S&P affirms American Renal on add-on

Standard & Poor’s said it affirmed the B corporate credit rating on American Renal Holdings Inc.

The agency also said it expects to transition the corporate credit rating to American Renal Associates Holdings Inc., the listed entity in the initial public offering, and withdraw the corporate credit rating on American Renal Holdings Inc. at the close of the transaction.

S&P also said it affirmed the B rating on the company’s increased revolving credit facility of $100 million due in 2018 and $460 million first-lien term , including a $60 million add-on.

The agency also said it revised the recovery on this facility to 4, indicating 30% to 50% expected default recovery, from 3. The revised recovery rating reflects the increase in first-lien claims, the agency said.

The agency also said it will withdraw the CCC+ ratings on the company’s $240 million second-lien term loan when the transaction closes.

The outlook is stable.

The ratings reflect American Renal’s narrow treatment focus, pricing pressure from Medicare and somewhat limited geographic diversity, S&P said.

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