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S&P: Team Health on watch
Standard & Poor’s said it placed Team Health Inc.’s BB corporate credit rating on CreditWatch with negative implications following news that the company plans to acquire IPC Healthcare Inc. for $1.6 billion.
The transaction will be financed with a significant amount of debt, S&P said.
The CreditWatch listing reflects an expectation that leverage will rise to more than 4x as a result of the acquisition, prompting a revision of the current intermediate financial risk profile, the agency said.
The acquisition expands the company’s existing hospitalist staffing business, as well as create opportunities for post-acute staffing, S&P said.
The agency said it expects to resolve the CreditWatch listing once Team Health announces details about how it plans to finance the acquisition and discusses its commitment to reduce leverage.
It is likely that if the transaction is completed as planned, S&P said it would lower the rating by at least one notch, but unlikely lower it by more than two notches.
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