OREANDA-NEWS. August 24, 2015. Fitch Ratings has placed the following bonds currently rated 'BBB' issued on behalf of KershawHealth, SC (Kershaw) on Rating Watch Evolving:

--\\$19,595,000 South Carolina Jobs-Economic Development Authority hospital facilities revenue bonds, series 2008.

SECURITY

The bonds are secured by a pledge of gross revenue, a mortgage on the primary facility and a fully funded debt service reserve fund.

KEY RATING DRIVERS
PENDING TRANSACTION: The Rating Watch Evolving reflects Kershaw's execution of a non-binding letter of intent on Dec. 18, 2014 with Capella Healthcare, Inc. pursuant to which KershawHealth will sell its assets and operations to Capella Healthcare. The transaction was originally expected to close on March 31, 2015. However, the closing date has been pushed back several times due to a variety of reasons. Fitch will continue to monitor the status of the transaction.

IMPROVED OPERATING PROFITABILITY: Operating profitability continued to improve during the second half of fiscal 2014, with operating EBITDA margin increasing from 1.2% in the six month interim period ending March 31, 2014 to 1.6% at fiscal year-end (Sept. 30). Operating EBITDA margin further improved to 4.2% in the nine month interim period ending June 30, 2015.

RATING SENSITIVITIES
EXECUTION OF TRANSACTION: Fitch expects that the transaction will be completed and that KershawHealth's outstanding bonds will be defeased upon closing.

CREDIT PROFILE

Kershaw operates the only acute care hospital in Kershaw County, South Carolina, with 121 licensed acute care beds and 96 long-term care beds. Total operating revenues equaled \\$103.9 million in fiscal 2014.

For more information, please see ' Fitch Downgrades KershawHealth (SC) Revs to 'BBB'; Outlook Revised to Stable', dated July 17, 2014, available at www.fitchratings.com.