Columbia/HCA Healthcare Rtgs Lowered by S&P;Off Watch.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 11/17/97 -- Standard & Poor's today lowered its ratings on Columbia/HCA Healthcare Corp. and removed them from CreditWatch, where they were placed July 24, 1997 (see list below). The rating actions follow the company's development of a strategic plan that clarifies the direction that the company will pursue. By creating more independent, community-based health care networks, the reorganization plan A scheme authorized by federal law and promulgated by the president whereby he or she alters the structure of federal agencies to promote government efficiency and economy through a transfer, consolidation, coordination, authorization, or abolition of functions. represents a credible way for Columbia to stabilize stabilize See peg. the company as a smaller, less ambitious entity. The government's broad investigation into several facets of Columbia's operations and the negative publicity surrounding the investigation have contributed to significant changes at the company. Importantly, earnings have been impacted as physicians have directed patients elsewhere, and some patients have become reticent to use Columbia's facilities. The investigations have also diverted di·vert v. di·vert·ed, di·vert·ing, di·verts v.tr. 1. To turn aside from a course or direction: Traffic was diverted around the scene of the accident. 2. senior management's attention from operations. Concurrently, lower-level management has experienced turnover, while the company formulated its strategic direction and recast re·cast tr.v. re·cast, re·cast·ing, re·casts 1. To mold again: recast a bell. 2. its corporate culture. Moreover, the new ratings incorporate the possibility of a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. financial settlement to resolve the investigations.
Still, the company's hospitals maintain important positions and generate strong cash flow. Proceeds from asset dispositions and dividends from companies that Columbia possibly might spin off could be used to reduce debt. The company has curtailed its capital expenditure budget and is not expected to be a major acquirer of hospitals in the near term. The reorganization allows the company to concentrate on its core businesses and reduce overhead. As a result, Standard & Poor's expects that funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to lease-adjusted debt will be in the range of 25%-30%. OUTLOOK: DEVELOPING Ratings could be either lowered or raised based on the company's financial policies following the conclusion of the governmental investigations and implementation of its strategic plan. Ratings could be lowered if management replicates its past behavior and consummates a leveraged buyout leveraged buyout, the takeover of a company, financed by borrowed funds. Often, the target company's assets are used as security for the loans acquired to finance the purchase. . Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , ratings could be raised if the company dedicates much of its substantial cash flow to reduce debt levels. -- CreditWire -0-
RATINGS LOWERED AND REMOVED FROM CREDITWATCH
Rating
To From
Columbia/HCA Healthcare Corp.
Corp credit rtg BBB A-
Sr debt BBB A-
Bank loan rtg BBB A-
Sub debt BBB- BBB+
CP A-3 A-2
Galen Health Care Inc.
Hospital Corp. of America
Corp credit rtg BBB A-
Sr debt BBB A-
CONTACT: Elie Radinsky, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-8910 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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