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HealthSpring plans $150 million term loan A, $250 million term loan B
By Sara Rosenberg
New York, Aug. 31 - HealthSpring Inc. expects that its $400 million in new term loans for its acquisition of Bravo Health Inc. will be comprised of a $150 million term loan A due Feb. 11, 2015 and a $250 million six-year term loan B, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.
JPMorgan and Bank of America are the joint lead arrangers and bookrunners on the deal, and Raymond James Bank is a co-arranger.
There is a $75 million accordion feature.
Financial covenants include a minimum consolidated statutory net worth and a maximum consolidated total leverage ratio of 2.25 times, with step-downs to be determined.
In connection with the acquisition, the company expects to amend its existing credit facility to allow for the new term loans.
The company's existing credit facility consists of a $175 million revolver and a $175 million term loan A, with both tranches currently priced at Libor plus 325 basis points.
Under the agreement, HealthSpring will acquire Bravo Health, a Baltimore-based operator of Medicare Advantage coordinated care plans, for $545 million.
The plan is to draw $100 million under the currently undrawn revolver, and those funds, along with the new term loans and unrestricted cash, will finance the acquisition.
At close, leverage on a pro forma EBITDA basis is anticipated to be 1.6 times, and debt to capital is expected in the mid-to-high 30s.
Also, assuming the transaction closes as anticipated, the transaction should add $0.45 to $0.55 to HealthSpring's 2011 earnings per share, after taking into account expected cost savings.
Closing on the acquisition is expected by year-end, subject to customary conditions, including federal and state regulatory approvals.
HealthSpring is a Nashville, Tenn.-based Medicare Advantage coordinated care plans.
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