dominant position in most of its operating markets against its considerable financial leverage position and constrained free cash flow resulting from its growth and expansion initiatives, Moody's said.

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