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Rating Action:

Moody's downgrades New Trident's CFR to Caa3, outlook negative

Global Credit Research - 27 Nov 2017

New York, November 27, 2017 -- Moody's Investors Service, ("Moody's") today downgraded New Trident Holdcorp, Inc.'s ("New Trident") Corporate Family Rating (CFR) to Caa3 from Caa1 and its Probability of Default Rating (PDR) to Caa3-PD from Caa1-PD. Actions on rated debt instruments are detailed below.

The following ratings were downgraded:

New Trident Holdcorp, Inc.

Corporate Family Rating to Caa3 from Caa1

Probability of Default Rating to Caa3-PD from Caa1-PD

Senior Secured 1st Lien Term Loan to Caa2 (LGD 3) from B3 (LGD 3)

Senior Secured Revolving Credit Facility to Caa2 (LGD 3) from B3 (LGD 3)

Secured 2nd Lien Term Loan to Ca (LGD 5) from Caa3 (LGD 5)

The rating outlook is negative

RATINGS RATIONALE

The downgrade primarily reflects the company's severe liquidity situation, the very high refinancing risk, and increased leverage beyond Moody's previous expectations. The company has funded cash outflows with borrowings under its $70 million revolving credit facility. As of September 30, 2017, the company had fully drawn its revolving facility and will need to tap new sources of liquidity in order to maintain operations. The cash outflows are a result of weak earnings as well as a build up in accounts receivables following difficulty converting to a different billing system. New Trident's leverage has increased beyond Moody's previous expectations and its adjusted debt/EBITDA leverage is currently in excess of nine times. The company's total net leverage ratio now exceeds 7.5x -- the maximum level permitted within the leverage covenant in its bank credit facilities. This will become a breach under the facilities following the cure period which ends on November 29th. Given New Trident's operating difficulties and near term debt maturities, Moody's expects the company to restructure its borrowings in the next 3-6 months. This may well involve a transaction which Moody's deems a distressed exchange, and hence a default.

The negative outlook reflects the risk that the company will not be able to drive earnings and cash flow improvements over the next few quarters. Moody's expects that negative trends in utilization rates will persist as key customers, such as skilled nursing facilities, are seeing declining occupancy rates. This will put further pressure on the company's leverage in the next 6-12 months.

Offsetting these weaknesses, in the ratings Moody's considers the company's leading position as the largest mobile diagnostic imaging company and breadth of product offerings. The ratings also reflect Moody's expectations that actions implemented by management to improve collections will improve cash flow.

Ratings could be further downgraded if the probability of a default rises.

Ratings could be upgraded if the company improves earnings in the face of structural pressures afflicting its key customers and meaningfully improve liquidity.

New Trident Holdcorp. Inc., is a 100% owned financing subsidiary of Trident Holding Company, LLC. Trident Holding Company LLC, through its principal operating subsidiary TridentUSA Health Services, provides outsourced ancillary healthcare and clinical services. These include mobile x-ray, ultrasound, teleradiology, mobile clinical and laboratory services to skilled nursing facilities, assisted living, home healthcare, hospice and correctional markets. Trident Holding Company LLC is owned by private equity sponsors Formation Capital, Audax Group, and Revelstoke Capital Partners.

The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

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.

Kailash Chhaya
Vice President - Senior Analyst
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

Peter H. Abdill, CFA
MD - Corporate Finance
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

No Related Data.
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