ข่าวประชาสัมพันธ์การเงิน/หลักทรัพย์

Franciscan Sisters Of Christian Charity Sponsored Ministries Inc., WI Bond Rating Lowered To ‘BBB-‘ From ‘BBB+’

          CENTENNIAL (S&P Global Ratings) Sept. 13, 2018--S&P Global Ratings lowered its long-term rating to 'BBB-' from 'BBB+' on the Wisconsin Health and Educational Facilities Authority's $34.4 million series 2017 bonds, issued for Franciscan Sisters of Christian Charity Sponsored Ministries Inc. (Franciscan Ministries or FSCC). The outlook is negative. 
          "The two-notch downgrade reflects our view of Franciscan Ministries' considerable and unbudgeted operating losses at Holy Family in fiscal 2017 that have continued year to date through the first six months of fiscal 2018 (ending Dec. 31)," said S&P Global Ratings credit analyst Wendy Towber. "The lowered rating also reflects our view of the ongoing losses at Silver Lake College that significantly dilute FSCC margins," Ms. Towber added. 
          The negative outlook also reflects recent management turnover at FSCC and Holy Family that currently leaves FSCC without a full-time or permanent chief financial officer (CFO), which may make it more challenging for FSCC to improve operating performance that achieves at least 1.0x MADS coverage, although we understand that the CFO role at FSCC is more strategic than operational in nature.
          The 'BBB-' rating further reflects our view of Franciscan Ministries':
          - Negative MADS coverage due to unbudgeted operating losses at Holy Family and continued losses at SLC with weak financial performance expected to continue in the near team;
          - Limited business position with declining market share and mostly soft volumes at Holy Family;
          - High contingent liabilities with $5.9 million of additional direct purchase bank debt planned for the fall 2018 resulting in contingent debt as a percentage of total debt increasing to 63.5% on a pro forma basis; and
          - Recent management turnover leading to risks associated with having no fulltime or permanent CFO at FSCC, although we understand recruiting efforts have recently begun and that the CFO role at FSCC is more strategic than operational in nature.

          Partly offsetting the above weaknesses, in our view, are Franciscan Ministries':
          - Healthy balance sheet exhibiting robust unrestricted reserves relative to both operations and debt; 
          - Sound debt profile highlighted by low leverage and a moderate debt burden; and
          - Proactive efforts to retain consulting services to improve operating performance and productivity at Holy Family as well as management's ongoing efforts to remedy the challenges associated with the recent IT conversion. 

          The Franciscan Ministries obligated group operates the 45-staffed-bed Holy Family (the largest obligated group entity); St. Paul Elder Services, which consists of 218 long-term-care beds and assisted living units in the Fox Valley area of Wisconsin; and Franciscan Care Services, which is located in West Point, Neb., and operates a critical access hospital and 64 long-term-care units. There are a few subsidiaries, including the small SLC outside the obligated group, which as a whole negatively affected operating income in 2016. The parent, Franciscan Ministries, is a not-for-profit health care holding company that manages the operations of the above entities. 
          Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.