Moody's slices Yestar

Moody's Investors Service said it cut the corporate family rating and senior unsecured rating of Yestar Healthcare Holdings Co. Ltd. to Caa3 from Caa1.

The downgrade follows the company’s Tuesday announcement reporting a planned offshore debt restructuring plan, Moody’s said. Yestar offers to exchange 5% of the outstanding principal amount on its $200 million senior notes due in September with a 6.9% annual coupon with cash. The remaining 95% of the outstanding principal and accrued interest will be exchanged with new notes due in three years from their issue date with an annual coupon of 7˝% and required amortization payments.

The agency said it considers the plan a distressed debt exchange since noteholders will get less than they were originally promised.

"The downgrade to Caa3 reflects Yestar's very weak liquidity and the uncertainty over the completion of the proposed offshore debt restructuring, which together could lead to lower recovery prospects for its creditors," says Gerwin Ho, a Moody's vice president and senior credit officer, in a press release.

The outlook remains negative.

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