DaVita sets Thursday launch for $3.15 billion credit facility

By Sara Rosenberg

New York, May 2 - DaVita Inc. has scheduled a bank meeting for Thursday to launch its proposed $3.15 billion credit facility (BB-), according to a market source.

JPMorgan is the sole bookrunner on the deal, and Credit Suisse First Boston is involved in the transaction as well.

The facility consists of a $250 million six-year revolver, a $250 million six-year term loan A and a $2.65 billion seven-year term loan B, the source said.

Proceeds from the credit facility along with proceeds from an already completed $1.35 billion bond offering will be used to help fund the $3.05 billion cash acquisition of Gambro Healthcare's U.S. assets and to refinance debt.

The two tranche bond deal priced in March. The offering included $500 million of eight-year senior notes (B2/B) priced at par to yield 6 5/8% and $850 million of 10-year senior subordinated notes (B3/B) priced at par to yield 7¼%.

Net proceeds from the bond offering along with available cash were already used by the company to repay all outstanding amounts under the term loan portions of its existing credit facilities, including accrued interest.

Following the acquisition, the company's leverage ratio will be in the 5x to 5.2x EBITDA range, but DaVita hopes to reduce that ratio to around 3x to 3.5x in the next three to four years using anticipated strong cash flows.

Completion of the acquisition is subject to customary closing conditions including Hart-Scott-Rodino antitrust clearance.

On Feb. 18, DaVita received a request from the Federal Trade Commission for additional information regarding the acquisition. The company continues to be involved in talks with the FTC, and although no agreement has yet been reached, based on discussions, DaVita expects that it will be required to divest about 5% of the combined number of Gambro Healthcare and DaVita centers, which represents the same percentage of the combined revenues.

DaVita is an El Segundo, Calif., provider of dialysis services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.