Bank of America and Citibank last week launched syndication of a $1.05 billion credit backing The Blackstone Group's $1.75 billion buyout of Vanguard Health Systems. The senior debt comprises a $250 million revolver, $475 million term loan, $175 million delayed draw term loan and another $150 million delayed draw term loan. Price talk on the term loans is in the LIBOR plus 2 1/4-1/2% range, a loan investor noted.
The $150 million delayed draw term loan will be used for specific acquisition opportunities and is available for five months after the transaction closes, according to Moody's Investors Service. The $175 million delayed draw term loan will be used for general corporate purposes and will be available for one year, Moody's adds. When those lines are drawn, the outstanding loan amounts will convert into Vanguard's existing term loan structure and will be governed by the same agreement as the $475 million term loan, Moody's explains. The financing also includes $560 million of 10-year senior subordinated notes and $140 million of 11-year senior discount notes.
Vanguard entered into a new $545 million credit with Citi and B of A in May. It comprised a $245 million revolver and $300 million "B" loan. The "B" loan priced at LIBOR
plus 2-2 1/4%, which is 2% less than under the prior credit (LMW, 5/31). The revolver priced at LIBOR plus 1 3/4-2 3/4%, which is 50 basis points cheaper than the previous line.
Vanguard was formed by management and Morgan Stanley Capital Partners in 1997. After the new transaction management and Morgan Stanley Capital Partners will jointly own 30% of Vanguard. The company owns and operates acute care hospitals and other healthcare facilities. Citi bankers, a Blackstone spokesman and Joseph Moore, Vanguard's cfo, did not return calls. A B of A spokeswoman declined comment.