Kindred Healthcare to launch $410 million term loan B on Tuesday

By Sara Rosenberg

New York, June 1 – Kindred Healthcare Inc. is set to hold a bank meeting at 9:30 a.m. ET on Tuesday to launch its $410 million seven-year term loan B, according to a market source.

J.P. Morgan Securities LLC, Morgan Stanley Senior Funding Inc., Citigroup Global Markets Inc., Goldman Sachs Bank USA, Bank of America Merrill Lynch, Capital One, RBC Capital Markets and Wells Fargo Securities LLC provided the commitment.

The term loan B is talked at Libor plus 425 basis points to 450 bps with a 0% Libor floor and an original issue discount of 99.5, the source said.

Included in the term loan is 101 soft call protection for six months.

Commitments are due at noon ET on June 19, the source added.

Based on filings with the Securities and Exchange Commission, the company is also expected to get a $450 million asset-based loan facility.

Proceeds will be used with $1.94 billion in equity to help fund the buyout of Kindred by TPG Capital, Welsh, Carson, Anderson & Stowe (WCAS) and Humana Inc., refinance Kindred’s existing credit facilities and senior notes and for working capital and general corporate purposes.

Under the agreement, Kindred stockholders will receive $9 in cash for each share of common stock they hold. The purchase price is about $4.1 billion in cash including the assumption or repayment of net debt.

Immediately following the buyout, Kindred’s long term acute care hospitals, inpatient rehabilitation hospitals and contract rehabilitation services businesses will be operated as a separate specialty hospital company owned by TPG and WCAS (Kindred Healthcare).

The home health, hospice and community care businesses (Kindred At Home) will be separated from Kindred and operated as a stand-alone company owned 40% by Humana, with the remaining 60% owned by TPG and WCAS.

Closing is expected this summer, subject to the approval by the stockholders of Kindred, the receipt of some licensure and regulatory approvals, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and other customary conditions.

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

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