Metropolitan Health reveals talk on $355 million facility with launch

By Sara Rosenberg

New York, Aug. 3 - Metropolitan Health Networks Inc. released price talk on its $355 million senior secured credit facility as the deal was launched with a bank meeting on Wednesday, according to a market source.

The $25 million five-year revolver (BB-) and $240 million five-year first-lien term loan (BB-) are being talked at Libor plus 475 basis points with a 1.5% Libor floor, and the $90 million six-year second-lien term loan (B-) is being talked at Libor plus 900 bps with a 1.75% Libor floor, the source said.

The first-lien term loan is being offered at an original issue discount of 99, while the discount on the second-lien term loan is still to be determined.

Call protection on the second-lien loan is 103 in year one, 102 in year two and 101 in year three.

Commitments are due on Aug. 17.

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

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 the 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 of 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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