Health Net gets new $600 million revolving credit facility due 2016

By Marisa Wong

Madison, Wis., Oct. 28 - Health Net, Inc. entered into a new $600 million revolving credit facility on Monday, according to an 8-K filed Friday with the Securities and Exchange Commission. The facility matures on Oct. 24, 2016 and replaces the company's existing $900 million five-year revolver due June 25, 2012.

The new facility includes a $400 million sublimit for standby letters of credit and a $50 million sublimit for swingline loans. The company may receive additional commitments totaling up to $200 million.

Amounts under the new facility will bear interest at either (a) the base rate, which is equal to the greatest of (i) the Federal Funds rate plus 50 basis points, (ii) Bank of America, NA's Prime rate and (iii) the eurodollar rate for a one-month interest period plus 100 bps, plus an applicable margin that is initially 87.5 bps or (b) the eurodollar rate plus an applicable margin, which is initially 187.5 bps. The applicable margins depend on the company's consolidated leverage ratio.

In addition, the company will pay a quarterly facility fee, which is initially 37.5 bps, times the actual daily amount of the total commitments under the facility, regardless of usage. The facility fee also depends on the company's consolidated leverage ratio.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners. Bank of America, NA is the administrative agent, swingline lender and letter-of-credit issuer. JPMorgan Chase Bank, NA and Wells Fargo Bank, NA are the co-syndication agents, and Sumitomo Mitsui Banking Corp. is the documentation agent.

Proceeds borrowed under the facility were used to refinance the company's existing credit facility and may be used for general corporate purposes, including acquisitions, restricted payments, capital expenditures and working capital.

Health Net is a Woodland Hills, Calif.-based health insurer.

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