S&P rates Rural/Metro loans B, notes CCC+

Standard & Poor's said it assigned its B corporate credit rating to Rural/Metro Corp., the holding company. The outlook is stable.

S&P also assigned its B senior secured debt rating and 2 recovery rating to Rural/Metro LLC's proposed $20 million senior secured revolving credit facility maturing in 2010 and a $120 million senior secured term loan B maturing in 2011. Rural/Metro LLC is an operating company and subsidiary of Rural/Metro Corp.

At the same time, S&P assigned its CCC+ subordinated debt rating to Rural/Metro LLC's proposed $140 million senior subordinated notes due 2015 and to Rural/Metro Corporation's proposed $50 million paid-in-kind notes maturing in 2016.

The company is expected to use the proceeds from the term, subordinated and holding company debt, in addition to about $7 million of on-hand cash, to refinance $150 million of existing senior notes, repay about $153 million of outstanding revolving credit facility borrowings and fund $15 million of related transaction fees and tender premiums.

S&P said the low-speculative-grade ratings reflect the company's exposure to government reimbursement combined with its relatively thin operating margins, as well as concerns regarding the sustainability of price increases from its commercial payers.

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