Metropolitan Health to launch $355 million facility on Wednesday

By Sara Rosenberg

New York, July 28 - Metropolitan Health Networks Inc. has set a bank meeting for Wednesday to launch its proposed $355 million senior secured credit facility, according to a market source.

GE Capital Markets Inc. is the lead arranger and bookrunner on the deal.

The facility consists of a $25 million five-year revolver, a $240 million five-year first-lien term loan and a $90 million six-year second-lien term loan, with official talk not yet available.

Based on filings with the Securities and Exchange Commission, pricing on the revolver and first-lien term loan is expected at Libor plus 475 basis points with a 1.5% Libor floor, and the revolver will have a 50 bps unused fee.

The filings also said that pricing on the second-lien term loan is expected at Libor plus 850 bps with a 1.75% Libor floor, and there is call protection of 103 in year one, 102 in year two and 101 in year three.

There is a $50 million accordion feature under the first-lien credit agreement.

Financial covenants include minimum fixed-charge coverage and maximum total leverage ratios. The first-lien facility will also have a maximum senior leverage requirement.

Proceeds will be used to help fund its acquisition of Continucare Corp. for $6.25 in cash and 0.0414 of a share of Metropolitan common stock per share. The transaction is valued at about $416 million.

Other funds for the acquisition will come from some of Metropolitan Health's and Continucare's cash and investments, which, combined, totaled $93 million at March 31.

Closing is expected in the third quarter, subject to shareholder approval and clearance under the Hart-Scott-Rodino Act.

The combined company will have about $660 million in annual revenue and more than $90 million in EBITDA.

Metropolitan Health is a Boca Raton, Fla.-based health care organization that provides health care services for Medicare Advantage members and other patients in Florida. Continucare is a Miami-based provider of primary care physician services on an outpatient basis.

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