S&P cuts Alliance HealthCare

S&P said it lowered its rating on Alliance HealthCare Services to SD from B- and its rating on the second-lien term loan due 2024 to D from CCC. The recovery rating remains 6, reflecting expectations of negligible (0%-10%; rounded estimate: 0%) recovery in a default.

“We lowered the issuer credit rating and the second-lien debt rating on Alliance HealthCare Services to reflect our view of the distressed nature of the recently completed credit agreement amendment,” S&P said in a press release.

Besides relief from very tight financial covenants, second-lien term loan lenders agreed to lower interest payments along with warrants to potentially acquire equity in the company, S&P said.

The amendment also changed the terms for first-lien term loan lenders. The amendment gives the company the ability to defer up to 40% of scheduled amortization payments, depending on meeting a defined liquidity threshold, the agency said.

S&P said it placed the company's first-lien issue-level ratings on CreditWatch with negative implications, reflecting prospects for a lower rating. The current recovery rating is a 3, reflecting expectations of meaningful (50%-70%; rounded estimate: 60%) recovery in a default.

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