Team Health hoping to close on $350 million credit facility late March

By Sara Rosenberg

New York, Feb. 26 - Team Health Inc. is hoping to close on its proposed $350 million credit facility by late March, a company spokesman told Prospect News Thursday. Bank of America and JPMorgan are the joint lead arrangers and joint bookrunners on the deal, with Bank of America also acting as administrative agent, JPMorgan also acting as syndication agent and Merrill Lynch acting as documentation agent.

The facility, which launched via a bank meeting on Wednesday, consists of a $100 million revolver with an initial interest rate of Libor plus 250 basis points and a $250 million term loan B with an interest rate of Libor plus 275 basis points, the source said.

According to the source, the bank meeting was "very well attended. Some of our existing relationship banks were in attendance and some people were on the phone. We're real pleased with the response that we're seeing in the market."

In addition to the proposed credit facility, the company is also looking to sell senior subordinated notes, with proceeds from these financing transactions to be used to refinance existing senior debt, help fund the tender offer of 12% senior subordinated notes that are callable at 108 and redeem preferred shares that carry a 10% PIK. Furthermore, the company is contemplating paying a cash dividend to shareholders.

The company opted to come to market now with these refinancing transactions since the bonds become callable on March 15 and the company is looking to lower its cost of capital, the source explained. "The preferred stock is a very expensive piece of financing. [And] pricing on the existing term loan B is a little higher than the new one - Libor plus 325 basis points," the source added.

Team Health is a Knoxville, Tenn., provider of outsourced physician services.

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