Catholic Healthcare West, a not-for-profit healthcare provider, has renewed a $350 million credit line via lead bank, Bank of America. The credit includes a $175 million, 364-day revolver and a $175 million, two-year letter of credit facility. The letter of credit facility is posted as collateral for Catholic Healthcare's workers compensation, self-insurance program, explained Bill Baird, the company's assistant treasurer. The beneficiary of the collateral is California's self-insurance program. The only outstanding amount on the revolver, meanwhile, is $55 million. Catholic Healthcare drew down on the facility to bridge the time between the maturity of a private-placement issue and the completion of a new issue via B of A, expected in June or July.
B of A has been working with Catholic Healthcare on the credit side for some time, fully underwriting the company's 364-day line when it carried an A rating. But when the company was downgraded to BBB+ in October of 1999, the bank could not take on the whole exposure alone, explained Baird. Catholic Healthcare felt that it was important to indicate to the market that B of A was still committed to the company and chose the bank to lead the syndication, said Baird. The bank group for the company's credit also includes J.P. Morgan, Citigroup, Washington Mutual, Key Bank, ING Bank, BNP Paribas, KBC Bank, Bank One, State Street Bank, Bank of New York, U.S. Bank, Farmers & Merchants National Bank, Union Safe Deposit Bank, Morgan Stanley and Allied Irish Bank.
Catholic Healthcare expects relationships with its banks to be reciprocal and looks for support from the credit side, noted Baird. "All of these banks are business partners," said Baird, explaining that Catholic Healthcare provides ancillary business to each. Commitments for the line range from $65 million to $10 million. The pricing on the renewed credit is linked to a rating-based grid. The undrawn letter of credit facility currently carries a fee of 3/4% and a 17.5 basis points facility fee. The revolver is priced at LIBOR plus 2% and carries a 1/2% commitment fee.