| Dirk Allison |
Citigroup and Bank of America are in the market with a $275 million add-on "B" loan for Ardent Health Services that backs a couple of acquisitions. The loan is being tacked on to the company's existing $125 million revolver, which is also being repriced. Pricing on the "B" loan has not yet been established but it looks like LIBOR plus 2 1/2%, said Dirk Allison, Ardent's executive v.p. and cfo. The revolver is currently priced at LIBOR plus 3 1/4%, but will come down below LIBOR plus 3%, he added. Proceeds from the new "B" loan will be used along with $58.3 million of equity to back the $281.2 million acquisition of Hillcrest HealthCare System and the $22 million acquisition of 35,000 commercial lives from Cimarron. The equity is coming from Welsh, Carson, Anderson & Stowe and other equity investors.
The company previously just had a revolver with an accordion feature and high-yield debt. "What we wanted to do, since high-yield is fixed long term, is put in some senior debt--that is why we chose to go with the term 'B,'" Allison said. "It's an opportunity for us to lever up the company in a strategic way to continue to meet the growth objectives." Pro forma leverage will increase from 3.4 times to 4.7 times. The company also put another accordion feature in the credit to allow a further add-on.
B of A was the previous lead, but Citi is new to the company, Allison noted. Citi had worked with the company before but did not become a part of the syndication of the previous deal. Citi represented Ardent on the Hillcrest Health acquisition, he added.