GE Capital launched syndication last Friday of an add-on $150 million "B" loan for Hanger Orthopedic Group. Jason Owen, treasurer of the orthotic and patient-care provider, explained that the loan will be used to fund the purchase of notes that are pursuant to a cash tender offer. The company announced last Tuesday that it was commencing a tender offer for any and all of its $150 million outstanding principal amount of 111/4% senior subordinated notes due 2009. Pricing for the add-on debt is set in the LIBOR plus 31/4-31/2% range, said Owen. The bank facility is currently just a $100 million revolver, which is priced at LIBOR plus 3%.
Owen said GECC clinched the administrative agent spot for the company's credit this past April when Hanger had increased its revolver from $75 million to $100 million. He said GECC brought an appealing proposal to Hanger in January of this year and then received the lead role after ties were broken with previous lead BNP Paribas. Owen said the BNP Paribas departure from the deal was due to relationship issues, but he declined to comment further. A BNP Paribas official declined to comment. GECC was involved in the credit before obtaining the lead spot, serving as documentation agent. This is GECC's second time ever leading an institutional deal, said a banker. The first was last month when GECC and Lehman Brothers closed out a dividend recapitalization credit for Tempur World Holdings (LMW, 8/18).
Lehman is syndication agent for the credit and also the dealer/manager for the tender offer. Owen noted that several existing bank lenders had showed interest in the term loan ahead of GECC's bank meeting. Other lenders to the existing deal include Citigroup, Credit Lyonnais and J.P. Morgan. Moody's Investors Service rated the credit B1, citing Bethesda, Md.-based Hanger's expected 2003 debt-to-EBITDA leverage to be in the low fours following the credit and note transactions. GECC and Lehman officials declined to comment.