Moody's Investors Service placed the B1 long-term debt ratings of Kennett Square, Pa.-based Genesis Health Ventures under review for possible downgrade following the announcement that the company is helping finance the $1.4 billion acquisition of Hackensack, N.J.-based Multicare Cos. The B2 rating of Multicare has been placed on review as well, and its direction is uncertain. The Multicare acquisition is being financed through Genesis Health's $300 million contribution in addition to $420 million from two equity funds. Genesis Health will manage and own 42% of the new company. New York-based Moody's says its analysis will focus on the structure of the transaction, specifically how it affects the overall leverage at Genesis, whether the $342 million of debt currently at Multicare is repaid or assumed and by whom, and Genesis Health's rights under the agreement. Moody's says it also will examine the benefits to Genesis Health from an operational standpoint, including the potential synergies created by the combined companies' contiguous markets spanning from New Hampshire to Washington, D.C.
Louisville, Ky.-based Vencor says it plans to issue up to $500 million in senior subordinated notes due in 2007. The company says it intends to use net proceeds from the offering, expected to be completed this month, to help finance its recently announced acquisition of Las Vegas-based Transitional Hospitals Corp. Vencor, a long-term-care company with $3 billion in annual revenues, operates a network of hospitals, nursing centers and contract therapy services in 46 states.
Sun Healthcare Group, Albuquerque, says it has begun an offering of $250 million in senior subordinated notes. The company says it intends to use the net proceeds from sales of the notes to pay down outstanding amounts under its revolving credit facility. Sun operates more than 400 long-term-care and assisted-living facilities in the U.S. and reported 1996 revenues of about $1.3 billion.