Moody’s drops 21st Century Oncology, loans, notes

Moody's Investors Service said it downgraded 21st Century Oncology, Inc.'s corporate family rating to Caa3 from Caa1, probability of default rating to Caa3-PD from Caa1-PD, first-lien bank credit facility ratings to Caa1 from B2 and senior unsecured notes rating to Ca from Caa3.

Concurrently, the agency affirmed the speculative grade liquidity rating at SGL-4.

The outlook was revised to negative from stable.

Moody’s said the downgrade reflects its substantial doubt about the company's ability to remain in compliance with covenants that were established in the Aug. 16 amendment to the credit agreement and notes indenture.

Under the terms of the amendment, 21st Century must raise at least $25 million in equity by Sept. 10 or it will be in default.

After the company completes the capital raise, it will be required to maintain at least $40 million in liquidity. The company has no equity commitments and only had liquidity of $40.5 million at July 31.

Furthermore, Moody’s said two additional capital raises of $25 million and $75 million are required by Nov. 30 and March 31, 2017, respectively.

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