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Moody’s ups Medical Depot
Moody’s Investors Service said it upgraded Medical Depot Holdings, Inc.’s (Drive DeVilbiss Healthcare) corporate family rating to Caa1 and probability of default rating to Caa1-PD/LD. The agency appended a /LD designation reflecting the recent amendments to Drive’s first and its 1.5 lien credit agreements, which Moody’s considers distressed exchanges and a default.
Moody’s also assigned a Caa1 rating to the company’s first-lien credit facilities due in 2025 and upgraded the $4 million second-lien term loan rating to Caa3 from Ca. Simultaneously, the agency withdrew the Caa2 rating assigned to the first-lien credit facilities due in 2023.
The outlook is stable and the /LD designation appended to the PDR will be removed in a few business days.
“Drive amended its credit agreements in a manner that will significantly reduce total leverage and debt service requirements over the near term. Specifically, Drive’s first-lien lenders waived term loan amortization during 2021, materially reduced term loan amortization in 2022 and extended the final maturity date from Jan. 3, 2023 to June 1, 2025. At the same time, the company’s 1.5 lien lenders converted the full amount of their loan to preferred shares,” the agency said.
The CFR upgrade reflects Moody’s view that these amendments reduce the likelihood of default, particularly the extension of its debt maturities which will provide additional time for the company to execute its operating improvement plans. “The upgrade also reflects recent improvement in operating results with EBITDA margins (as defined by the company) rising around 170 basis points in 2020,” the agency said in a press release.
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