Kindred Healthcare flexes $410 million term B to Libor plus 500 bps

By Sara Rosenberg

New York, June 21 – Kindred Healthcare Inc. increased pricing on its $410 million seven-year covenant-light term loan B (B3/B+) to Libor plus 500 basis points from talk in the range of Libor plus 425 bps to 450 bps, according to a market source.

Also, the original issue discount on the term loan was changed to 99 from 99.5 and the 101 soft call protection was extended to one year from six months, the source said.

The term loan still has a 0% Libor floor.

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 are the leads on the deal.

Along with the term loan, the company is getting a $450 million asset-based revolving credit 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., to 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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