Fitch Places KershawHealth (SC) Revs on Rating Watch Evolving

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has placed the following bonds currently rated 'BBB' issued on behalf of KershawHealth, SC (Kershaw) on Rating Watch Evolving:

--$19,595,000 South Carolina Jobs-Economic Development Authority hospital facilities revenue bonds, series 2008.

SECURITY

The bonds are secured by a pledge of gross revenue, a mortgage on the primary facility and a fully funded debt service reserve fund.

KEY RATING DRIVERS

PENDING TRANSACTION: The Rating Watch Evolving reflects Kershaw's execution of a non-binding letter of intent on Dec. 18, 2014 with Capella Healthcare, Inc. pursuant to which KershawHealth will sell its assets and operations to Capella Healthcare. The transaction was originally expected to close on March 31, 2015. However, the closing date has been pushed back several times due to a variety of reasons. Fitch will continue to monitor the status of the transaction.

IMPROVED OPERATING PROFITABILITY: Operating profitability continued to improve during the second half of fiscal 2014, with operating EBITDA margin increasing from 1.2% in the six month interim period ending March 31, 2014 to 1.6% at fiscal year-end (Sept. 30). Operating EBITDA margin further improved to 4.2% in the nine month interim period ending June 30, 2015.

RATING SENSITIVITIES

EXECUTION OF TRANSACTION: Fitch expects that the transaction will be completed and that KershawHealth's outstanding bonds will be defeased upon closing.

CREDIT PROFILE

Kershaw operates the only acute care hospital in Kershaw County, South Carolina, with 121 licensed acute care beds and 96 long-term care beds. Total operating revenues equaled $103.9 million in fiscal 2014.

For more information, please see ' Fitch Downgrades KershawHealth (SC) Revs to 'BBB'; Outlook Revised to Stable', dated July 17, 2014, available at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Revenue-Supported Rating Criteria (pub. 16 Jun 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750012

U.S. Nonprofit Hospitals and Health Systems Rating Criteria (pub. 09 Jun 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866807

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=989787

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150821005586/en/

Fitch Ratings
Primary Analyst
Adam Kates
Director
+1-312-368-3180
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Gary Sokolow
Director
+1-212-908-9186
or
Committee Chairperson
James LeBuhn
Senior Director
+1-312-368-2059
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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