Moody's affirms Triumph Healthcare

Moody's Investors Service said it affirmed the B2 corporate family rating of Triumph Healthcare Second Holdings, LLC following the announcement that the company will increase debt by $86 million through a $76 million add-on to its senior secured first-lien term loan due 2013 and a $10 million add-on to its senior secured second-lien term loan due 2014.

The agency also affirmed the first-lien term loan and senior secured revolving credit facility due 2012 at B1 (LGD3) and changed their loss-given-default rates to 37% from 35%. The second-lien term loan was affirmed at Caa1 (LGD5), and its loss-given-default rate was revised to 88% from 86%.

Moody's understands that the incremental debt will be used to fund the $32 million acquisition of the long-term acute care hospital operations of Memorial Hermann Health Systems and to pay a $50 million dividend to shareholders.

While Triumph has grown through a combination of acquisitions and de novo development, the agency said it remains relatively small and therefore scale and diversity factors continue to constrain the rating.

The ratings also reflect the relatively aggressive financial policy of Triumph. This is the second time in two years that Triumph has increased financial leverage in order to fund a dividend, and Moody's believes these transactions result in decreased financial flexibility at a time when the company and the sector continue to face significant pressure.

© 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.