CBay unit secures $225 million term, revolver at Libor plus 550 bps

By Susanna Moon

Chicago, Oct. 1 - CBaySystems Holdings Ltd. said its 69.5%-owned subsidiary MedQuist Inc. entered into a $225 million senior secured credit facility as part of a $310 million financing.

The facility consists of a $200 million term loan and a $25 million revolving credit facility with an interest rate of Libor plus 550 basis points and a Libor floor of 1.75%. The revolver bears a fee of 50 bps on undrawn amounts.

Proceeds will be used to help refinance the debt incurred by MedQuist in connection with its April acquisition of the assets of Spheris, Inc. and to pay a one-time special cash dividend of $4.70 per share to all MedQuist shareholders of record as of Oct. 11.

CBay said it intends to use its share of the dividend proceeds to repay outstanding CBay debt, including the convertible senior PIK notes due 2015 held by Koninklijke Philips Electronics.

The loan is expected to close on Oct. 15.

As part of the $310 million financing, MedQuist also will issue $85 million of 13% senior subordinated notes due 2016, with some of the interest to be payable in kind at MedQuist's option.

CBay has agreed to guarantee MedQuist's obligations under the credit facility and the notes.

General Electric Capital Corp. is administrative agent, and SunTrust Bank is syndication agent.

CBay provides technology-enabled clinical documentation services and related revenue cycle services for the health care industry with operations in the United States of America and India. The company is based in Annapolis, Virgin Islands.

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