Bloomberg News

Metropolitan Health Said to Propose Rates on Acquisition Loans

September 13, 2011

Sept. 13 (Bloomberg) -- Metropolitan Health Networks Inc., a health-care benefits manager, set the initial rate on $355 million of loans it’s seeking to help fund its acquisition of Continucare Corp., according to a person with knowledge of the transaction.

A $240 million first-lien term piece will pay 5.5 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the deal is private. Libor, a rate banks charge to lend to each other will have a 1.5 percent floor.

The company is proposing to sell the debt at 98.5 cents on the dollar, reducing proceeds for the company and boosting the yield to investors.

A $75 million second-lien portion will pay 11.75 percentage points more than Libor, the person said. The company is proposing to sell the second-lien slice at 98 cents on the dollar. The lending benchmark will have a 1.75 percent minimum.

GE Capital Markets, the lending unit of General Electric Co. and SunTrust Banks Inc. are arranging the deal for the Boca Raton, Florida-based company.

Revolving Credit Line

Metropolitan Health is also seeking a $40 million revolving line of credit that will pay 5 percentage points more than Libor and will a 1.5 percent minimum on the lending benchmark, the person said. The company is proposing to sell the revolver at 99 cents on the dollar.

Robert Sabo, chief financial officer of Metropolitan Health, didn’t respond to an e-mail seeking comment.

First-lien debt is repaid first in a bankruptcy or liquidation, second-lien debt is repaid next. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.

--Editors: Faris Khan, John Parry

To contact the reporter on this story: Michael Amato in New York at mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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