Cigna to help fund acquisition with $2.5 billion bridge facility

By Aleesia Forni

Columbus, Ohio, Oct. 24 - Cigna Corp. announced today it will acquire Healthspring Inc. in a transaction valued at roughly $3.8 billion, which the company expects to finance with debt and available liquidity.

The company has entered into bridge financing facility of up to $2.5 billion to complete the acquisition, according to chief financial officer Ralph J. Nicoletti.

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, Nicoletti said during the company's conference call to announce the acquisition on Monday.

"We believe that this financing structure allows us to maintain a strong balance sheet and liquidity," Nicoletti said. "We would expect to maintain our current credit rating."

Due to this transaction, the company expects its debt to capitalization ratio to move up to "the 37% range," Nicoletti said.

"Our expectation would be, over a reasonable amount of time, we'll bring that back down to our target in the 25% to 30% level," Nicoletti continued.

"We're going to structure the debt in a way that allows us to do that with balancing short-term tenor, as well as longer term."

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

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

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