Mariner Post-Acute Network is seeking to arrange exit financing in preparation for leaving bankruptcy protection within the next two months while rivals Sun Healthcare Group and Integrated Health Systems are also said to be planning emergence. Mariner is in talks with several banks for a $50-100 million revolver and a $200 million "B" term loan, said Michael Gries, a partner at restructuring firm Conway, Del Genio, Gries & Co. and chief restructuring officer at the long-term healthcare company. The debt is expected to carry a spread of between LIBOR plus 3% to 31/ 2% with a tenor of six years. Mariner has also solicited bids from several investment banks regarding a note issuance. Gries declined to name the prospective bidders.
An approximate date for exit would be mid-April for Mariner, Gries stated, noting the common thread to the three companies emerging now can be seen in the lead creditors. Lenders such as Goldman Sachs, Highland Capital and GE Capital have come to understand the business and the issues, he said. But the exits do not come at the best possible time for the sector. A recent decline in pricing for the three names in the secondary market has been attributed to investor fears regarding the Medicare Payment Advisory Commission's recommendation to Congress, that it should not continue "give backs" or "add-ons" to the nursing home-sector. That casts a shadow over the reimbursement issue, which forced a number of companies into bankruptcy in the first place (LMW, 2/11). Gries said the reimbursement development is not the best news, but in no way does it impact financing plans. "There is still a mass of appetite for the name," he stated, adding, "health care is more favorable than other sectors."
Sun Healthcare has already secured an exit facility from Heller Financial, a unit of GE Capital, and Citibank, said spokeswoman Deborah Hileman. Heller was the DIP lender, she added. One banker said the loan would be in the region of $150 million. IHS is also believed to be planning emergence though at present it is spinning off subsidiary RoTech Medical (see related story, p. 4). Officials at both RoTech and IHS did not return repeated calls. Chase Manhattan Bank provided a $100 million DIP to Mariner, but Foothill Capital replaced Chase as agent shortly afterwards. Subsidiary Mariner Health Group obtained a commitment for $50 million in DIP financing with PNC Bank