Apria's $410 million A-2 notes could follow on heels of A-1 issue

By Paul A. Harris

St. Louis, May 18 - Apria Healthcare Group Inc.'s $410 million of senior secured notes, series A-2, due 2014, could come to market soon after the announced $600 million series A-1 notes price, market sources say.

Whether the A-2 notes are offered depends upon demand, the sources add.

Apria's $600 million offering of senior secured notes, series A-1, due Nov. 1, 2014, were the subject of roadshow presentations beginning Thursday. That roadshow is expected to wrap up on Wednesday. An investor call for the A-1 notes took place on Monday.

Banc of America Securities LLC, Wachovia Securities LLC and Barclays Capital Inc. are joint bookrunners for the Rule 144A with registration rights notes. Scotia Capital is co-manager.

Securing the notes is a first-priority lien on substantially all tangible and intangible assets and capital stock and a second-priority lien on the ABL collateral. The series A-1 notes will have priority over series A-2 debt in certain circumstances, including any acceleration of obligations in default or bankruptcy.

Because of that language, a high-yield mutual fund manager considers the A-2 notes to be subordinated to the A-1 notes, even though they are officially described as "senior secured."

The A-2 notes did not come up during the Monday investor call, the fund manager added.

Moody's Investors Service assigns its Ba2 rating to the A-1 notes, while it rates the A-2 notes two notches lower at B1.

Proceeds will be used to refinance the bridge loan used to fund a leveraged buyout by the Blackstone Group. The loan was funded on Oct. 28, 2008.

Apria is a Lake Forest, Calif., home health care services company.

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