Moody's rates Triumph Healthcare loans B2, Caa1

Moody's Investors Service said it assigned a rating of B2 to Triumph HealthCare Second Holdings Inc.'s proposed $175 million first-lien senior secured bank credit facilities comprised of a $35 million senior secured revolver due 2011 and a $140 million senior secured term loan due 2011, and a rating of Caa1 to a proposed $95 million second-lien term loan due 2012.

Moody's also assigned a corporate family rating of B2 to the new entity, which replaces the existing borrower, Triumph HealthCare LLP.

The outlook is stable.

The proceeds of the transaction, along with about $20 million of cash on hand, will be used to buy SCCI Health Services Corp. for $110 million. The proceeds will also be used to refinance the company's existing debt, including the redemption of about $30 million of the $35 million redeemable preferred stock put in place at the holding company, Triumph Holdings Inc., by the financial sponsor, TA Associates.

Moody's said the ratings reflect the company's high leverage after the transaction; the decreased financial flexibility resulting from the conversion to debt of a significant portion of the company's equity; the expected reduction in Medicare reimbursement in 2006; the continued development of new facilities and the required start-up costs; concerns regarding the successful integration of the SCCI acquisition; and an ongoing qui tam lawsuit involving an SCCI facility.

According to Moody's, the ratings also reflect recognition of the company's expanded geographic reach and diversity following the SCCI acquisition and the company's leading market position in its primary market in Houston.

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