Radiation Therapy in position for acquisitions after recent refinancing

By Paul Deckelman

New York, June 19 - Radiation Therapy Services Holdings, Inc.'s recent refinancing of its existing bank debt and revolving credit borrowings positions the growth-minded health care company financially to take advantage of potential acquisition opportunities, its chief financial officer said on Tuesday.

"Between the cash that we put on the balance sheet of about $25 million and the revolver that we put in place of $140 million, we have very significant capital, and we think it's a great time to be judicious, but to be pursuing very attractive acquisitions," CFO Bryan J. Carey told investors attending the Wells Fargo Securities 2012 Healthcare Conference in Boston.

Radiation Therapy, a Fort Meyers, Fla.-based provider of radiation oncology treatment to patients in the United States, Latin America and now, India, sold $350 million of new 8 7/8% senior secured second-lien notes due 2017 in April through its Radiation Therapy Services, Inc. unit, pricing the bonds at 99.527 to yield 9%. The deal was upsized from an originally shopped $335 million and priced on April 26.

Carey said, "We essentially took our existing bank and revolver borrowings and rolled those into a second-lien note," using the bond deal proceeds to fully pay off the existing revolver and term loan obligations.

In early May, the company entered into a new $140 million revolver due 2016, also through Radiation Therapy Services, Inc., initially pricing it at 550 basis points over Libor with a 100 bps unused fee. Pricing can range from Libor plus 500 bps to 575 bps and the unused fee can range from 50 bps to 100 bps, based on leverage, and there is a $10 million accordion feature.

According to a recent filing with the Securities and Exchange Commission, the company's balance sheet at the end of the first quarter on March 31 showed total debt of $704.762 million, up from $679.033 million at the end of 2011 and from $633.355 million at the end of the year-earlier quarter.

The company said that pro forma for the completion of all of the financing transactions, the company would have some $752.9 million of total debt outstanding and would have up to $140 million of additional borrowing available under the new revolver, excluding issued and undrawn letters of credit.

Radiation Therapy added: "Subject to the limits contained in the indenture governing the notes and our senior secured revolving credit facility, we may be able to incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes."

Carey told the attendees at the conference that following those transactions, "We end up with senior leverage of about 3 times [EBITDA], which we are very comfortable with because the acquisitions we see are sort of 4 times quickly going to 3 times. So it's got a real lot of runway, in terms of being able to continue to support the growth of the business.

"We're very pleased to have completed that [refinancing] in May."

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