J.P. Morgan and Bank of America are in the market with a $1.25 billion redux for Community Health Systems, a Forstmann Little & Co. investment, and are looking for a major price cut on the institutional tranches. The current "A," "B" and "C" tranches are priced at LIBOR plus 3%, 31/ 2% and 33/ 4%, respectively. But the banks want to roll those lines into one $800 million "B" tranche priced at LIBOR plus 21/ 2%. A $450 million revolver also is being refinanced, said a banker.
The attempted reprice is coming off the back of good performance figures for the quarter. EBITDA for the first quarter of 2002 was $92.4 million, compared with $77.2 million for the same period last year, representing a 19.6% increase. But the existing bank debt is rated B+ and, despite some equity offerings, leverage remains high as the company continues to acquire aggressively, according to a Standard & Poor's report.
Community Health operates full-service, acute-care hospitals in non-urban areas where it is typically the prominent primary healthcare provider. Calls to Larry Cash, executive v.p. and cfo, were referred to a spokeswoman, who was unable to provide comment by press time. Officials at B of A and J.P. Morgan did not return calls.