Fitch Ratings downgrades $45.5M of California VHS bonds to 'D' from 'C'

NewsGuard 100/100 Score

Fitch Ratings has downgraded to 'D' from 'C' the rating on approximately $45.5 million of bonds (listed below) issued by Valley Health System, California (VHS).

Fitch's 'D' rating indicates default on payments to bondholders. Bond trustee for the VHS' outstanding bonds did not make the Nov. 15, 2009 interest-only payments to bondholder due to insufficient debt service reserve funds.

As Fitch has reported in its recent rating actions, VHS remains under Chapter 9 bankruptcy protection (since 2007) while it attempts to implement several ongoing turnaround initiatives. On July 27, 2009, Valley Health System's board of directors voted to enter into an exclusive 90-day agreement with Physicians for Healthy Hospitals (PHH; a group of local doctors) for the potential sale of the district's assets, including its two hospitals Hemet Valley Medical Center and Menifee Valley Medical Center.

On Nov. 2, 2009, VHS filed its Plan for the Adjustment of Debts of Valley Health System (Plan) with the U.S. Bankruptcy Court for the Central District of California. Upon confirmation by the court, the Plan provides for the sale of substantially all of the VHS' assets to PHH and, upon closing of the sale, VHS will transfer to the Trustee a sum sufficient to fully satisfy all outstanding principal and accrued interest on the bonds.

Fitch will closely monitor the outcome of these negotiations and will update the market accordingly.

VHS has the following outstanding debt:

--$4.9 million Valley Health System hospital revenue bonds (refunding and improvements project), 1996 series A.

--$40.6 million Valley Health System certificates of participation (refunding project), series 1993.

Applicable criteria available on Fitch's web site at www.fitchratings.com include:

--Nonprofit Hospitals and Health Systems Rating Criteria, dated Dec. 29, 2009.

--Revenue-Supported Rating Criteria, dated Dec. 29, 2009.

www.fitchratings.com

Comments

The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of News Medical.
Post a new comment
Post

While we only use edited and approved content for Azthena answers, it may on occasions provide incorrect responses. Please confirm any data provided with the related suppliers or authors. We do not provide medical advice, if you search for medical information you must always consult a medical professional before acting on any information provided.

Your questions, but not your email details will be shared with OpenAI and retained for 30 days in accordance with their privacy principles.

Please do not ask questions that use sensitive or confidential information.

Read the full Terms & Conditions.