Dec 4 Standard & Poor's Ratings Service said on
Tuesday it cut Pennsylvania's West Penn Allegheny Health
System's $726 million of bonds to CC from B-minus.
S&P said its lowered rating reflects uncertainty after
Highmark Inc and the agency resumed talks about
restructuring the agency's debt and pension obligations.
The rating cut also reflects the agency's low and
unrestricted cash and investment balances and weak financial
performance, S&P said in a statement.
Despite a legal ruling prohibiting the agency from seeking
other suitors "there remains significant uncertainty as to
whether the parties will reach an agreement that will receive
subsequent approval by the Pennsylvania Insurance Department,"
S&P credit analyst Cynthia Keller said in a statement.
Highmark had sought to have the agency declare bankruptcy or
take other actions to restructure its debt, Keller said. At
that point, discussions between the company and agency about
becoming affiliated broke down.
S&P, which has a negative outlook on the bonds, said it
could cut the rating again if West Penn files for bankruptcy,
restructures its debt or misses principal or interest payments.
West Penn operates five acute-care hospitals in and around
Pittsburgh. The bonds were issued for the health system by the
Allegheny County Hospital Development Authority.