Brentwood, Tenn-based LifePoint Hospital Inc.'s $210 million senior secured credit facility has been upgraded from B1 to Ba3 by Moody's Investors Service, reflecting strong performance since LifePoint's spin-off from HCA-The Healthcare Company in 1999 and a cash infusion of $100 million from a secondary offering. The company has limited competition in the rural areas it operates in and there is a more favorable reimbursement environment, noted Russell Pomerantz, v.p. senior analyst.
Additionally, increasing wages and supplies expenses, potential reimbursement pressure in the intermediate term and the shift to outpatient procedures may also adversely affect growth. Proceeds of the $100 million offering will contribute to LifePoint repaying the company's credit facility. Following the repayment, the company will amend the facility to increase the revolver from $65 million to $200 million, providing greater financial flexibility for expansion and possible acquisitions.
* Moody's has notched up L-3 Communications Holdings, Inc.'s secured revolving credit facilities to Ba2 from Ba3 because of the successful public offering of 6.9 million shares of L-3's stock, significantly strengthening the equity base of the New York City-based supplier of secure communication systems. The proceeds of the offering were used to reduce bank borrowings under the revolvers, totaling $700 million, and build up working capital. Funded debt-to capitalization ratio is now 50%, versus the 61% at year-end 2000 and 77% at year-end 1997. The rating reflects a successful track record in integrating multiple companies acquired since a 1997 buyout from Lockheed Martin.
* Standard & Poor's has placed Motor Coach Industries International Inc. on creditwatch with negative implications, due to weaker than expected results for 2000 and anticipated adverse market conditions. The Schaumburg, Ill-based inter-city coach manufacturer's $462 million senior secured bank facility is rated BB-. New coach sales in 2000 declined by 25% as tour operators were affected by the slower economy, rising fuel costs and reduced credit availability. EBITDA for 2000 was $36.5 million, down 71% from 1999. EBIDTA interest coverage was about 0.7x and total debt to EBIDTA was 11.5x. An amendment to the bank facility has been obtained until the end of the year. The current ratings are predicated on the assumption that debt usage would diminish, with total debt to EBITDA declining to 3x by 2001. Standard & Poor's will review management's operating plans to turn the business around and reduce debt. If credit measures remain below expected levels, ratings will be lowered. Pricing on the credit is linked to the company's consolidated leverage ratio.