Fitch Ratings downgrades West Penn Allegheny's $726M in bond debt
Fitch Ratings downgraded West Penn Allegheny Health System's credit rating to one step above default, following an exclusive Tribune-Review report this week.
Fitch said on Friday that the downgrade to “C” came after the Trib's story on Thursday reporting that West Penn Allegheny's bondholders had tentatively agreed to reduce the amount of money they are owed and prevent a bankruptcy filing by the health system.
While Fitch noted in a statement on the downgrade that Highmark Inc. and West Penn Allegheny officials would confirm only that negotiations are under way, “Fitch believes that a negotiated debt restructuring appears to be inevitable to forestall insolvency.”
A “C” rating means a borrower has “exceptionally high levels of credit risk,” according to Fitch. It is the lowest rating before an organization is considered in default of its bond obligations.
West Penn Allegheny and Highmark officials declined to comment.
West Penn Allegheny officials also said this week that they and Highmark had extended standstill and nondisclosure agreements with bondholders, which prevent demands for immediate payment of $726 million in outstanding bond debt and public discussion of the talks.
Highmark, the state's largest health insurer, is trying to acquire West Penn Allegheny, Pittsburgh's second-largest hospital operator, to create an integrated health system to compete with UPMC, the largest hospital system in Western Pennsylvania. But Highmark needs to reduce West Penn Allegheny's total debt of $1.4 billion in order to gain approval for the acquisition from the state Insurance Department.
West Penn Allegheny was issued a notice of default by the bondholders on Jan. 4, giving the health system 30 days to release audited financial statements for its last fiscal year.
If the health system does not meet the 30-day deadline, it likely will be forced to enter Chapter 11 bankruptcy protection.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Small stores take big gamble by not upgrading credit card readers
- Yahoo investors losing patience with ‘star’ CEO Marissa Mayer
- Nutritional supplement makers, led by GNC, want to create voluntary safety standards
- Stock markets finish with minor losses
- 3 startups want millennials to save money
- Black Friday loosens its hold on the holiday season
- Collectors willing to overpay for silver, value ‘all in the eye of the beholder’
- Covestro leader MacCleary finds stability amid change
- U.S. Steel to cut 3 HMOs for retirees; premiums could soar if deal not struck
- Pa. unemployment rate dips to 5.1% for October
- Take steps to make it harder for holiday hackers