Kaiser Permanante Rtgs Cut,Off S&PWatch;$400M Revs Rtd.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 6/24/98-- Standard & Poor's today lowered its ratings on debt issued for Kaiser Permanante (see list below) and removed the ratings from CreditWatch, where they were placed Feb. 23, 1998. Concurrently, Standard & Poor's assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. its single-`A' rating to California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). Health Facilities Finance Authority's $400 million revenue bonds series 1998A dated June 1, 1998, issued for Kaiser Permanante. The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. reflects Kaiser's increased managed care and health care financing risk, weaker-than-expected financial performance, and additional debt. Kaiser, the nation's largest nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. managed care system, has strong industry and market positions, financial flexibility, and strong net asset position. Its brand, size, and ability to integrate health care distinguishes the provider in the competitive managed care field. Regions representing 18% of membership generated most of 1997's net loss of under 2% of revenues, or a deficit of $266 million. Kaiser's important California HMOs, which represent 60% of membership, posted a $7 million loss in 1997, despite significant pricing pressures and capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. . Management is taking steps to deal with a difficult period of growth and change; 1998's interim results show improvement. More conservative financial practices, strategic and operational restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiatives, and higher premiums are expected to yield improved earnings by 2000. Lasting prosperity, however, will depend on the unified efforts of management and their independent Permanente Medical Group partners to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. the system's capacity with demand and effectively manage costs. Industry risks -- insurance cycles, market and regulatory pressures, and more formidable competitors -- will continue to impact the magnitude and durability du·ra·ble adj. 1. Capable of withstanding wear and tear or decay: a durable fabric. 2. of Kaiser's financial recovery. The downgrade applies to $1.75 billion of fixed and variable-rate Variable-rate A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. demand bonds, taxable debt securities, and commercial paper issued by various issuers and directly by Kaiser Foundation The mission of the Kaiser Foundation is to assist individuals and communities in preventing and reducing the harm associated with problem substance use and addictive behaviours. External links
A floating-rate debt obligation that has a nominal long-term maturity as well as an option allowing the investor to put (sell) the obligation back to the trustee, generally at par plus accrued interest. payment support is available from a dedicated $500 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Management plans to remarket variable-rate demand obligations to a fixed-rate mode shortly. The dedicated revolving facility and related balance sheet risks will be reduced accordingly. An additional $500 million of bank lines are available for commercial paper backup and general corporate purposes. Following issuance and planned commercial paper paydown Paydown A payment made towards an outstanding loan balance. Notes: Every time you make a mortgage payment you are "paying down" your loan. See also: Loan, Mortgage, Principal paydown In a corporate or U.S. , debt will rise to a moderate 25% of capital. OUTLOOK: NEGATIVE Kaiser is jettisoning underperforming noncore operations, adjusting staff and capacity, and instituting better controls to correct system misalignments. After 1998's modest loss, net margins of 2%-4% are expected. Uncertainties about management's ability to stabilize stabilize See peg. operations and improve financial results under challenging market conditions remain. Moderate growth organically and through opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. affiliations is expected. However, large scale potentially disruptive disruptive /dis·rup·tive/ (-tiv) 1. bursting apart; rending. 2. causing confusion or disorder. acquisitions are not factored into the rating and outlook, Standard & Poor's said. -- CreditWire OUTSTANDING RATINGS LOWERED
Rating
To From
California Health Facilities Finance Authority@
$60.0 mil. (Kaiser Foundation Hospitals & Kaiser Foundation
Health Plan Inc.) semi-annual tender rev bnds
ser 1983 A A+
California Health Facilities Finance Authority
(see note A)
$482.9 mil rev bnds ser 1985, 1989A, 1990A,
1991A, 1993A A A+
California Health Facilities Finance Authority
(see note B)
$160.0 mil. variable-rate rev bnds ser 1993A, B, C A/A-1 A+/A-1+
California Statewide Communities Development Authority
(see note A)
$139.6 mil certs of part ser 1995 A/A-1 A+/A-1+
Clackamas County Hospital Facilities Authority
(see note A)
$16.5 mil semi-annual tender option bonds ser 1984 A/A-1 A+/A-1+
Clackamas County Hospital Facilities Authority@
$16.5 mil. rev bnds (Kaiser Foundation Hospitals & Kaiser
Foundation Health Plan Inc.) ser 1991A A A+
Colorado Health Facilities Authority@
$40.2 mil. rev bnds (Kaiser Foundation Hospitals & Kaiser
Foundation Health Plan Inc.) ser 1994A A/A-1 A+/A-1+
Colorado Health Facilities Authority
(see note A)
$42.0 mil rev bnds ser 1995A A/A-1+ A+/A-1+
Falls Church Industrial Development Authority
(see note A)
$10.7 mil. rev bnds ser 1985 A/A-1 A+/A-1+
Hawaii State Department of Budget & Finance
(see note A)
$30.0 mil semi-annual tender option bnds ser 1984B A/A-1 A+/A-1+
Hawaii State Department of Budget & Finance
(see note A)
$10.8 mil rev bnds ser 1995A A/A-1 A+/A-1+
Hawaii State Department of Budget & Finance@
$26.6 mil (Kaiser Foundation Hospitals & Kaiser Foundation
Health Plan Inc.) special purpose bonds ser 1991A A A+
Kaiser Permanente Medical Care Program
(see note A)
$389.0 mil. Kaiser Foundation hospital taxable
comm paper A-1 A-1+
Kaiser Foundation Health Plan Inc.
Corporate credit rating A A+
Financial strength rating A A+
Kaiser Permanente Medical Care Program@
$320.5 mil. Kaiser Permanente (Kaiser Foundation Hospitals
& Kaiser Foundation Health Plan Inc.) taxable
debt secs A A+
Maryland Health & Higher Education Facilities Authority
(see note A)
$42 mil rev bnds ser 1995A A/A-1 A+/A-1+
North Central Texas Health Facilities Development Corp.
(see note A)
$3.7 mil. rev bnds ser 1995A A/A-1 A+/A-1+
Note A:
Obligor: Kaiser Foundation Hospital & Kaiser Foundation Health Plan
Inc. @Issued for Kaiser Permanente Medical Care Program.
Note B:
Issued for Kaiser Permanente.
Copyright 1998, Standard & Poor's Rating Services
CONTACT: Elissa S Granick, New York (1) 212-208-1739
Jack Reichman, New York (1) 212-208-8432
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