Bank of America has more than $75 million in commitments for Vanguard Health Systems' $150 million, add-on "B" term loan that back's the company's $295 million acquisition of five hospitals from Baptist Health System. Investors are keen on the credit's asset coverage, said a banker familiar with the deal, declining to name any specific investors that signed on. Moody's Investors Service rated the company's senior implied rating at B1 on account of the credit's strong security package (LMW 12/9).
Final pricing is still to be determined on the line, the banker added. Another banker said that Vanguard's speculative-grade ratings may make it tough to set pricing below LIBOR plus 4%. The company's existing $125 million revolver, led by B of A and co-documentation agents Wachovia Securities and General Electric Capital Corp., is priced at LIBOR plus 3%. Commitments for the add-on are due by tomorrow. A B of A banker declined to comment.
Vanguard agreed to pay Baptist $247 million in cash and $48 million in equity and subordinated debt securities for the hospitals. The cash portion will come from Nashville, Tenn.-based Vanguard's available funds, proceeds of private sales of its common stock to existing shareholders and the expanded bank debt. The transaction is slated to close by the end of the year. Trip Pilgrim, v.p. of investor relations for Vanguard, did not return calls.