New York, June 22, 2020 -- Moody's Investors Service ("Moody's") downgraded AAC Holdings, Inc.'s
("AAC") Corporate Family Rating to Ca from Caa2. This
follows AAC's June 20, 2020 announcement that it filed for voluntary
protection under Chapter 11 of the U.S. Bankruptcy Code[1].
The rating agency also downgraded AAC's senior secured ratings to
Ca from Caa2. Moody's also affirmed AAC's D-PD Probability
of Default Rating. There was no change to AAC's SGL-4 Speculative
Grade Liquidity Rating. The outlook, previously negative,
was changed to stable.
The stable outlook reflects Moody's view that the current ratings adequately
reflect AAC's recovery prospects.
Ratings downgraded and to be subsequently withdrawn:
AAC Holdings, Inc.
Corporate Family Rating to Ca from Caa2
Senior secured 1st Lien revolving credit facility expiring 2022 to Ca
(LGD4) from Caa2 (LGD3)
Senior secured 1st Lien term loans due 2023 to Ca (LGD4) from Caa2 (LGD3)
Ratings affirmed and to be subsequently withdrawn:
Probability of Default Rating at D-PD
Ratings unchanged and to be subsequently withdrawn:
Speculative Grade Liquidity Rating at SGL-4
Outlook action:
The outlook, previously negative, was changed to stable.
RATINGS RATIONALE
AAC's Chapter 11 filing resulted in the downgrade of its Corporate Family
Rating to Ca. Moody's will subsequently withdraw all of AAC's ratings
due to its bankruptcy filing. For more information, please
refer to Moody's Withdrawal Policy on moodys.com.
AAC Holdings, Inc., headquartered in Brentwood,
TN, provides substance abuse treatment services for individuals
with drug and alcohol addiction. As of September 30, 2019,
the company operated 9 inpatient substance abuse treatment facilities,
14 standalone outpatient centers and three sober living facilities across
the US. AAC Holdings is publicly traded and generated $234
million of revenue during the 12 months ending September 30, 2019.
The principal methodology used in these ratings was Business and Consumer
Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating action(s)
announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
REFERENCES/CITATIONS
[1] AAC Holdings, Inc. press release (company website),
June 20, 2020.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Jonathan Kanarek, CFA
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Jessica Gladstone, CFA
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653