TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Fitch Ratings downgrades West Penn Allegheny's $726M in bond debt

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

Friday, Jan. 11, 2013, 12:04 p.m.
 

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 anixon@tribweb.com.

Add Alex Nixon to your Google+ circles.

 

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. As smokers seek Cuban cigars, retailers point to trade embargo
  2. Coal ash sites have tainted hundreds of waterways, aquifers
  3. EPA says it won’t regulate coal ash as hazardous waste
  4. Real estate union: Howard Hanna buys Langholz Wilson Ellis
  5. ExOne Co. moves solidify authority under CEO
  6. Americans support strict rules for drones in poll
  7. Upscale Verano takes part in Buick’s success
  8. Pennsylvania jobless rate drops to 5.1 percent
  9. First Niagara to cut 200 jobs; Pittsburgh impact unclear
  10. Some in Western Pa. affected by Staples data breach
  11. Beacons track shoppers’ smartphones amid retailers’ aisles
Subscribe today! Click here for our subscription offers.