Citigroup Shops LifePoint Acquisition Facility
Citigroup is leading a $1.4 billion credit line for LifePoint Hospitals in conjunction with its approximately $1.7 billion purchase of Province Healthcare.
Citigroup is leading a $1.4 billion credit line for LifePoint Hospitals in conjunction with its approximately $1.7 billion purchase of Province Healthcare. The facility comprises a five-year, $300 million revolver and a seven-year, $1.1 billion term loan "B" with a carve out of roughly $200 million for a delayed term loan. There is a commitment fee of 50 basis points on the delayed draw loan. Pricing is at LIBOR plus 1 3/4% on both tranches. Michael Culotta, cfo, did not return phone calls. Syndication of the deal launched at a bank meeting last week.
Both LifePoint and Province operate hospitals in non-urban communities. Moody's Investors Service assigned a Ba3 rating to the bank debt. Though the bulk of the acquisition can be financed with the new credit, Moody's expects LifePoint to complete the deal through a second phase of financing.
The ratings reflect the combined company's high pro forma leverage and the likelihood that the combined entity will continue with its acquisitive strategy. There is also concern over LifePoint's ability to capture out-migration of services to larger urban facilities or non-affiliated outpatient centers. LifePoint was formed as a division of The Healthcare Company in November 1997. In May 1999 the group was separated from HCA through a share distribution.