| David Jones |
Bank of America, J.P. Morgan and Merrill Lynch are in the market with a $350 million refinancing for Team Health. The facility comprises a six-year, $100 million revolver and seven-year, $250 million "B" loan. Price talk on the revolver and "B" loan is LIBOR plus 21/2% and LIBOR plus 23/4%, respectively. The company currently has about $199 million of bank debt, noted David Jones, Team Health's cfo. The previous facility had a revolver and "A" loan priced on a grid and a "B" loan that carried a spread of LIBOR plus 31/4%. "We're seeing some modest rate improvement," Jones said. The refinancing is being done in conjunction with a tender offer for the company's senior subordinated notes, callable March 15. The company will also issue another $180 million of senior subordinated notes, redeem the preferred shares and pay a dividend on the common shares. "We're doing this transaction to lower the overall capital structure," Jones said. "It's a pretty expensive capital structure we have in place between the bonds and the preferred shares." Debt-to-EBITDA at Dec. 31, 2003, pro-forma for the recap will increase from 3.3 times to about 4.7 times (see Credit In Focus, page 12).
B of A and Fleet Securities led the previous facility. Merrill and J.P. Morgan are new relations to the company, Jones said. Syndication launched Feb. 25 and the company is expecting the deal to be wrapped up by March 23, Jones said. Cornerstone Equity Investors, Madison Dearborn Partners and Beecken Petty & Co. are the company's equity sponsors. "We have leveraged in two occasions, first in 1999 and then with the Spectrum [Healthcare] acquisition. In both cases, we were able to quickly deleverage," Jones stated.