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TEXT-S&P rates United Surgical Partners' notes 'CCC+'
March 14, 2012 / 10:03 PM / in 6 years

TEXT-S&P rates United Surgical Partners' notes 'CCC+'

March 14 - Standard & Poor's Ratings Services said today that it
assigned Adisson, Texas-based United Surgical Partners International Inc.'s new
$440 million senior unsecured notes due 2020 its 'CCC+' issue-level rating (two
notches lower than the 'B' corporate credit rating on the company). We also
assigned a recovery rating of '6' to the notes, indicating our expectation of
negligible (0% to 10%) recovery for lenders in the event of a payment default.
United Surgical Partners will use the proceeds from the note, in addition to its
new senior secured credit facility, as part of the refinancing of its capital
structure and payment of a $270 million dividend to its shareholders. 	
	
The ratings on United Surgical Partners reflect what we consider its "highly 	
leveraged" financial risk profile and "weak" business risk profile (as our 	
criteria define the terms). We see the transaction adding $150 million of 	
adjusted debt, and adjusted debt leverage increasing minimally. While reported 	
debt will increase $330 million, adjusted debt will increase by approximately 	
$150 million because there will be around a $180 million reduction in 	
preferred stock (which we already consider debt). The reduction in preferred 	
stock includes $100 million in the spin-off of the U.K. facilities to 	
shareholders. We expect adjusted debt leverage to increase minimally and 	
remain below 9x. We believe the annual cash interest expense will increase to 	
about $87 million from $65 million. 	
	
United Surgical Partners' highly leveraged financial risk profile reflects our 	
expectation that adjusted leverage will remain above 8x over the next few 	
years because of the cumulative dividend of the preferred stock and our 	
expectation for high-single-digit revenue and EBITDA growth. We expect organic 	
revenue growth in the mid-single-digit area, reflecting a 2% to 3% increase in 	
reimbursement and the remainder from volume.	
	

RELATED CRITERIA AND RESEARCH	
     -- Methodology And Assumptions: Liquidity Descriptors For Global 	
Corporate Issuers, Sept. 28, 2011	
     -- Business Risk/Financial Risk Matrix Expanded, May 27, 2009	
	
	
RAITNGS LIST	
	
United Surgical Partners International Inc.	
 Corporate Credit Rating         B/Stable/--	
	
New Ratings	
	
United Surgical Partners International Inc.	
 Senior Unsecured	
  $440 mil notes due 2020        CCC+	
   Recovery Rating               6	
	
Complete ratings information is available to subscribers of RatingsDirect on 	
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 	
by this rating action can be found on Standard & Poor's public Web site at 	
www.standardandpoors.com. Use the Ratings search box located in the left 	
column.

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