Fitch rates Tenet notes B-

Fitch Ratings said it assigned a B- with recovery rating of RR5 to Tenet Healthcare Corp.'s $750 million 7½% senior secured second-lien notes.

About $500 million of the proceeds will be used to pay down balances outstanding on Tenet's asset based lending facility, which was drawn to fund litigation settlements during the fourth quarter of 2016, Fitch said.

The senior secured first-lien notes were downgraded to BB- with recovery rating of RR2 from BB with recovery rating of RR1 because of lower recovery prospects for the lenders in a hypothetical bankruptcy scenario.

The outlook is stable.

Tenet is among the largest for-profit operators of acute care hospitals in the United States and following the acquisition of a majority ownership interest in United Surgical Partners International in 2015, it is now the largest operator of ambulatory surgery and imaging centers, Fitch explained.

Scale is increasingly important as U.S. health care providers seek efficiencies to offset the effects of an overall constrained reimbursement environment, the agency said.

The debt funding for the transaction prolonged the de-leveraging for the company.

De-leveraging also has been slow because Tenet relies primarily on EBITDA growth, S&P said, and its free cash flow limits its ability to repay debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.