Sun Healthcare sets Wednesday launch for $285 million credit facility

By Sara Rosenberg

New York, Sept. 27 - Sun Healthcare Group Inc. has scheduled a bank meeting for Wednesday to launch its proposed $285 million credit facility, according to a market source.

Credit Suisse, JPMorgan and RBC are the lead banks on the deal.

The facility consists of a $60 million revolver and a $225 million term loan, of which $75 million will cash collateralize letters of credit, the source said.

Price talk on the term loan is Libor plus 475 basis points with a 1.75% Libor floor and an original issue discount of 981/2, the source continued.

Proceeds from the new debt will be used to help repay the company's 9 1/8% senior subordinated notes and outstanding term loans, and for general corporate purposes.

The deal is being done in connection with the company's separation into two publicly traded companies.

The first company will be new Sun, a provider of nursing, rehabilitative and related specialty health care services, and manager of rehabilitation therapy, medical staffing services and hospice businesses.

The second company will be Sabra Health Care REIT Inc., an owner of substantially all of Sun's currently owned real property portfolio and intends to operate as a real estate investment trust.

Sabra's capital structure is expected to include a new $100 million secured revolver and new notes in the amount of $225 million.

The separation will be done through a distribution to Sun stockholders of the common stock of the new Sun Healthcare Group and is expected to be completed in the fourth quarter, subject to regulatory, stockholder, final board and other approvals.

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