Moody's Expects to Cut HCA Debt Rating to Riskiest Junk Level after Buyout

Published on:
8 December 2006 at 06:33 a.m. ET

Written by: Unknown Author –

http://www.insidearm.com/news/00021497-moodys-expects-to-cut-hca-debt-rating-to-/

MarketWatch.com is reporting some bad news for HCA Inc. investors.

Investors will probably see the ratings on their holdings tumble from the top of the junk ladder to almost the floor after the U.S. hospital operator completes its planned $33 billion leveraged buyout.

The buyout – by an investor group let by Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and HCA founder Thomas Frist Jr. – is expected to heap more than $22 billion in new speculative grade debt on HCA, pushing existing bondholders lower in the company’s pecking order.

A meeting has been set for Nov. 16 for shareholders to vote on the buyout. Once complete, it will rank as the largest leverage buyout to date.