Moody's affirms Team Finance

Moody's Investors Service said it affirmed Team Finance, LLC's corporate family and probability-of-default ratings at B2, senior secured revolving credit facility due 2011 and senior secured term loan due 2012 at B1 (LGD3, 34%), senior subordinated notes due 2013 at Caa1 (LGD5, 87%) and speculative-grade liquidity rating at SGL-2.

The outlook is stable.

The agency said the affirmation reflects the continued positive operating performance roughly one year following the company's leveraged buyout by the Blackstone Group. Also supporting the ratings is the company's relatively good diversity of revenue, the fact that parent company Team Health, Inc. does not rely significantly on Medicare and Medicaid, Team Health's demonstrated history of stable financial performance, its ability to manage changes in the military contracting process and the healthy, underlying industry fundamentals.

However, the ratings also reflect the limited scale and considerable financial leverage of Team Finance, the risk for pressure on operating margins stemming from increasing labor and bad debt expense and Moody's expectation that acquisitions may constrain free cash flow and the company's ability to materially repay debt in the near-term.

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