S&P Global Ratings placed Tivity Health Inc.'s ratings on CreditWatch with positive implications.

The positive CreditWatch status is based on the rating agency's expectation that the Franklin, Tenn.-based provider of fitness and wellness programs will use about $525 million of proceeds from the sale of its NutriSystem business to repay its $989 million first-lien term loan facilities.

Ratings forecasts the company's adjusted leverage to decrease by at least 1.0x by mid-2021 from 4.7x as of June 30 and covenant headroom to improve to at least 45% in 2020 and 15% in 2021.

Ratings said it intends to resolve the CreditWatch after the completion of the divestiture and subsequent debt repayment, which is likely to occur in the fourth quarter of 2020.

The rating agency also said it would likely raise Tivity's issuer credit rating to B+ from B, if the sale is completed and proceeds are used to reduce debt as expected.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.