Citigroup was scheduled to launch syndication last Thursday of a $200 million credit backing Cross Country Healthcare's $104 million cash acquisition of nurse staffing business Med-Staff. The credit for the healthcare-staffing company includes a six-year, $125 million "B" loan priced at LIBOR plus 31/2% and a five-year, $75 million revolver with a spread of 3% over LIBOR. A Citi official declined to comment on the deal. Emil Hensel, cfo of Cross Country, confirmed the structure for the underwritten deal and said Wachovia Securities was set to join as a co-lead as of late last week. He noted that Citi leads the existing credit, pointing to the selection of the bank to arrange the new facility. The existing deal is priced at LIBOR plus 15/8%. Cross Country expects existing lenders to join the new deal, Hensel noted.
The acquisition will increase Cross Country's debt to $136 million from last fiscal year's reported $43 million in debt. The revolver is expected to be tapped for $11 million at closing, Hensel confirmed. Pro forma for fiscal year 2002, leverage will increase to 1.6 times. The transaction will give Cross Country most of the market for traveling nurses. Hensel noted that the company was pleased with its debut Ba1 rating from Moody's Investors Service. But Standard & Poor's lower BB- rating was somewhat of a letdown, he said.