MOODY'S DOWNGRADES TO Caa1 FROM B2 THE LONG-TERM RATING ASSIGNED TO WESTERLY HOSPITAL'S (RI) OUTSTANDING BONDS; OUTLOOK REMAINS NEGATIVE

Posted on: November 5, 2010, 12:21 pm

NEW YORK, Nov 5, 2010 -- Moody's Investors Service has downgrade to Caa1 from B2 the long-term rating assigned to Westerly Hospital's ("Westerly") Series 1994 bonds ($9.3 million outstanding), issued by Rhode Island Health & Educational Building Corporation. The outlook remains negative. The two-notch rating downgrade reflects the thin cash position at the end of FY 2010 (unaudited) that is largely supported by two bank lines of credit that the bank can call at any time if unrestricted cash falls below the required collateral amount. In the event that the bank were to demand payment or not extend the lines, very little liquidity would remain available for the fixed rate bondholders given the thin cash reserves. The rating outlook remains negative reflecting our expectations for continued operating challenges and liquidity pressures. While management is endeavoring to improve performance, it is Moody's opinion that given the financial challenges, there would be further rating pressure should Westerly have a payment default...

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