Moody’s rates RegionalCare B2, notes B1

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to RegionalCare Hospital Partners Holdings, Inc., a Ba2 rating to its proposed asset based revolving credit facility and a B1 rating to its proposed senior secured notes.

The outlook is stable.

Proceeds from the note offering, along with $350 million of senior unsecured notes (unrated) and $120 million of equity from Apollo Global Management, LLC, will be used to acquire Capella Healthcare, Inc. from Medical Properties Trust, Inc. (MPT) and refinance existing debt at Capella and RCHP, Inc. (a separate subsidiary within the corporate structure).

The ratings at RCHP, Inc. including its B3 corporate family rating, will be withdrawn at the close of the transaction.

The combination of RegionalCare and Capella will create an operating entity with a footprint of 18 hospitals in 12 states and pro forma revenue of about $1.6 billion.

Moody's estimates that pro forma adjusted debt/EBITDA would have been about 7 times at Dec. 31, 2015, prior to consideration of any synergies.

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