HCA gains on amend and extend; Community Health retreats; Sourcecorp, TriZetto tweak deals

By Sara Rosenberg

New York, April 18 - HCA Inc.'s term loan A-1 headed higher during Monday's trading session on news of an amendment and extension proposal, and Community Health Systems Inc.'s bank debt softened with word of a subpoena and a revised offer price for Tenet Healthcare Corp.

Over in the primary market, Sourcecorp Inc. increased the spread on its second-lien term loan on the back of last week's first-lien term loan pricing flex, and TriZetto Group Inc. firmed pricing on its term loan at the wide end of talk and added call protection.

Also, Hillman Group Inc.'s repricing and amendment has been getting a favorable response from investors ahead of its commitment deadline, and Asset Acceptance Capital Corp. and Ameritox Ltd. emerged with new deal plans.

HCA A-1 trades up

HCA's term loan A-1 was stronger and its term loan B-1 was flat to better on Monday after the company launched an amendment and extension proposal to lenders in the morning, according to traders.

One trader had the term loan A-1 quoted at 99¾ bid, par 1/8 offered, up from 99½ bid, 99¾ offered, and the term loan B-1 quoted at 99¾ bid, par 1/8 offered, up from 99 5/8 bid, 99 7/8 offered. He also had the term loan B-2 unchanged on the day at par ¼ bid, par ½ offered.

Meanwhile, a second trader has the term loan A-1 quoted at 99 7/8 bid, par 1/8 offered, up from 99¾ bid, par offered, the term loan B-1 quoted at par bid, par ¼ offered, flat from previous levels, and the term loan B-2 quoted at par 1/8 bid, par 3/8 offered, down from par 3/8 bid, par 5/8 offered.

Under the amendment, the company is asking to extend the A-1 to May 2016 from November 2012 through the creation of a new term loan A-2 and to extend the B-1 to May 2018 from November 2013 through the creation of a new term loan B-3.

HCA extended pricing

Pricing on the new A-2 tranche would be Libor plus 250 basis points, compared to Libor plus 125 bps on the existing term loan A-1, and pricing on the new B-3 loan would be Libor plus 325 bps, compared to Libor plus 225 bps on the B-1, a source said.

Lenders under the term loan A-1 are being offered the option to roll their commitments into the new term loan A-2 or the term loan B-3, while lenders under the B-1 are only being offered the B-3 tranche.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the lead banks on the deal and are asking for commitments by April 27.

HCA is a Nashville-based hospital and health care services company.

Community Health slides

Community Health Systems' extended and non-extended strip of debt weakened as the company revealed that it received a subpoena from the U.S. Department of Health and Human Services, Office of the Inspector General, and that it modified its offer price for Tenet, according to traders.

One trader had the extended strip at 98 7/8 bid, 99¼ offered, down from 99 1/8 bid, 99 3/8 offered, and the non-extended strip at 97 7/8 bid, 98¼ offered, down from 98 bid, 98 3/8 offered, while a second trader had the non-extended strip at 97¾ bid, 98 1/8 offered, down from 98 bid, 98 3/8 offered.

In an 8-K filed with the Securities and Exchange Commission late Friday, the company said that the subpoena received is part of an investigation of possible improper claims submitted to Medicare and Medicaid.

The company also disclosed that the subpoena requests documents from all of its hospitals and appears to concern emergency department processes and procedures, and it requests other information about relationships with emergency department physicians, including financial arrangements.

Community Health revises

Also on Monday, Community Health announced that it is now offering $6 per share in cash to acquire all outstanding shares of Tenet Healthcare, instead of $5 per share in cash and $1 per share in common stock.

The first offer for Tenet was made in a letter to Tenet's board of directors on Nov. 12 and rejected on Dec. 6. On Dec. 20, Community Health announced its intention to nominate directors for election at the 2011 annual meeting of Tenet. Tenet's entire board is up for reelection this year.

Then, on April 11, Tenet said that it was suing Community Health over allegations of overbilling Medicare and likely other payers as well by causing patients to be admitted to its hospitals unnecessarily when these patients should have been treated in outpatient observation status.

Tenet said it discovered the alleged overbilling as a result of due diligence conducted while evaluating Community Health's buyout proposal and that the implications are that Community Health's stock is worth less than stated and the ability to finance the cash portion of the offer may be impaired.

Company rebuffs allegations

When the lawsuit was announced, Community Health said that the allegations were without merit and that both Credit Suisse and Goldman Sachs reaffirmed their confidence in financing the transaction.

And with the new buyout offer, Wayne T. Smith, chairman, president and chief executive officer of Community Health, said in a news release: "Converting our offer to all cash underscores our commitment to completing this transaction and renders Tenet's irresponsible and inaccurate lawsuit irrelevant to our offer. We are confident that our business practices are appropriate and we will respond in detail to Tenet's claims in due course."

In response, Tenet said that its board of directors will review the revised proposal to determine the course of action that it believes is in the best interests of the company and its shareholders.

Community Health is a Franklin, Tenn.-based hospital company. Tenet is a Dallas-based health care services company.

Sourcecorp ups pricing

Moving to the primary, Sourcecorp raised pricing on its $200 million eight-year second-lien term loan (Caa2) to Libor plus 900 bps from Libor plus 800 bps, while leaving the 1.25% Libor floor and call protection of 102 in year one and 101 in year two intact, according to a market source.

The company's $625 million credit facility also includes a $75 million revolver (B1) and a $350 million seven-year first-lien term loan (B1).

As was previously reported, price talk on the company's first-lien term loan (B1) had already been flexed up at the end of last week to Libor plus 500 bps from Libor plus 425 bps. This tranche continues to have a 1.25% Libor floor and original issue discount of 991/2.

The commitment deadline is still set for Thursday.

Sourcecorp lead banks

UBS Securities LLC, Credit Suisse Securities (USA) LLC and Jefferies & Co. are the lead banks on Sourcecorp's credit facility.

Proceeds will be used to help fund the company's merger with HOV Services Inc., after which shareholders of Sourcecorp and HOV will each control and receive 50% ownership of the combined company.

Closing is subject to customary conditions, including expiration of the antitrust waiting period.

Sourcecorp, a portfolio company of Apollo Management, is a Dallas-based provider of business process outsourcing and consulting services. HOV is a Troy, Mich.-based end-to-end business process outsourcing company.

TriZetto firms spread

Pricing on TriZetto's $650 million seven-year covenant-light term loan is now set at Libor plus 350 bps, the high end of the Libor plus 325 bps to 350 bps talk, while the 1.25% Libor floor and original issue discount of 99½ were left unchanged, according to a market source.

The term loan also saw the addition of 101 soft call protection for one year, the source said.

The company's $750 million credit facility (B1/B) also includes a $100 million five-year revolver that is being talked at Libor plus 325 bps with a 62.5 bps undrawn fee and upfront fees of 50 bps to 75 bps.

Commitments continue to be due on Wednesday.

RBC Capital Markets LLC is the lead bank on the deal that will be used to refinance existing debt.

TriZetto is a Greenwood Village, Colo.-based health care information technology company to the health care payer industry.

Hillman going well

Hillman Group's $290 million term loan B repricing and credit facility amendment was "in very good shape" at initial terms ahead of the 5 p.m. ET Monday commitment/consent deadline, a market source told Prospect News.

Under the proposal, the company is looking to lower pricing on its term loan B to Libor plus 350 bps with a 1.5% Libor floor from Libor plus 375 bps with a 1.75% Libor floor.

The repriced loan is being offered at par, whereas, when the deal was first sold in 2010 for a buyout by Oak Hill Capital Partners, it was done at a discount of 991/2.

Furthermore, the repriced loan will have 101 soft call protection for one year, compared to the current deal that has no call protection.

Hillman amendment details

On top of the repricing, Hillman is looking to amend its credit facility to eliminate the total leverage and interest coverage ratios and to reset the senior secured leverage ratio at 4.75 times with no step-downs. Currently, the senior secured leverage ratio is 4.0 times with step-downs.

Also, revolver drawings will be subject to a 4.0 times senior secured leverage ratio covenant, and the amendment would revise the acquisition basket, the accordion feature and the company's ability to incur unsecured debt to give more flexibility to do acquisitions and finance those acquisitions with debt.

There is no amendment fee being offered.

Barclays Capital Inc., Morgan Stanley & Co. Inc. and GE Capital Markets are the lead banks on the deal.

Hillman is a Cincinnati-based distributor of fasteners, key duplication systems, engraved tags and related hardware items.

Asset Acceptance sets launch

In more primary happenings, Asset Acceptance Capital has scheduled a meeting for Wednesday to launch a new credit facility that is being led by J.P. Morgan Securities LLC, according to a market source.

Proceeds will be used to refinance the company's existing credit facility that includes a $100 million revolver due June 5, 2012 and a term loan due June 5, 2013, which, as of Dec. 31, had a balance of $133.4 million outstanding.

Asset Acceptance is a Warren. Mich.-based purchaser and collector of defaulted or charged-off accounts receivable portfolios from consumer credit originators.

Ameritox coming soon

Ameritox is also set to hold a meeting on Wednesday, with its deal sized at $450 million, consisting of a $25 million revolver and a $425 million term loan B, according to a market source.

J.P. Morgan Securities LLC is the lead bank on the facility.

Proceeds will be used to refinance existing debt and fund a dividend payment.

Ameritox is a Baltimore-based provider of laboratory testing and proprietary methods of analysis.

Bally closes

Bally Technologies Inc. closed on its $700 million five-year amended and restated senior secured credit facility (NA/NA/BBB-) that consists of a $300 million term loan A and a $400 million revolver, according to an 8-K filed with the SEC on Monday.

Pricing on the facility ranges from Libor plus 100 bps to 200 bps based on leverage.

Bank of America Merrill Lynch, Wells Fargo Securities LLC and Union Bank acted as the lead banks on the deal that is being used to refinance an existing credit facility, to fund a Dutch Auction tender offer for up to $400 million of common stock and for general corporate purposes.

Bally Technologies is a Las Vegas-based designer, manufacturer, operator and distributor of advanced gaming devices, systems and server-based technology products.

© 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.