Vanguard Health $1.05 billion credit facility to launch Tuesday

By Sara Rosenberg

New York, July 30 - Vanguard Health Systems Inc. is scheduled to hold a bank meeting for its proposed $1.05 billion credit facility on Tuesday afternoon, according to a market source.

Bank of America and Citigroup are the lead banks on the deal, with Bank of America listed on the left.

The deal will consist of a $250 million revolving credit facility, a $650 million term loan B with $175 million of that amount delay draw and a $150 million delay-draw acquisition term loan, sources said. Price talk on the term loan B is Libor plus 225 to 250 basis points, one source told Prospect News Friday.

This price talk is not necessarily a surprise based on comparable deals made by other companies such as Ardent Health Services LLC and Iasis Healthcare Corp., which both priced in that Libor plus 225 basis points area.

As was previously reported, proceeds will be used to help fund a recapitalization of the company that will include a major investment by The Blackstone Group and the refinancing of essentially the company's entire capital structure, including senior subordinated notes and equity.

The company currently has a $545 million credit facility consisting of a $245 million five-year revolver that is undrawn 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. Both management and Morgan Stanley Capital Partners will reinvest in the company in connection with this transaction and each will own 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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