S&P Rates Columbia/HCA Healthcare $1B Term Loan `BBB'.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/2/98-- Standard & Poor's today assigned its triple-`B' rating to Columbia/HCA Healthcare Corp.'s $1 billion bank term loan facility due Feb. 25, 2002. Concurrently, Standard & Poor's affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its ratings on Columbia/HCA and affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. (see list). The outlook is developing. The new term loan facility is rated the same as the corporate credit rating. Proceeds are expected to be used for general corporate purposes and may be used to purchase shares of the company's common stock. Since the facility is unsecured, the bankers will fare the same as other senior creditors in the event of default. Currently ample asset coverage may be expected to dwindle dwin·dle v. dwin·dled, dwin·dling, dwin·dles v.intr. To become gradually less until little remains. v.tr. To cause to dwindle. See Synonyms at decrease. in the default scenario. The investment-grade ratings continue to reflect the company's important market positions and strong cash flow generation relative to its debt burden. Internal cash flow generation, proceeds from asset dispositions, and capacity under its bank lines provide considerable financial flexibility. Following the company's implementation of its strategic plan, which calls for the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. or sale of approximately 100 hospitals, Standard & Poor's expects the company to be stabilized as a smaller and 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. The investigations have also diverted senior management's attention from operations which, in part, have contributed to the earnings decline over the past year. Standard & Poor's expects that operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before before interest, taxes, depreciation, and amortization margins, which rebounded in the first quarter, will be in the upper-teens, yielding 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 of 25%-30% over time. OUTLOOK: DEVELOPING Ratings could be either lowered or raised based on the outcome of the investigations and the company's financial policies following the conclusion of the investigations and implementation of its strategic plan. The ratings currently 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. Ratings could also 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, Standard & Poor's said.---CreditWire -0-
OUTSTANDING RATINGS AFFIRMED
Rating
Columbia/HCA Healthcare Corp.
Corporate credit rating BBB
Senior debt BBB
Bank facility BBB
Subordinated debt BBB-
Commercial paper A-3
Hospital Corp. of America
Corporate credit rating BBB
Senior debt BBB
CONTACT: Elie Radinsky, New York (1) 212-208-8910
For more information on criteria or subscriptions:
http://www.ratings.standardpoor.com
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion