HealthSpring to pay down term loans and revolver with stock proceeds

By Toni Weeks

San Diego, March 28 - HealthSpring, Inc. will use at least 50% of the net proceeds from its planned sale of 7.5 million shares of common stock to pay down term loans and the remainder to pay down its revolving credit facility and for general corporate purposes, according to a 424B2 filing with the Securities and Exchange Commission.

A portion of those term loans mature Feb. 11, 2015 and bear interest at Libor plus 375 basis points, and the remainder of the term loans mature Oct. 22, 2016 and bear interest at Libor plus 450 bps.

General corporate purposes may include potential acquisitions, repayment or repurchases of debt, capital expenditures and working capital.

The proceeds of the stock offering, which the company estimates will be $262 million, or $301 million if the greenshoe is exercised, will be invested in highly liquid, secure short-term securities pending such uses.

Franklin, Tenn.-based HealthSpring is a managed care organization whose primary focus is Medicare.

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