Renal Care Group to get $475 million credit facility for NNA acquisition

By Sara Rosenberg

New York, Feb. 2 - Renal Care Group Inc. plans to get a new $475 million credit facility to fund the acquisition of National Nephrology Associates Inc., a Nashville-based dialysis services provider, company officials said in a conference call Monday.

The credit facility will have a five-year term and will consist of a $325 million term loan and a $150 million revolver.

"Based upon the anticipated leverage at closing we expect the rate to be approximately Libor plus 150 basis points," company officials said in the call.

Besides financing the acquisition, the new facility will also "provide funds for de novo development, acquisitions, share repurchases and other general corporate purposes," officials added.

Under the acquisition agreement, Renal Care Group will make a cash payment of about $167 million to National Nephrology's equity holders and assume National Nephrology's outstanding debt, including its $160 million of 9% senior subordinated notes due 2011, and other debt, bringing the total transaction value to about $345 million. At this time the Renal Care Group does not plan to repay National Nephrology's senior subordinated notes but rather intends to leave them in place, officials said in the call.

Furthermore, the company announced Monday that due to the acquisition it is increasing some 2004 financial estimates.

"As a result of the acquisition of NNA, we are revising our previously announced financial objectives for 2004. We expect the acquired operations to add approximately $200 million to our 2004 revenues. We also estimate that the transaction will produce immediate accretion to our 2004 earnings of approximately $0.05 per share. As such, we expect that Renal Care Group will post full year 2004 revenues between $1.3 billion and $1.4 billion and full year net income between $2.45 and $2.55 per share," said David Dill, executive vice president and chief financial officer, in a company news release.

The transaction is expected to close by March 31.

Banc of America Securities LLC acted as financial adviser to Renal Care Group on this transaction.

Renal Care Group is a Nashville, Tenn., specialized dialysis services company.

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