DaVita seeks $1.35 billion term loan A talked at Libor plus 250 bps

By Sara Rosenberg

New York, July 23 - DaVita Inc. is in market with a $1.35 billion term loan A that is being guided at Libor plus 250 basis points, according to a market source.

J.P. Morgan Securities LLC is the lead bank on the deal.

Proceeds will be used to help fund the acquisition of HealthCare Partners for about $4.42 billion, subject to post-close adjustments and contingent consideration.

The purchase price consists of $3.66 billion in cash and roughly 9.38 million shares of DaVita common stock.

In addition, there is potential for an additional up to $275 million cash payment if certain performance targets are achieved in 2012 and 2013 by HealthCare Partners.

When announcing the transaction, DaVita said that it anticipated using $3.8 billion of new debt for the transaction, bringing pro forma leverage to 3.7 times, and available cash.

The debt was outlined as new senior secured loans and the issuance of new unsecured debt.

Closing is expected early in the fourth quarter, subject to receipt of Hart-Scott-Rodino approval, obtaining the approval of HealthCare Partners' owners and other customary conditions.

Upon closing, the combined company will be named DaVita HealthCare Partners Inc.

In 2011, HealthCare Partners' revenue was about $2.4 billion, EBITDA was $527 million, and operating income was $488 million.

DaVita is a Denver-based provider of kidney care services for those diagnosed with chronic kidney disease. HealthCare Partners is a Torrance, Calif.-based operator of medical groups and physician networks.

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