S&P downgrades MedAssets

Standard & Poor’s said it lowered all of the ratings on MedAssets Inc., including the corporate credit rating, to B from BB- and removed the ratings from CreditWatch, where they were placed with negative implications in November.

The outlook is stable.

The agency also said it assigned a B rating to the proposed $1.23 billion first-lien credit facility, which consists of a $100 million revolving credit facility due 2021 and $1.13 billion term loan due 2022.

The recovery rating is 3, indicating 50% to 70% expected default recovery.

S&P also said it assigned a CCC+ rating to the proposed $500 million second-lien term loan due 2023. The recovery rating is 6, indicating 0 to 10% expected default recovery.

Pamploma Capital will use proceeds of the new debt to fund the acquisition of MedAssets, the agency said.

The borrowers of the facilities will initially be Magnitude Acquisition Corp., but the surviving entity following the acquisition will be MedAssets Inc., S&P explained.

The downgrade is based on the acquisition of the company by Pamplona Capital in a leveraged buyout, which will cause leverage to rise materially, S&P said.

Leverage will now remain at about 7x over the next couple of years, compared to a previous expectation that leverage would remain at less than 3.5x to 4x, the agency said.

Despite high leverage, S&P said it expects the company will generate moderate discretionary cash flow.

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