Kindred Healthcare sets price talk on $1.3 billion credit facility

By Sara Rosenberg

New York, March 11 - Kindred Healthcare Inc. released price talk on its proposed $1.3 billion senior secured credit facility as the deal launched with a bank meeting on Friday, according to a market source.

The $600 million five-year asset-based revolver is being talked at Libor plus 250 basis points, and the $700 million seven-year term loan B is being talked at Libor plus 350 bps with a 1.25% to 1.5% Libor floor and an original issue discount of 99, the source said.

The term loan B includes 101 soft call protection for one year.

J.P. Morgan, Morgan Stanley and Citigroup are the lead banks on the deal.

Covenants under the term loan include a maximum total adjusted leverage ratio, a minimum fixed-charge coverage ratio and maximum capital expenditures, while revolver covenants include a minimum fixed-charge coverage ratio and maximum capital expenditures.

Proceeds will be used to help fund the acquisition of RehabCare Group Inc., a St. Louis-based provider of physical rehabilitation services.

Under the terms of the agreement, each stockholder of RehabCare common stock will receive $26.00 per share in cash and 0.471 of a share of Kindred common stock. The equity for the transaction is around $228 million.

The transaction is valued at $1.3 billion, including $400 million of existing debt.

The adjusted leverage of the combined company is projected to be about 4.5 times at the end of 2011, roughly the same as Kindred's stand-alone adjusted leverage at the close of 2010.

Kindred expects the combined company to achieve operating synergies of $40 million within a period of two years following closing, with $25 million expected in the first year after closing.

Based on pro forma financial projections, revenues for the combined company are expected to be $6.2 billion for the year ending Dec. 31, 2011. Pro forma EBITDA of the combined company is expected to range from $470 million to $487 million.

Closing on the acquisition is expected on or about June 30, subject to approvals by the stockholders of both companies, completion of financing, clearance under the provisions of the Hart-Scott-Rodino Act of 1976 and the receipt of licensure and regulatory approvals.

Kindred Healthcare is a Louisville, Ky.-based health care services company.

© 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.