NDCHealth has completed its first term loan "B" and high-yield offering in conjunction with a larger recapitalization plan, noted Randolph Hutto, NDC's cfo. The company decided to pursue a recapitalization plan because the need to refinance roughly $145 million in convertibles due November 2003 was putting pressure on NDC's stock price, Hutto explained. Merrill Lynch and Credit Suisse First Boston led the senior debt financing. With the new funds now in place, the Atlanta-based provider of health information services is looking to redeem all of the notes on Dec. 26.
The company had a $150 million, three-year revolver. But it decided to pursue both a term loan "B" and a high-yield issue to establish presence in both markets, said Hutto. The company's new debt includes a $100 million, five-year revolver, a $125 million, six-year "B" term loan, and $200 million of 10-year notes. NDC increased the size of the note offering to $200 million from $175 million and also upsized the bank portion to $225 million from $200 million during syndication.
The revolver was upsized from $75 million as the company chose to take advantage of its relatively cheaper spread, Hutto noted. With the new financing, the company did increase its overall debt, but Hutto said that NDC wanted the available capacity to be a potential source of funding for the second phase of the company's TechRX acquisition in May 2003.
The revolver and term loan are priced at LIBOR plus 31/ 4% and 4%, respectively. The notes bear a coupon of 101 /2 %. Although the new debt has a higher interest rate compared to the LIBOR plus 23 /4 % spread on the former revolver, Hutto said the company was pleased with the execution.