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Vanguard Health to get new credit facility via Bank of America and Citigroup
By Sara Rosenberg
New York, July 26 - Vanguard Health Systems Inc. will get a new credit facility as part a recapitalization of the company that will include a major investment by The Blackstone Group. Bank of America and Citigroup are the lead banks on the deal, with Bank of America listed on the left, according to market sources.
"We're pretty much refinancing the facility we've got. Possibly some expansion," a company spokesman told Prospect News Monday, adding that the company is still deciding just what the new capital structure will look like.
"We're refinancing senior debt and senior subordinated notes and equity. It's a refinancing of the entire capital structure," the spokesman added.
Currently, the company has a $545 million credit facility consisting of an undrawn $245 million five-year revolving credit facility and a $300 million seven-year term loan. Pricing on the revolver can range from Libor plus 175 to 275 basis points, and pricing on the term loan can range from Libor plus 200 to 225 basis points, depending on leverage. Vanguard closed on this credit facility in May.
Under the recapitalization, Blackstone will purchase a majority equity interest in Vanguard in a transaction valued at about $1.75 billion. In connection with the transaction, both management and Morgan Stanley Capital Partners will reinvest in the company, together owning about 30% of the company.
The transaction is subject to regulatory approvals, financing and other customary closing conditions and is expected to be completed in the third quarter.
Banc of America Securities LLC and Citigroup Global Markets Inc. are advising Vanguard in connection with the transaction. Bear Stearns & Co. Inc. is advising Blackstone.
Vanguard is a Nashville, Tenn., owner and operator of acute care hospitals and related health care services.
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