J.P. Morgan Chase is shopping a $200 million revolver for Fort Smith, Ark.-based nursing home operator Beverly Enterprises Inc. that replaces an existing $325 million credit facility set to mature at the end of this year. Morgan Chase is lead arranger and administration agent. Pricing is LIBOR plus 27/8 %, but the maturity and fees could not be determined by press time. Scott Tabakin, cfo of Beverly, who has resigned to join AMERIGROUP Corporation, was travelling and could not be reached. Declining comment on a prospective revolver facility, a spokesman for Beverly noted that the company is issuing $200 million of eight-year senior notes in order to pay down the existing credit.
According to a banker familiar with the situation, "trying to get banks in on a pro rata deal for the long-term care sector is difficult." Government-prompted changes in Medicare have hindered many businesses, he noted. Though Beverly is one of the better operators, it is likely that a simultaneous bond deal is necessary to attract the banks, he added. Standard & Poor's rates Beverly's existing senior unsecured debt "B-plus," its fourth-highest junk grade, with a negative outlook. Beverly operates 531 nursing facilities, 34 assisted living centers, 165 outpatient therapy clinics and 58 home-care and hospice agencies. A spokeswoman for Chase was unable to provide comment ahead of press time. The existing credit facility, launched in 1998 and arranged by J.P. Morgan Securities, was priced at LIBOR plus 21/4 % basis points.