Multiplan Corp. credit rating upgraded to ’B-’ from ’SD’, outlook stable: S&P Global

Investing.com -- Multiplan Corp. (MPLN) has seen its issuer credit rating upgraded to ’B-’ from ’SD’ (selective default) at S&P Global following a successful restructuring of more than 99% of its debt. The revised rating was announced by S&P Global Ratings on February 5, 2025, and reflects the reduced refinancing risks and the company’s increased capacity to focus on its turnaround plan.

As part of the restructuring, MPLN’s new debt has been assigned issue ratings. The company’s new first out first-lien $350 million revolving credit facility (RCF) expiring in December 2029 and $325 million term loan due in December 2030 have been given a ’B+’ rating, with a recovery rating of ’1’. This indicates a very high expectation of recovery (95%) in the event of a payment default.

The company’s new second out first-lien $1.144 billion term loan due in December 2030, its $763.1 million notes (5.75% cash pay) due in December 2030, and its $600.2 million notes (6.5% cash pay; 5.0% payment in kind [PIK]) due in December 2030 have been assigned a ’B-’ rating, with a recovery rating of ’3’. This suggests a meaningful recovery (50%-70%; rounded to 50%) in the event of a payment default.

MPLN’s new third out first-lien $752.5 million and $969.4 million notes due in March 2031 have been given a ’ CCC (WA:CCCP)’ rating, with a recovery rating of ’6’, indicating negligible recovery (0%) in the event of a payment default.

The updated ratings reflect S&P Global Ratings’ views on MPLN’s credit profile, which remains strained by weakening operating performance and uncertainty regarding a sustainable turnaround plan. The company has experienced credit deterioration from 2021 to 2024, due to competitive conditions, unmet growth objectives, client concentrations, and a rapid rise in interest rates.

The stable outlook is based on expectations that MPLN will maintain adequate liquidity and achieve revenue/margin stability, with financial leverage near 8x through 2025. It also reflects the expectation that the company will progress with its turnaround plan to strengthen its competitive presence.

MPLN could be downgraded over the next 12 months if the company’s liquidity weakens as a result of cash flow declines, or if earnings or credit metrics deteriorate to the point where the company’s capital structure is unsustainable. An upgrade, although unlikely in the next 12 months, could occur if MPLN demonstrates revenue growth with stable margin growth, efficient working capital management, prudent financial policy decisions, and successful execution of its turnaround plan.

MultiPlan is a leading provider of data analytics and technology-enabled solutions designed to bring affordability and efficiency to the U.S. health care industry. The company’s base-case scenario assumes a modest revenue contraction in 2024 followed by modest revenue growth through 2026, with adjusted EBITDA margins at 61%-62% through 2026. The company’s new RCF expires in December 2029 and the new debt matures in 2030 and 2031.

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