 |
April 7, 2008 |
|
|
|
 |
MMM HOLDINGS: Moody's Retains Ratings Under Review Moody's Investors Service is maintaining its review for possible downgrade on the senior debt ratings of MMM Holdings, Inc., NAMM Holdings, Inc., and Preferred Health Management Corporation. The rating agency stated that the continuation of the review is a result of a possible breach of the Debt to EBITDA financial covenant in its bank loan agreement which tightens to a 2.0 limit in 2008. The ratings had been under review for possible downgrade since March 20, 2007. At that time the ratings were also downgraded one notch. According to Moody's, 2007 preliminary financial results indicate the company has made significant progress in addressing the unexpectedly high medical utilization and costs in its Puerto Rico operations. These issues had resulted in a significant earnings decline at the end of 2006 and early 2007 and a breach of several financial covenants in its bank loan agreement. The rating agency stated, however, that despite this progress, the company has not yet been successful in renegotiating the financial covenants with its lenders. Moody's noted that even though the company is improving its net earnings margins, the combination of a significant decline in medical membership in Puerto Rico during 2007, lower than expected debt amortization in 2007, and the tightening Debt to EBITDA covenant limit in 2008 will make it difficult for MMM to be in compliance with this covenant at the end of 2008. The rating agency commented that this uncertainty is the key driver for the rating remaining under review. Moody's noted, however, that based on preliminary financial results, the company is expected to be close to meeting all financial covenants as of Dec. 31, 2007. In addition, declining membership trends appear to have reversed during 2008. The company is current on all required debt service and continues to make all required principal and interest payments, including an excess principal payment of approximately $20 million made on March 28, 2008. Moody's said that the focus of its review will be the progress and terms of any renegotiation of the credit facility. Moody's will also review MMM's final 2007 audited results as well as 2008 earnings as they develop. These ratings remain under review for possible downgrade: * MMM Holdings, Inc. -- senior secured debt rating at Caa1; corporate family rating at Caa1; * NAMM Holdings, Inc. -- senior secured debt rating at Caa1; * Preferred Health Management Corporation -- senior secured debt rating at Caa1; * MMM Healthcare, Inc. -- insurance financial strength rating at B1; * PrimeCare Medical Network, Inc. -- insurance financial strength rating at B1. MMM Healthcare offers Medicare Advantage products exclusively to eligible participants in Puerto Rico. Moody's notes that the company currently enjoys being the market leader in providing Medicare Advantage products in Puerto Rico. NAMM is a medical management company that operates in California and Illinois. Its regulated operating subsidiary, PrimeCare Medical Network, Inc., consists of 10 owned IPAs in Southern California that contract with major health care benefit companies on a capitated basis to provide medical care to commercial and Medicare members. Moody's health insurance financial strength ratings are opinions about the ability of life and health insurance companies to punctually repay senior policyholder claims and obligations. Moody's corporate family rating is an opinion of a corporate family's ability to honor all of its financial obligations and is assigned to a corporate family as if it had a single class of debt and a single consolidated legal entity structure. MMM Holdings Inc., through it two main operating subsidiaries MMM Healthcare and Preferred Medical Choice, Inc., is the largest provider of Medicare Advantage products in Puerto Rico, with over 200,000 members as of Sept. 30, 2006. MMM Healthcare and Preferred Medical service in excess of 60% of the Medicare Advantage enrolled population in Puerto Rico and account for approximately 80% of Aveta's operating earnings. |
|
|
||
|
Today's Top Stories have been selected from the Troubled Company Reporter - Latin America. To receive the Full TCR-LA please CLICK HERE.
