Cross Country Healthcare completed a $200 million secured credit with a $125 million "B" loan that had its pricing flexed down during syndication. The tranche was two times oversubscribed, said Victor Kalafa, v.p. of corporate development at the healthcare staffing firm, explaining that the heavy buyside interest prompted the initial LIBOR plus 31/2% coupon to decrease to LIBOR plus 31/4%. The six-year "B" loan is accompanied by a $75 million, five-year revolver that priced at LIBOR plus 3%, Kalafa added.
The deal backs Cross Country's $104 million cash acquisition of nurse staffing business Med-Staff. Proceeds from the credit also helped pay off Cross Country's $27.5 million term loan, Kalafa stated, noting that this previous loan was priced lower at around LIBOR plus 165 basis points. The company also used $10 million of existing cash toward the acquisition and refinancing. The acquisition transaction further includes an earn-out provision of $37.5 million based on 2003 performance.
Citigroup leads the facility with Wachovia Securities. Citi was the Boca Raton, Fla.-based company's lead arranger for its previous credit, while Wachovia is a new joint arranger, said Kalafa. Around 20 institutional investors joined the "B" tranche, he noted. Kalafa said the revolver has not been drawn upon and remains in place for added flexibility. "[It was a] combination of our familiarity, flexibility and pricing," he added, explaining why the company decided to use bank debt for the transaction.