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Kindred Healthcare launches $1 billion term B at Libor plus 300 bps
By Sara Rosenberg
New York, March 12 - Kindred Healthcare Inc. launched on Wednesday its $1 billion senior secured seven-year term loan B with price talk of Libor plus 300 basis points with a 1% Libor floor and an original issue discount of 99½ to 993/4, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.
The term loan has 101 soft call protection for six months and amortization of 1% per annum.
Financial covenants include a maximum total adjusted leverage ratio of 5.75 times, a minimum consolidated fixed charge coverage ratio of 1.25 times and maximum capital expenditures of $300 million per annum.
The company's $1.75 billion credit facility also includes a $750 million five-year ABL revolver that has pricing of Libor plus 200 bps to 250 bps based on availability, a 37.5 bps undrawn fee and a 25 bps upfront fee.
Covenants in the revolver are a minimum consolidated fixed charge coverage ratio of 1.25 times and maximum capital expenditures of $300 million per annum.
Included in the term loan and the revolver is an incremental allowance of $100 million plus an unlimited amount up to 3.5 times secured leverage net of up to $100 million of cash.
Commitments for the term loan B are due on March 25, and commitments for the revolver are due on March 26.
J.P. Morgan Securities LLC is the lead bank on the deal.
Proceeds will be used to refinance existing secured debt and senior unsecured debt to improve the company's maturity profile, reduce interest expense and provide operational flexibility.
Other funds for the refinancing will come from other unsecured debt.
Closing is targeted for April 9.
Pro forma for the transaction, senior secured leverage will be 3.18 times and total leverage will be 4.58 times based on Dec. 31 adjusted EBITDA of $361 million.
Kindred Healthcare is a Louisville, Ky.-based health care services company.
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