Valitas Health closes $285 million term loan B, $75 million revolver

By Angela McDaniels

Tacoma, Wash., June 8 - Valitas Health Services Inc. entered into a $360 million senior secured credit facility (Ba3/B) that includes a $285 million six-year term loan B and a $75 million five-year revolver, according to an 8-K filing with the Securities and Exchange Commission.

The credit facility closed on Friday, the same day that the company closed its acquisition of America Service Group Inc. America Service Group is also a borrower under the facility.

Barclays Capital Inc. and Bank of America Merrill Lynch are the lead arrangers and bookrunners. Barclays Bank plc is the administrative agent. Bank of America, NA is the syndication agent, and General Electric Capital Corp. and Regions Bank are the documentation agents.

Equal amortization payments are due on the term loan each quarter equal to 1% per year of the original principal amount. In addition, the company must apply the proceeds from asset sales, additional debt issuance and, beginning in 2012, 50% of excess cash flow to prepaying the facility. The funds will be used first to make the scheduled installments on the term loan and then to repay revolver borrowings.

The credit facility includes financial covenants related to a maximum leverage ratio and a minimum interest coverage ratio.

The credit facility was talked at Libor plus 450 basis points with a 1.25% Libor floor and, for the term loan, a step-down to Libor plus 425 bps at 3.75 times leverage, according to a market source.

The term loan was expected to be issued with an original issue discount of 99½ and one year of 101 soft call protection.

Valitas and America Service also issued $100 million of 12½% subordinated notes due 2018 to GSO COF Facilities, LLC and Blackstone Holdings Financial Co. LLC in a private placement.

The proceeds of the credit facility and notes along with $63 million of cash on hand were used to fund the acquisition and to repay debt of both companies, including Valitas' $40 million revolving credit facility. The revolver was then terminated.

Valitas paid $26 per share in cash, or about $250 million, for America Service.

St. Louis-based Valitas and Brentwood, Tenn.-based America Service Group are providers of health-care services to the incarcerated population. They are the parent companies of Correctional Medical Services, Inc. and PHS Correctional Healthcare, Inc., respectively.

The corporate headquarters for the combined company will be in Brentwood, Tenn.

© 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.