LOS ANGELES — Moody's downgraded California's Antelope Valley Healthcare District further into junk territory Wednesday citing what it called the "unexpected termination" of the hospital's CEO.
The Lancaster-based hospital district’s rating was downgraded to Ba3 from Ba2 affecting $97 million in debt. Moody’s also retained the negative outlook at the lowered rating.
AVHD CEO Dennis Knox resigned July 9 citing personal reasons, but Moody’s said his resignation “appears to be partly due to a difficult working relationship with the board of AVHD.”
Unstable governance and management, which led to Knox’s resignation after less than two years in the position, was cited for the downgrade.
The negative outlook reflects the district's debt structure challenges, and Moody’s view that weak governance and turnover in senior leadership delays progress on strategic initiatives.
Other concerns cited by the rating agency are a $55 million bond maturity in September 2017 for which a refinancing plan has not been approved; and a significantly underfunded pension liability.
AVHD runs the 420-bed Antelope Valley Hospital, an acute care hospital. AVHD, a political subdivision of the state, is governed by a five-member elected board of directors.