Fresenius sets Friday launch for $2 billion term loan B

By Sara Rosenberg

New York, Feb. 21 - Fresenius Medical Care AG has scheduled a bank meeting for Friday to launch its proposed $2 billion seven-year term loan B, according to a market source. Bank of America and Deutsche Bank are the lead banks on the deal, with Bank of America the left lead.

Proceeds from the $2 billion term loan B, along with proceeds from $3 billion in pro rata bank debt that was already syndicated last year, will be used to finance the acquisition of Renal Care Group Inc. for about $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.

In June 2005, Fresenius came to market with its $3 billion in pro rata debt consisting of a $1 billion revolver and a $2 billion five-year term loan A, with both tranches priced initially at Libor plus 137.5 basis points.

Originally, the term loan A was sized at $1.5 billion, but during the 2005 syndication process, the company shifted $500 million out of its not-yet-launched term loan B and into its term loan A.

In addition, during the pro rata syndication, pricing on both the revolver and the term loan A was reverse flexed from original price talk at launch of Libor plus 150 basis points.

Fresenius' acquisition of Renal Care has been under regulatory scrutiny since 2005 as the Federal Trade Commission has been making requests for additional information on the transaction.

Just last week, however, Fresenius and Renal Care announced that they have signed a definitive agreement to sell approximately 100 dialysis clinics to National Renal Institutes Inc. in connection with the FTC's review of the merger.

The divestiture of the clinics was labeled by the companies as an important step toward concluding the FTC's review of the transaction.

The merger is now targeted for completion on or before March 31, subject to meeting all closing conditions including final approval by the FTC.

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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