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Rotech Healthcare to sell $300 million 10-year notes to fund exit from Chapter 11
By Paul A. Harris
St. Louis, Mo., March 1 - Rotech Healthcare, Inc.will sell $300 million senior subordinated notes due 2012 (B2/B+) via joint bookrunners UBS Warburg and Goldman Sachs & Co. to help fund the company's exit from Chapter 11, according to a syndicate source.
The roadshow for Rotech starts Tuesday. Pricing is expected to take place March 14.
"The company was a part of Integrated Health Services," the source commented. "That company went into bankruptcy. Now they're spinning the Rotech portion of it off and they're financing it with this issue."
On February 2, 2000, Integrated Health Services (IHS) and substantially all of its subsidiaries filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code at the U.S. Bankruptcy Court for the District of Delaware.
IHS joined Vencor, Sun Healthcare Group and Mariner Post-Acute Network, each of which filed for bankruptcy in within months of one another - and each blaming its financial failings on Medicare payment cuts to skilled-nursing facilities. The cuts stemmed from financial pressure created by the Balanced Budget Act of 1997 and its implementation. Among other things, the legislation changed Medicare reimbursement for nursing facilities from a cost-based retrospective reimbursement system to a prospective payment system.
Rotech's new Rule 144A senior subordinated notes are non-callable for five years, and contain an equity clawback of up to 35% for three years.
The company also announced a $275 million senior credit facility due 2008 (Ba2/BB). The loan will also led by UBS Warburg and Goldman Sachs, according to a syndicate source.
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