Fitch: Tenet on negative watch

Fitch Ratings said it placed Tenet Healthcare Corp.'s ratings, including the B issuer default rating, on rating watch negative.

The action follows the company's announcement that it will acquire Vanguard Health Systems. The ratings apply to about $5.5 billion of debt as of March 31.

Fitch said the negative watch primarily reflects risks inherent in the companies' operating profiles, the most important of which is strained free cash flow generation and industry-lagging profitability.

On a stand-alone basis, both companies are highly leveraged and Fitch said it expects Vanguard to produce negative FCF (cash from operations less dividends and capital expenditures) in 2013-2014.

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