Moody's: Beverly Enterprises outlook to developing

Moody's Investors Service said it affirmed the ratings of Beverly Enterprises Inc. and changed the outlook to developing.

Moody's affirmed Beverly's Ba3 rated $90 million senior secured revolving credit facility due 2007 and $135 million senior secured term loan B due 2008 and B2 rated $215 million 7 7/8% senior subordinated notes due 2014 and $115 million 2.75% convertible subordinated notes.

Moody's said this action follows the announcement by Beverly that its board of directors voted unanimously to pursue the sale of the company through an auction process. This announcement follows the expression of interest from and ensuing proxy battle with the Whitman/Appaloosa investor group.

The developing outlook reflects the fact that there is significant uncertainty related to who the ultimate buyer will be or what type of capital structure the company will have going forward, according to Moody's.

In June 2004, Moody's revised the outlook to stable from negative to reflect the company's successful operations through a challenging reimbursement environment, its focus on core markets and the selective exit of unprofitable regions, leading to improved cash flow and deleveraging of the balance sheet.

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