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Biotech / Medical : Integrated Health Services

IHS 7.575

+2.1%

Jan 16 9:30 AM EST

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To: Dan B. Brockman who wrote (42)	11/3/1997 7:12:00 PM
From: David Lawrence	Read Replies (1) of 88

NEW YORK, Nov 3 - Standard & Poor's placed its double-B'-minus corporate credit and bank loan ratings and its single-'B' subordinated debt rating of Integrated Health Services Inc. on CreditWatch with negative implications. The CreditWatch placement is due to the announced definitive agreement in which Integrated will acquire long-term care and certain other facilities from HEALTHSOUTH Corp. (NYSE:HRC) for $1.15 billion in cash and will assume $100 million in debt. At the same time, Standard & Poor's placed its double-B'-plus corporate credit rating and double-B'-minus subordinated debt rating of HEALTHSOUTH Corp. on CreditWatch with positive implications due to the pending transaction. Integrated's acquisition should provide HEALTHSOUTH with ample cash proceeds that will be used to pay down debt and improve an already sound financial profile. The cash funding for this transaction is expected to come primarily from Integrated's recently increased bank lines. Although this transaction will further enhance and broaden Integrated's capabilities, the all-cash transaction will significantly increase an already high debt load and strain Integrated's credit profile. Before the deal is expected to close at year-end, Standard & Poor's will meet with management to review the transaction and will then evaluate the company's financial profile and flexibility, and assess the integration of its significant acquisitions. Standard & Poor's also will meet with HEALTHSOUTH management and assess its improved financial flexibility in light of this transaction, before taking further action. Copyright 1997, Reuters News Service

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