Community Health Systems came back to the market for a $300 million add-on to its existing "B" term loan. Led by JPMorgan, Wachovia Securities and Bank of America, the add-on will be priced the same as the existing debt, at LIBOR plus 1 3/4%. CHS plans to use the additional funds to repay borrowings under its existing $425 million revolver and for general corporate purposes. The company had approximately $272 million outstanding under the revolver as of Sept. 30, according to a Moody's Investors Service release.
CHS entered into a $1.625 billion credit agreement with the three banks in August 2004, according to a filing with the Securities and Exchange Commission. The deal comprises a five-year, $425 million revolver and a seven-year, $1.2 billion term loan "B," both priced at LIBOR plus 1 3/4%. The credit agreement allows for the facility to be increased by $400 million. The new add-on will leave CHS with room to increase the credit by another $100 million in the future.
Moody's affirmed its Ba3 ratings on the company following the announcement of the add-on. Based in Brentwood, Tenn., CHS operates general acute care hospitals in non-urban markets and currently owns 77 hospitals in 22 states. Calls to a company spokesman were not returned.