Lehman Brothers and Citigroup last Friday launched syndication of a $305 million credit for Hanger Orthopedic Group. The financing consists of a $75 million revolver and a $230 million term loan. Pricing could not be determined by press time. The company will use the deal, along with proceeds from a $50 million private placement of 3.33% convertible preferred stock to Ares Corporate Opportunities Fund, a private equity fund of Ares Management, to refinance existing debt.
The company, an operator of orthotic and prosthetic rehabilitation centers, intends to use about $166 million to repay indebtedness outstanding as of March 31, under its existing revolver and term loan facilities; $200 million to refinance its 10 3/8% senior notes due 2009; $16 million to refinance its outstanding 11 1/4% senior subordinated notes due 2009 and about $65 million to redeem outstanding 10% redeemable preferred stock, according to a company release. A call to George McHenry, executive v.p. and cfo, and a call to an official at Ares, were not returned by press time.
Moody's Investors Service assigned a B2 rating to the revolver and the term loan "B." It assigned a B3 rating to the $190 million unsecured notes due 2014. The ratings agency said the company's leverage has risen the past few years, with the ratio of adjusted debt to EBITDA increasing from 5.8 times at the end of fiscal year 2003 to 6.3 times at the end of 2004, declining slightly to 6.0 times as of Dec. 31, 2005.