Fresenius holds U.S. bank meeting to launch $2.5 billion of pro rata debt

By Sara Rosenberg

New York, June 27 - Fresenius Medical Care AG held a U.S. bank meeting to launch the $2.5 billion pro rata portion of its $5 billion senior credit facility, according to a market source.

A bank meeting in Germany to launch the deal took place Thursday.

As was previously reported, the pro rata piece consists of a $1 billion revolving credit facility and a $1.5 billion five-year term loan A, with both tranches talked at Libor plus 150 basis points.

Fresenius' proposed $2.5 billion seven-year term loan B is not expected to launch until fall.

Bank of America and Deutsche Bank are the lead banks on the deal, with Bank of America the left lead.

Proceeds from the $5 billion credit facility will be used to finance the acquisition of Renal Care Group Inc. for $3.5 billion, plus the assumption of about $500 million of Renal debt.

In addition to funding the acquisition, Fresenius will also use the new loan to replace its existing $1.2 billion credit agreement.

At closing, debt to EBITDA will be a little over 4 times, but the company hopes to lower it to 2½ to 3 times during the next two to three years.

Under the acquisition agreement, Fresenius will pay $48.00 per Renal share in cash. The transaction, which is expected to close in the second half of the year, is subject to Renal Care shareholder approval and other customary closing conditions, including Hart-Scott Rodino.

Fresenius is a Bad Homburg, Germany-based dialysis products and services provider. Renal Care is a Nashville, Tenn.-based dialysis service provider.

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