Orthodontic Centers of America (OCA) has completed a new $125 million credit with Banc of America Securities, replacing a $100 million revolver led by Wachovia Securities. After the merger of Wachovia and First Union, Wachovia's industry focus shifted away from companies in OCA's sector, stated Cory Armand, v.p. of investor relations and the person responsible for financing and banking relationships at OCA. "They had changed their core focus areas in their healthcare group," he stated, explaining that the break with Wachovia was a mutual decision. He added that OCA had developed a relationship with B of A after it led, with Bank One, its Nov. 2001, $50 million bridge term loan backing a merger with OrthAlliance. Officials at Wachovia declined comment beyond saying the split was amicable.
The new facility includes a three-year, $100 million revolver and a $25 million term loan. Pricing is based on a grid tied to leverage. Reportedly, the current pricing on the facility is LIBOR plus 21/ 4%. The previous $100 million revolver, which would have matured this October, was also priced on a grid, with a rate of LIBOR plus 33/ 4% at the time it was paid off, Armand said. The bridge loan was paid down by $37 million by the time of its Nov. 2002 expiration, but OCA used a one-year extension option for the remaining balance. Armand said after two months into the extension, interest rates were over 10% until OCA refinanced the debt into the new facility.
The lending group includes Bank One, US Bank, LaSalle Bank, Hibernia National Bank and Whitney National Bank. Armand said that LaSalle and Whitney are new relationships for OCA. "We are keen on long relationships," he mentioned, adding that the dental practice management firm is excited about doing more non-loan product business with its lenders. Beyond refinancing previous debt, Metairie, La.-based OCA will also use the credit for flexibility to continue its common stock repurchase program.