Veterinary Network Reduces Costs As It Consolidates Debt

  • 15 Sep 2002
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VCA Antech has refinanced $143.1 million in term loans through Goldman Sachs and Wells Fargo in order to take advantage of reduced interest rates and lower its payments. According to Tomas Fuller, cfo, the Los Angeles veterinary health care network consolidated its term loans into a new "C" tranche priced at LIBOR plus 3%. This gave the company a 63 basis point reduction in its weighted average interest rate, he noted, predicting that the reduction would save VCA about $900,000 in interest expenses before taxes over the next year.

The company also adjusted its amortization schedule. The original loans required VCA to pay $5 million per quarter through 2006, with payments of $23 million from December 2006, Fuller noted. The new arrangement, however, is much more economical, with quarterly payments of $357,000 through 2006 and $17.1 million quarterly payments until 2008, Fuller said. The balance will probably be refinanced in 2006 though, he explained.

VCA's original credit, which was signed in September 2000, was a $400 million facility that has since been paid down to $193.1 million. The remaining debt included a $22.6 million term loan "A" priced at LIBOR plus 3% and a $120.5 million "B" tranche priced at LIBOR plus 33/ 4%. An undrawn $50 million revolver, which is priced at LIBOR plus 3%, was not refinanced.

VCA manages the nation's largest network of freestanding veterinary hospitals and laboratories. Buyout firm Leonard Green & Partners took the company private at a cost of $321 million in 2000, before VCA went public again less than one year later. The company's total debt as of this past June was some $387 million, representing a leverage multiple of about four times.

  • 15 Sep 2002

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