Aspen Dental Gets Stable Ratings Outlook As Leonard Green Nears Buy

Aspen Dental, which is being acquired by Leonard Green, received a “B” corporate credit rating with a stable outlook from Standard & Poor’s.

S&P, in a statement Thursday, said the stable rating reflects expectations that Aspen will continue growing but that leverage will remain high. It’s unclear how much debt Aspen actually has.

However, Aspen Dental is in the market trying to raise about $230 million in fresh credit. This includes a $195 million term loan and a $35 million 5-year revolving credit facility, according to Thomson Reuters Loan Pricing Corp. UBS is leading the loan package, LPC said.

Proceeds from the loans will help refinance debt and help fund an equity investment in Aspen from Leonard Green, S&P said. peHUB reported in August that Green, a Los Angeles PE firm with about $9 billion in capital, was buying Aspen Dental for roughly $500 million.

East Syracuse, N.Y.-based Aspen Dental specializes in dentures but also provides dental services, like checkups and fillings, to customers.

S&P said that Aspen has a weak business model because of its narrow focus on dentistry, the company’s “concentration on a specific patient niche, and a business model of uncertain durability as the company expands rapidly over time.”

Aspen has doubled revenues in the past several years through de novo expansion, the ratings agency said. It currently operates 254 locations in 21 states, mainly in the Northeast and Midwest. This is up from 13 offices in 1998.

“Management could be challenged by the complexities associated with recent growth, including an additional 55 de novo projects in 2010,” S&P said.