S&P: Rotech on positive watch; new notes B

Standard & Poor's said it placed the current B- corporate credit rating for Rotech Healthcare Inc. on CreditWatch with positive implications, given the company's proposed debt refinancing.

The B+ first-lien senior secured debt rating on the company's existing $230 million of first-lien senior secured notes due 2015 also was placed on CreditWatch with positive implications.

The agency said it expects to raise the corporate credit and first-lien senior secured debt ratings on Rotech following the completion of the company's proposed debt refinancing. The 1 recovery rating, which indicates 90% to 100% expected recovery in a default, will remain unchanged.

S&P also said it assigned a B rating to Rotech's proposed $290 million of second-lien senior secured notes due 2018 with a recovery rating of 4, indicating 30% to 50% expected recovery in a default.

The ratings reflect the company's weak business risk profile, incorporating Rotech's exposure to Medicare reimbursement reductions for its products and services, the agency said.

The ratings also consider the company's highly leveraged financial risk profile, S&P added.

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