Capella Healthcare B CCR affirmed, bank loan ratings assigned

MUMBAI, Feb. 5, 2008 (Thomson Financial delivered by Newstex) — Standard Poor’s (NYSE:MHP) Ratings Services said it affirmed its ratings, including the ‘B’ corporate credit rating, on privately-held hospital company Capella Healthcare Inc, with a stable outlook.

S P said the company’s proposed senior secured first-lien facilities, consisting of a 312 mln term loan B and a 45 mln usd revolving credit facility, are rated ‘BB-’, with a recovery rating of ‘1′, indicating the expectation for very high (90 - 100 pct) recovery in the event of a payment default.

Capella’s proposed 178 mln usd senior secured second-lien term loan C is rated ‘CCC+’, with a recovery rating of ‘6′, indicating the expectation for negligible (0 - 10 pct) recovery in the event of a payment default, the ratings agency added. The debt is being used to refinance existing debt and to finance the acquisition of nine hospitals from Community Health Systems Inc (NYSE:CYH) , S P said.

Although the transaction improves the diversity of the company’s hospital portfolio and reduces its revenue concentration, the management will remain challenged to integrate such a large transaction that more than doubles its size, the ratings agency noted.