GE Healthcare Financial Services' commitment to the acute healthcare market helped it win the lead spot on a $350 million debtor-in-possession financing for the Saint Vincent Catholic Medical Centers, according to Martin McGahan, cfo of Saint Vincent's.
The DIP loan consists of a two-year, $275 million term loan priced at LIBOR plus 3 1/4% and a $75 million revolver priced at LIBOR plus 2 1/2%. It replaces a $50 million DIP led by the Healthcare Finance Group (HFG). Pricing on the previous DIP was LIBOR plus 3 1/2%.
McGahan said the hospital sought a new DIP because it was looking for additional liquidity. "With the combination of the term loan and the revolver we have more flexibility than under the loan with HFG," said McGahan.
Saint Vincent's will use the term loan to retire all of the approximately $130 million of its publicly held bonds issued by the Dormitory Authority of the State of New York. The hospital chose to retire the bonds because of their high cost -- they are priced more than 100 basis points higher than the DIP. The hospital also wanted to pay off the bonds because they contain restrictive covenants related to real estate assets, McGahan explained. He said rolling the hospital's debt into one facility gives it more financial flexibility. Included in the DIP are covenants that allow the hospital to upgrade its physical plants when it restructures. The hospital plans to emerge from bankruptcy within the next 12 to 18 months.