S&P cuts Covenant Surgical Partners

S&P said it downgraded its ratings for Covenant Surgical Partners Inc. and its first-lien senior secured debt to CCC+ from B-. The agency also lowered the second-lien senior secured debt to CCC- from CCC. The 3 recovery rating on the first-lien debt and the 6 recovery rating on the second-lien debt are unchanged.

“The downgrade reflects our view that the company's capital structure is unsustainable and it is dependent on favorable economic and operating conditions to be able to improve its cash flow deficits. We believe Covenant Surgical is dependent on favorable conditions such as better operational efficiency, a slowdown in rising labor costs, improvements in interest rates or capital market conditions, and successful integration of physician practices to meet its financial commitments over the next 12 to 24 months,” S&P said in a press release.

The outlook is negative.

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