Moody's lowers RadNet facilities

Moody's Investors Service said it affirmed RadNet Management, Inc.'s B2 corporate family rating and downgraded the first-lien revolver and term loan to B1 from Ba3 following the expected repayment of its second-lien debt from proceeds of a proposed $170 million add-on to the first lien term loan.

The new capital structure will consist of all first-lien debt.

Moody's also said it affirmed the company's B2-PD probability of default rating and the SGL-2 speculative grade liquidity rating.

The outlook is stable.

Moody's said it views the refinancing as a credit positive and believes the company remains well positioned for its ratings.

This transaction results in about $3 million in annual interest savings and an extended maturity profile with no material increase in total debt, the agency said.

The downgrade of the first-lien debt reflects the lack of loss absorption previously provided by the second-lien term loan, Moody's said.

The ratings also consider RadNet's high leverage, modest size and significant geographic concentration with the vast majority of its facilities in California, New York and Maryland, the agency said.

Moody's said it estimates that the company's debt-to-EBITDA ratio is 4.7x as of June 30, pro forma for the refinancing.

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