DBRS Comments on Centric Health Corporation’s Review of Strategic Alternatives

DBRS Limited (DBRS) notes Centric Health Corporation’s (Centric Health or the Company) announcement that its board of directors has initiated a process to consider and evaluate strategic alternatives available to the Company. Strategic alternatives could include a potential sale of the Company’s businesses or assets or any combination thereof as well as possible joint ventures, strategic financing, redemption or repurchase of securities and the continued execution of its business plan. Centric Health has established a special committee composed of directors who are independent of management to oversee the strategic review process.

On April 28, 2015, DBRS downgraded the Issuer Rating of Centric Health to B (low) and the rating on its Senior Secured 2nd Lien Notes to CCC (high), removing the ratings from Under Review with Negative Implications. DBRS also changed the recovery rating on the Senior Secured 2nd Lien Notes to RR5 from RR4. The downgrade was based primarily on the Company’s lower expected revenue and earnings going forward as well as significantly weaker credit metrics and uncertainty surrounding the renewal and possible terms of the Company’s revolving credit facility, which was set to mature in June 2015. The revolving credit facility was subsequently extended for one year.

The Company is expected to release its Q2 financial statements next week after the close of business on August 4, 2015. DBRS will continue to monitor any upcoming announcements, including but not limited to updates with respect to its strategic review and its operating performance, and will take any necessary rating action once additional information becomes available.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodologies are Rating Companies in the Services Industry (June 2015) and DBRS Recovery Ratings for Non-Investment Grade Corporate Issuers (February 2015), which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.