Extendicare Health Services (EHS) has increased its $105 million revolver and extended the maturity to obtain the option to reduce leverage. "We were in the process of refinancing our long-term debt and we decided to extend our facility because we wanted the option to be able to pay debt down for the next couple of years," said Mark Durishan, EHS' cfo. "Our other choice was to issue more high-yield debt. But since high yield has a no-call provision, we would not have been able to reduce leverage," Durishan stated.
EHS increased the Lehman Brothers-led revolver to $155 million and also issued $125 million in 67/8% senior subordinated bonds. The long-term care facilities operator extended the revolver's maturity out for two more years to 2009. The restated credit facility, together with the new bonds and cash on hand, will be used to repurchase $200 million of 9.35% bonds due in 2007.
Durishan declined to state the spread on the restated facility, but he did note that pricing improved and EHS was able to make minor adjustments in the debt covenants. The revolver was priced at LIBOR plus 31/4%, according to a 10-K filing. Other participants in the expanded revolver are Alcentra, GE Capital, LaSalle Bank, US Bank, GMAC Financial Services, and Foothill Capital Corp.