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Moody's may downgrade Community Health, Triad Hospitals
Moody's Investors Service said it placed the ratings of Community Health Systems, Inc. under review for possible downgrade and kept Triad Hospitals, Inc.'s ratings under review for possible downgrade following the announcement that Community Health will acquire Triad Hospitals for $6.8 billion, including $1.7 billion of existing Triad debt. The announcement follows a February announcement that Triad had entered into a definitive agreement to be acquired by affiliates of CCMP Capital Advisors and GS Capital Partners in a transaction valued at $6.4 billion.
Ratings under review for possible downgrade include Community Health's Ba3 corporate family and probability-of-default ratings, B2 (LGD6, 93%) 6½% senior subordinated notes due 2012 and SGL-2 speculative grade liquidity rating, CHS/Community Health Systems, Inc.'s Ba3 (LGD3, 42%) senior secured revolving credit facility and term loan and Triad Hospitals' Ba3 corporate family and probability-of-default ratings, Ba1 (LGD2, 18%) senior secured revolving credit facility and term loan due 2011, B1 (LGD4, 64%) 7% senior notes due 2012, B2 (LGD5, 89%) 7% senior subordinated notes due 2013 and SGL-2 speculative grade liquidity rating.
The agency said its review will focus on the increase in the financial leverage of Community Health resulting from the financing of the transaction and the increased scale and diversity of Community Health following the proposed transaction. Moody's noted that the combined company will be the largest publicly traded hospital operating company, with estimated pro forma revenue of approximately $9.9 billion for the year ended Dec. 31.
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