Moody's rates 21st Century Oncology loans B1, notes Caa2

Moody's Investors Service said it assigned B1 (LGD2) ratings to 21st Century Oncology, Inc.'s proposed $125 million senior secured revolving credit facility due 2020 and $570 million senior secured term loan due 2022 and a Caa2 (LGD5) rating to its proposed $400 million senior notes due 2023. At the same time, Moody's affirmed the company's B3 corporate family rating, B3-PD probability of default rating and SGL-2 speculative grade liquidity rating. The outlook remains stable.

Proceeds from the proposed term loan and notes, along with $39 million of balance sheet cash, are expected to be used to refinance the company's existing debt.

The agency said the B3 rating reflects the company's highly leveraged capital structure, history of negative free cash flow and concentration by geography and by payor.

At the same time, the rating reflects the reduced debt level following the CPPIB investment and the improved maturity profile and expected reduction in cash interest following the refinancing, Moody’s said. The rating also benefits from 21st Century's competitive industry position, size and scale, the agency added.

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