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Jan. 20 (Bloomberg) -- Community Health Systems Inc., the second-largest U.S. hospital chain, is seeking to extend $2 billion of a $4.5 billion term loan to January 2017 from July 2014, according to a person with knowledge of the transaction.
The debt will pay interest at 3.5 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private. Lenders will also be paid a 12.5 basis point fee to agree to the extension, the person said. A basis point is 0.01 percentage point.
Credit Suisse Group AG is arranging the financing for the Franklin, Tennessee-based company and is asking lenders to respond by Jan. 25 at 5 p.m. in New York.
The proposed amendment will allow Community Health to replace its existing $750 million revolving line of credit that is currently due to expire in July 2013, the person said. As of Sept. 30 the company had no borrowings outstanding under the facility that pays interest at 2.25 percentage points more than Libor, according to data compiled by Bloomberg.
Lenders are also being asked to increase the company’s ability to borrow additional funds to as much as $1.75 billion from $1 billion by issuing a new term loan A, the person said. Proceeds of such borrowings will be used to refinance debt.
Larry Cash, chief financial officer of Community Health, didn’t respond to an e-mail seeking comment.
A term loan A is sold primarily to banks, while so-called B loans are mainly bought by non-bank lenders such as collateralized loan obligations, mutual funds and hedge funds. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.
--Editors: Faris Khan, Alan Goldstein
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