DMG Practice Management Solutions LLC Subsidiaries# Issue-Level Debt Ratings Unchanged On Structure Change

Stocks and Financial Services Press Releases Friday August 11, 2017 09:22
NEW YORK--11 Aug--S&P Global Ratings

NEW YORK (S&P Global Ratings) Aug. 10, 2017--S&P Global Ratings said today that its ratings on multi-specialty physician practice operator DMG Practice Management Solutions LLC (DuPage Medical Group), including the 'B' corporate credit rating, are not affected by the company's proposed changes to its capital structure. The debt is issued by subsidiary Midwest Physician Administrative Services LLC.

The co-issuer of this debt is ACOF V DP Acquiror LLC.

While the capital structure change shifts $40 million in debt from the company's second-lien credit facility to the first-lien credit facility, resulting in higher expected first-lien debt at default, we continue to expect meaningful (50%-70%) recovery for first-lien lenders in a default scenario, although our rounded recovery percentage declines to 55% from 65% as a result of the higher expected debt at default.

Our '6' recovery rating, indicating our expectations for negligible (0%-10%, rounded estimate: 0%) and 'CCC+' issue-level rating on the company's second-lien debt are not affected by the structure change. For the corporate credit rating rationale on DMG, see the research update published on July 31, 2107.

RECOVERY ANALYSIS Key analytical factors: DMG's capital structure consists of a $60 million rate revolver due 2022, a $470 million first-lien term loan due 2024 (pari passu with revolver), and a $150 million second-lien term loan due 2025.We assume the revolver will be 85% drawn and LIBOR of 250 basis points at default.Given the continued demand for its services, we believe DMG would remain a viable business and would therefore reorganize rather than liquidate following a hypothetical payment default.Consequently, we have used an enterprise value methodology to evaluate recovery prospects.

We valued the company on a going-concern basis using a 5.5x multiple off our projected EBITDA at default, which is consistent with the multiple used for similar companies.Simulated default scenario: Simulated year of default: 2020EBITDA at emergence: $58 mil.

EBITDA multiple: 5.5xSimplified waterfall Net enterprise value (after 5% admin. costs): $305 mil.

Valuation split in % (obligors/nonobligors): 100/0Collateral value available to secured creditors: $305 mil.Secured first-lien debt: $523 mil.Recovery expectations: 50%-70%; rounded estimate: 55%Total value available to second-lien claims: $0 mil.Second-lien debt: $157Recovery expectations: 0%-10%; rounded estimate:0%


Latest Press Release

Republic of Korea #AA/A-1+# Ratings Outlook Stable

-Although geopolitical tensions have risen of late in the Korean peninsula, we believe a direct armed conflict is unlikely. - Korea's record of steady economic growth has generated a prosperous economy, a high degree of fiscal and monetary flexibility,...

Ratings Affirmed In European Cash Flow CLO Transaction Lingfield 2014 I Following Review

- We have reviewed Lingfield 2014 I's performance following the extension of the reinvestment period. - Following our review, we have affirmed our ratings on the class A and B notes. - Lingfield 2014 I is a cash flow CLO transaction securitizing a...

Lippo #B+# Rating Placed On CreditWatch Negative On Slow Operating Environment, Corporate Action At Siloam

- Slow marketing sales of existing projects since the beginning of 2017 and a shift to lower-priced apartments could reduce Lippo's profit margins, EBITDA, and interest servicing capacity beyond our tolerance for the 'B+' rating through 2018. - The...

Compania Minera Milpo #BB+# Ratings Affirmed And Off Watch Negative On Similar Action On Outlook Negative

- On Aug. 17, 2017, we affirmed our ratings on Votorantim S.A., removed them from CreditWatch with negative implications, and assigned a negative outlook, following the same action on the sovereign rating on Brazil. This prompted a similar rating action...

Fitch Affirms TREIT at #A-(tha)#, Outlook Negative

Fitch Ratings (Thailand) Limited has affirmed TICON Freehold and Leasehold Real Estate Investment Trust's (TREIT) National Long-Term Rating and its national senior unsecured rating at 'A-(tha)'. The Outlook remains Negative. The Negative Outlook reflects...

Related Topics