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KKR-backed GenesisCare prepares for dividend recap

24 Jun 2013

hospital_health_170sqPrivate equity-backed healthcare company GenesisCare is seeking loans totalling A$285m ($261m) for a dividend recapitalisation.

Moody’s has assigned a first time (P)B1 corporate family rating with a stable outlook to the Australian company, which is seeking a term loan of A$255m and revolving credit facilities for a further A$30m, the credit agency said in a statement.

The funds will be used to reduce the company’s debts and for “specific distributions to shareholders.”

Buyout firm KKR currently holds a 48 per cent stake in GenesisCare, which operates a network of cancer and cardiovascular care centres across Australia. KKR bought a 63 per cent interest in GenesisCare in June last year in a deal that reportedly valued the business at A$600m.

Following the recapitalisation, GenesisCare’s debt to EBITDA ratio is expected to rise to about five times, according to Standard & Poor’s, which has assigned a B-plus rating to the company.

Moody’s vice president Ian Lewis said, “GenesisCare’s ratings reflect principally its small scale, unique business model which we expect to grow at a steady rate, as well as challenging financial profile and significant exposure to funding from the Government’s Medicare universal health scheme.

“However we think the regulatory and reimbursement environment is currently overall supportive of the company’s credit profile.”

“At the same time the ratings also reflect weak financial metrics including high leverage and our expectation that leverage will reduce from its current point but remain at elevated levels as a consequence of expansion capex, ongoing tuck-in style acquisitions and shareholder friendly initiatives.”

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