By Angela McDaniels
Tacoma, Wash., June 8 - America Service Group Inc. and Valitas Health Services Inc. issued $100 million of 12½% subordinated notes due June 3, 2018 to GSO COF Facilities, LLC and Blackstone Holdings Financial Co. LLC in a private placement, according to an 8-K filing with the Securities and Exchange Commission.
The placement closed on Friday, the same day that Valitas acquired America Service.
Wilmington Trust FSB is the administrative agent for the notes.
Of the coupon, 10½% is payable in cash and 2% is payable in cash or in kind. Interest is payable quarterly.
The companies must use the proceeds from asset sales and additional debt issuance to offer to prepay the notes on a pro rata basis at par plus accrued interest.
The notes include a financial covenant that caps the company's net leverage ratio.
The companies also 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.
The proceeds of the notes and credit facility, along with $63 million of cash on hand, were used to fund the acquisition and to repay debt of both companies.
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.
| Issuers: | America Service Group Inc. and Valitas Health Services Inc.
|
| Issue: | Subordinated notes
|
| Amount: | $100 million
|
| Maturity: | June 3, 2018
|
| Coupon: | 12½%, including 2% payable in cash or in kind; payable quarterly
|
| Price: | Par
|
| Investors: | GSO COF Facilities, LLC and Blackstone Holdings Financial Co. LLC
|
| Settlement date: | June 3
|
| Distribution: | Private placement
|
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