Goldman Sachs and UBS Warburg will launch Tuesday a $275 million bank deal for RoTech Medical, a subsidiary of Integrated Health Services that markets respiratory products and durable medical equipment. IHS is currently in bankruptcy, but RoTech is being spun out as part of the reorganization, said a banker. Split between a $200 million "B" term loan and a $75 million revolver, the credit already has gathered considerable interest, he added. Leverage is 1.1 times senior and 2.8 times total, with the credit expected to be rated BB-/Ba2, the banker stated. The deal is priced at LIBOR plus 3% on the revolver and LIBOR plus 31/ 2% on the "B" term loan.
The Orlando-based medical company last month agreed to pay the government $17 million to settle allegations the company fraudulently overbilled health care programs for respiratory equipment, supplies, and services. The settlement resolves claims that RoTech submitted false bills to several government agencies, including Medicare, Montana Medicaid, the Department of Veterans Affairs and Indiana Health Service. Officials at the banks declined comment. Calls to Janet Ziomek, cfo at RoTech, were not returned.