Alliance Imaging took advantage of current investor appetite for the company's paper to revisit the bank market and gain cheaper pricing on its term loans. According toHoward Aihara, corporate controller, the Anaheim, Calif., provider of outsourced diagnostic imaging services took its cue from the performance of its public bonds, which were trading at 106-107. "The debt markets looked receptive," Aihara said, adding that the company decided to proceed with the refinancing following discussions with its Deutsche Bank-led bank group.
In addition to investor demand for the paper, Aihara cited Alliance Imaging's improved credit profile as a reason for the refinancing. Proceeds from an initial public offering last year were used to delever, he noted, adding that EBITDA is growing at 8-9% annually. Furthermore, the industry is projected to grow 10% per year until 2005 or 2006.
Alliance Imaging refinanced $286 million in "B" and "C" term loans and combined them into a single "C" tranche that carries a spread of 23/ 8% over LIBOR. The new "C" tranche has amortization of $1.5 million due in 2004, 2005 and 2006, with the remaining $281.5 million due in 2008.
The bank debt originally was incurred in connection with Kohlberg Kravis Roberts' acquisition of the company in 1999, Aihara noted. The $145.5 million "B" and $140.5 million "C" tranches were priced at 23/ 4% and 3% over LIBOR, respectively.