Goldman Sachs and UBS Warburg today will dispense allocations on the $200 million "B" term loan for Rotech Healthcare, with investors expecting slim pickings from the much sought after deal which blew out just days after launch. A banker said buyside accounts snapped up paper for the Integrated Health Services subsidiary, but overdemand will limit the amount allocated to each fund. Rotech, which markets respiratory products and durable medical equipment, is being spun out of bankrupt IHS, which is currently reorganizing.
Split between the $200 million "B" term loan and a $75 million revolver, leverage is 1.1 times senior and 2.8 times total. The deal is priced at LIBOR plus 3% on the revolver and LIBOR plus 31/ 2% on the "B" term-loan. The Orlando-based medical company last month agreed to pay the government $17 million to settle allegations the company fraudulently overbilled health care programs for respiratory equipment, supplies, and services. The settlement resolves claims that Rotech submitted false bills to several government agencies, including Medicare, Montana Medicaid, the Department of Veterans Affairs and Indiana Health Service. Officials at the banks declined comment or did not return calls. Janet Ziomek, cfo at Rotech, did not return calls also.