Apria Healthcare Group's lenders convinced the Lake Forest, Calif., healthcare provider to amend its $175 million "B" term loan after bringing to its attention successful repricings by other issuers. The amendment resulted in 100 basis points being shaved from the loan's old spread of LIBOR plus 3% and an extension of the maturity by one year to 2008, according to James Baker, cfo. "The success of similar companies was brought to our attention by our financial institutions," he said. "But current market conditions and the improving financial strength of the company were the factors behind the repricing."
One banker had suggested a government investigation into the company's Medicare billing practices had fizzled out recently, enabling Apria to revisit the institutional market. "There has been no change in the government's investigation," Baker asserted, citing the company's improved financial strength as the reason for the repricing's success. Indeed, Apria's EBITDA was $69 million in the first quarter of 2002, compared to $63.2 million in the first quarter of 2001.
The "B" term loan originally was in syndication last year, but some investors pulled back when Apria disclosed that government claims could be worth as much as $9 billion. Pricing on the loan had to be flexed up from LIBOR plus 21/ 4% to LIBOR plus 3% during syndication to keep the book together. Prior to the disclosure, the loan was twice oversubscribed and had been reverse flexed from LIBOR plus 21/ 2%.
The "B" term loan is part of a $400 million credit facility, which also comprises a $100 million revolver and $125 million "A" term loan, provided by Bank of America. Pricing on those tranches is LIBOR plus 21/ 4% all-in.