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O.C. BUSINESS PLUS | ORANGE COUNTY BRIEFLY

InSight Health Debt Is Put on Credit Watch

February 03, 2001

Debt securities issued by InSight Health Services Corp. were put on a credit watch Friday for a possible downgrade after the Newport Beach provider of diagnostic imaging services said it may put itself up for sale.

Credit agency Standard & Poor's said in a press release that InSight has comfortable operating cash-flow margins and other positive operating ratios, but "it is highly leveraged as a result of prior ownership changes."

The Carlyle Group and General Electric Co. own about two-thirds of the company's stock. InSight said Thursday that it hired a financial advisor to help it sort out strategic alternatives, including the possible sale of the company. It also reported quarterly earnings had more than doubled to $3 million.

S&P has a B+ rating for InSight's credit, a B+ rating on its secured bank loan and a B- rating on lower-ranking debt securities. All the ratings classify the debts as risky, low-grade investments, or junk bonds. The S&P release was issued after the market closed. InSight stock gained 56 cents to close at $12 a share on Nasdaq.

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