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Moody's rates Diagnostic Imaging loan B2
Moody's Investors Service said it assigned a rating of B2 to Diagnostic Imaging Group LLC's $135 million senior secured bank credit facilities comprised of a $25 million senior secured revolving credit facility and a $110 million senior secured term loan. Moody's also assigned a senior implied rating of B2 and a senior unsecured issuer rating of B3.
The outlook is stable.
This rating action follows the announcement by the company that the new credit facilities, along with $84.0 million of equity contributed by Evercore Capital Partners and $37.4 of rollover equity contributed by certain existing shareholders, including management, will be used to fund the recapitalization of the company.
Moody's said the ratings reflect Diagnostic Imaging Group's limited geographic diversity resulting in revenue and cash flow concentration in only three markets, and the company's limited experience in new markets. The ratings also reflect the significant amount of financial leverage being considered in the transaction resulting in constrained cash flows; the need for significant investment in capital expenditures for growth, which constrain free cash flow; and the competitive nature of the industry characterized by regional and national companies as well as individual and group physician practices with access to reasonable equipment financing.
Positive factors, Moody's said, include the company's track record of growth and healthy cash flow generation in the New York market, diversity of revenue, the company's early adoption of emerging technologies, and the relatively conservative capitalization of the company post the recapitalization.
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