Moody's rates Vanguard loan

Moody's Investors Service said it assigned Ba3 ratings to Vanguard Health Systems Inc.'s proposed $500 million credit facilities, which include a $200 million senior secured revolving credit facility due 2009 and a $300 million senior secured term loan due 2011.

Moody's also confirmed the company's B1 senior implied rating, B2 issuer rating and B3 rating for the company's $300 million 9.75% senior subordinated notes due 2011.

The outlook is stable.

Moody's said the ratings reflect the company's high leverage, aggressive financial policy and acquisition strategy, risks related to the acquisition of underperforming facilities, the recent increase in investment in capital expenditures, and the company's low margins relative to peers.

The ratings also consider the limited size of the company's portfolio of hospitals, the competitive nature of the markets in which the company operates, weakness in industry wide growth rates, and the increase in the number of uninsured patients. In addition, Moody's noted that Vanguard's effort to improve margins will be challenged by increasing expenses for labor (including contracted labor), bad debt expense, supplies and liability insurance.

Moody's said positive rating factors include the company's favorable historical performance, which occurred during the initial, high-risk phase of the company's growth, Vanguard's demonstrated ability to execute on its acquisition strategy and to turn around underperforming facilities, good market position for a majority of the company's facilities and a seasoned management team.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.