Moody's rates HCR loans Ba3

Moody's Investors Service said it assigned a Ba3 (LGD 2, 23%) rating to HCR Healthcare, LLC's proposed senior secured credit facility, consisting of a $150 million revolver due in 2016 and a $400 million term loan due in 2018.

The agency also said it affirmed the corporate family rating at B2 and upgraded the probability of default rating to B2 from B3.

The outlook is stable.

The proceeds will be used to refinance the company's existing debt that will be repaid as part of the corporate reorganization undertaken to complete the sale of the real estate assets of HCR Properties, LLC to HCP, Inc., Moody's said.

The agency said it expects to withdraw the ratings on HCR Healthcare's existing debt at the close of the transaction.

The probability of default revision reflects the potential for significant unsecured claims against the company in a default scenario associated with the high level of operating lease obligations in the pro forma capital structure.

The ratings reflect the considerable financial leverage when including the obligation related to the operating leases for the facilities sold to HCP, the agency said.

The ratings also consider the historically stable cash flow generation of the company, which is expected to continue to result in a good liquidity profile, Moody's said.

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