Moody's rates Summit Behavioral B3

Moody's Investors Service said it assigned ratings to Summit Behavioral Healthcare, LLC, including a B3 corporate family rating, a B3-PD probability of default and B2 ratings to the planned first-lien senior secured credit facilities. The agency also assigned Caa2 ratings to the proposed second-lien senior secured term loans.

Patient Square Capital Summit is acquiring Summit and will contribute equity. Summit seeks to raise credit facilities consisting of a $75 million senior secured first-lien revolver, a $450 million senior secured first-lien term loan, a $70 million senior secured first-lien delayed draw term loan, a $180 million senior secured second-lien term loan, and a $25 million senior secured second-lien delayed draw term loan.

“The B2 rating assigned to the proposed first-lien credit facilities reflects their senior secured interest in substantially all assets of the borrowers and the level of junior debt in the company's capital structure. The Caa2 rating assigned to the proposed second-lien secured loans reflects their junior ranking,” Moody’s said in a press release.

The proceeds will be used to refinance Summit's indebtedness, pay related fees and expenses and fund future expansion.

The outlook is stable, reflecting an expectation that Summit will reduce its currently high leverage towards seven times the end of 2022 and will prudently manage its expansion and cash, the agency said.

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