Pediatrix Medical Group, a Fort Lauderdale, Fla.-based neonatal physician network, increased its credit facility by $25 million to continue growth through acquisitions, rather than swap stock. Bob Kneeley, director of investor relations, said Pediatrix is planning to spend $40 million acquiring practices this year and will spend another $50 million next year. The company had a $75 million maturing three-year revolver with a one-year extension led by BankBoston, but upsized this to a $100 million, three-year revolver led by Fleet Bank. The old credit was set to expire at the end of October. The proceeds will pay for the physician practices Pediatrix acquires. "We've never used equity when acquiring doctors," said Kneeley, explaining Pediatrix wants to avert the selling practices from the uncertainties of the equity market.
The success of integrating the practices is based on stability, Kneeley noted, adding its model expects the physicians to stay on, which he thinks they would prefer to do if bought out with cash rather than stock. They would rather get cash than a piece of stock which fluctuates, he said. The bank leading and acting as administration agent is still Fleet as Pediatrix was happy with the team, Kneeley stated. HSBC Bank as documentation agent is also retained, he added. Firstar and U.S. Bank were new to the syndicate, he said, since Pediatrix wanted to expand the banking relationships. The spread on the credit is LIBOR plus 21/ 2%, unchanged from the old line, he added. Other participants include UBS Warburg and International Bank of Miami. There was $17 million outstanding on the old line.