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Fresenius gets commitment for $5 billion credit facility to fund Renal Care purchase
By Sara Rosenberg
New York, May 4 - Fresenius Medical Care AG has received a commitment for a new $5 billion senior credit facility to fund its all-debt financed acquisition of Renal Care Group Inc. for about $3.5 billion, plus the assumption of about $500 million of Renal debt. Bank of America and Deutsche Bank equally provided the loan commitment.
The facility, as committed, consists of a $1 billion revolving credit facility, a $1.5 billion five-year term loan A and a $2.5 billion seven-year term loan B, said Lawrence A. Rosen, Fresenius' chief financial officer, during a conference call Wednesday.
"It's a long ways off. Most likely it won't happen till at least the fall," a market source said regarding the launch of the proposed credit facility.
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 4x but the company hopes to bring that multiple down to 21/2x to 3x over the next two to three years, Rosen added in the call.
Fresenius has had preliminary talks with the rating agencies and expects its credit ratings to stay in the BB range. Officials declined to give out any more specifics on ratings during the conference call.
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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