First Union and Goldman Sachs kicked off syndication of an additional $200 million "B" term loan for Genesis Health Ventures at a bank meeting last Wednesday. The add-on credit, which backs the company's acquisition of NCS HealthCare, will be consolidated with Genesis' existing $285 million "B" piece and its existing $80 million delayed-draw term loan to form a new $565 million institutional tranche, according to one banker. The two banks are seeking approval from existing lenders for the changes and are targeting new investors to commit to the incremental portion of the deal. First Union officials declined to comment, and calls to Goldman were not returned.
Pricing on the new "B" piece is the same as that on the existing term loans, which are priced at LIBOR plus 31/ 2%, the banker noted. An existing $150 revolver, which is priced at LIBOR plus 3%, remains unchanged, as does maturities for the entire facility. The existing $515 million credit was put in place last year as Genesis emerged from Chapter 11 bankruptcy protection (LMW, 10/15/01).
Since exiting Chapter 11 last year, Genesis has performed according to plan, the banker said. And although the amount of debt is being increased, the company has good collateral that more than covers the entire bank financing, he noted. Moody's Investors Service has reaffirmed the credit's Ba3 rating (see Credit in Focus, page 7), and the company is awaiting an assessment fromStandard & Poor's, which rates the existing deal as BB-. Calls to George Hagar Jr., cfo, were not returned by press time.