Cigna announces pricing for $2.5 billion bridge facility with Morgan Stanley

By Aleesia Forni

Columbus, Ohio, Oct. 27 - Cigna Corp. has entered into a commitment letter with Morgan Stanley Senior Funding Inc. to provide for a 364-day bridge credit facility of up to $2.5 billion to complete the acquisition of Healthspring Inc., according to an 8-K filed with the Securities and Exchange Commission.

The facility will bear interest at a rate based on the company's credit rating.

Pricing on the facility ranges from Libor plus 150 basis points to 250 bps from the effective date through 89 days after the effective date. The effective date is when the acquisition closes.

From 90 days through 179 days after the effective date, pricing will range from Libor plus 200 bps to 300 bps.

Interest will range from Libor plus 250 bps to 350 bps from 180 days after the effective date through 269 days after the effective date, while pricing will range from Libor plus 300 bps to 400 bps from 270 days after the effective date.

This facility is intended to pay part of the consideration to Healthspring's stockholders.

If Cigna chooses to draw under this facility, it may refinance all or a portion of the bridge facility at a later date.

This facility contains certain financial covenants, including requiring the company to maintain a leverage ratio of no more than 50%.

Cigna will acquire Healthspring in a transaction valued at roughly $3.8 billion, which the company previously said it expects to finance with debt and available liquidity.

The company expects the permanent financing to include approximately 20% of the purchase price in the form of newly issued equity and approximately 80% in debt and available cash, chief financial officer Ralph J. Nicoletti said during the company's conference call to announce the acquisition on Monday.

The transaction is expected to close during the first half of 2012.

Cigna is a Bloomfield, Conn.-based health service company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.