S&P gives Rural/Metro loan BB

Standard & Poor's said it assigned its issue-level ratings and recovery ratings on Rural/Metro LLC's proposed new issuance of senior secured credit facilities, comprised of a $40 million revolving credit facility maturing in 2013 and a $180 million term loan maturing in 2014.

The issue-level ratings on the bank facilities are BB, two notches higher than the expected B+ corporate credit rating on parent holding company Rural/Metro Corp. after the close of the transaction, with a 1 recovery rating, the agency said.

The proposed facilities will refinance outstanding term debt, allow for a 100% tender of the existing Opco 9.875% senior subordinated notes due 2015, extend maturities and reduce complexity in the capital structure by effectively removing the restrictive payments basket provision of the Holdco notes which applied exclusively to the Opco senior subordinated notes, S&P said.

The low-speculative-grade corporate credit rating on Rural/Metro Corp. reflects the company's exposure to the ongoing uncertainty of government reimbursement rates and sustainability of price increases to commercial payors, relatively thin operating margins, and high levels of uncompensated care, the agency said.

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