Moody's rates Manor Care loans Ba3

Moody's Investors Service said it assigned a B2 corporate family rating to HCR Healthcare LLC, which is expected to be formed to house the operations of Manor Care, Inc.

Moody's also assigned a Ba3 rating (LGD2, 18%) to HCR Healthcare's proposed senior secured credit facilities, consisting of a $200 million senior secured revolving credit facility due 2013 and $700 million senior secured term loan due 2014.

Under review for downgrade is Manor Care's senior unsecured notes rated Baa3.

The outlook is stable.

Proceeds are expected to be used to complete the acquisition of Manor Care, Inc. by the Carlyle Group for $6.3 billion, including $950 million of existing debt.

The B2 corporate family rating reflects the considerable amount of adjusted leverage that will result from the transaction, Moody's said.

The ratings also reflect the significant decline in adjusted interest coverage and cash flow coverage of debt metrics when compared with the investment grade level metrics of the predecessor company, Manor Care, Inc., currently rated Baa3, the agency said.

Supporting the rating is the company's position as the largest provider of long-term care services, Moody's said.

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