National Specialty Hospitals, d/b/a National Surgical Hospitals, Assigned 'B' Corporate Credit Rating; Outlook Stable
- U.S. surgical facility operator National Specialty Hospitals Inc. d/b/a National Surgical Hospitals (NSH) was acquired by Irving Place Capital in a highly leveraged transaction.
- We are assigning a 'B' corporate credit rating to National Specialty Hospitals Inc.
- At the same time, we are assigning a 'B' issue-level rating to the $220 million senior secured credit facility with a recovery rating of '3'.
- The stable rating outlook reflects our expectation for moderate growth, reflecting mid-single-digit same-store revenue growth and acquisitions.
- Still, significant adjusted debt leverage will likely persist because of the LBO debt and preferred equity, which we view as debt.
NEW YORK (Standard & Poor's) March 25, 2011--Standard & Poor's Ratings Services said today that it assigned its 'B' corporate credit rating to Chicago-based National Specialty Hospitals Inc. The rating outlook is stable. At the same time, we assigned our 'B' issue-level rating and '3' recovery rating to the company's $172 million senior secured term loan due 2017 and $20 million senior secured revolving credit facility due 2016. The senior secured facility also includes a $30 million delayed draw term loan that expires in August 2012. "The low speculative-grade preliminary ratings on National Specialty Hospitals Inc. reflect our expectation that the company will remain highly leveraged in the medium term," said Standard & Poor's credit analyst Rivka Gertzulin, "since increasing adjusted debt from the pay-in-kind cumulative preferred stock (which we view as debt, consistent with our criteria) will mostly offset expected EBITDA growth from existing facilities and acquisitions. The company has a highly leveraged financial risk profile, with adjusted debt to EBITDA likely to remain above 7x over the next several years (excluding the preferred debt, pro forma lease-adjusted leverage at the close of the transaction was around 5x). Thus, while debt leverage is substantial, we expect liquidity to be adequate. RELATED CRITERIA AND RESEARCH
- Methodology And Assumptions: Standard & Poor’s Standardizes Liquidity Descriptors For Global Corporate Issuers, July 2, 2010
- Criteria Guidelines For Recovery Ratings On Global Industrial Issuers’ Speculative-Grade Debt, Aug. 10, 2009
- Business Risk/Financial Risk Matrix Expanded, May 27, 2009
- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
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| Primary Credit Analyst: | Rivka Gertzulin, New York (1) 212-438-1201; rivka_gertzulin@standardandpoors.com |
| Secondary Contact: | David P Peknay, New York (1) 212-438-7852; david_peknay@standardandpoors.com |
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