“The ratings are currently on CreditWatch with negative implications, and we expect to meet with management shortly to get further details regarding this transaction and will expect to resolve the CreditWatch placement in August,” states a July 26 S&P bulletin.
ProMedica’s July 26 acquisition is a joint venture with Toledo-based real estate investment trust Welltower.
S&P said ProMedica could see a ratings downgrade of more than one notch due to additional debt and cash use to pay for the acquisition, and noted other financial risks involved in the deal, such as integration. But the ratings agency said there are also benefits involved in the acquisition, including “diversification into the post-acute care space, potential cashflow contributions, and possible synergies as well as the expected restructuring of some of HCR ManorCare existing liabilities.”
S&P initially placed ProMedica’s debt on rating watch negative on April 26.
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