Gentiva Loan Pushed Back Amid Soft Demand, SEC Probe
21 Julio 2010 - 6:47PM
Noticias Dow Jones
If Gentiva Health Services (GTIV) wants to secure the $600
million it needs to buy Odyssey Healthcare (ODSY), it may have to
give lenders better terms or more money.
The banks arranging Gentiva's loan have postponed closing the
deal until at least next week, according to people familiar with
the transaction. That suggests they're reworking the terms with
investors who were already skittish, the people said.
Last week, Gentiva said it had received a notice from the SEC
requiring it to preserve documents, an indication it could be
included in an investigation into whether health-care companies
pushed patients into extra home-healthcare visits to secure more in
reimbursements from a government program.
Potential buyers into the loan said as early as last week they
were nervous about committing to the deal, wanting to wait and see
how the investigation might affect their investment.
Then, in another blow, the Centers for Medicare and Medicaid
Services said Monday it would cut home health-care payments
industrywide by $900 million, potentially affecting Gentiva's
future earnings.
By the time Gentiva executives told investors Wednesday that the
company was cutting its earnings forecast for this year, some
lenders were already deciding they'd pass on the loan.
Several portfolio managers at large leveraged-loan funds said
they were no longer considering the deal, saying there were other
health-care loans to buy from companies with fewer
complications.
The original facility comprised a $125 million revolving loan
and a $200 million term loan marketed to banks, plus a $600 million
term loan marketed to a wider investor pool. That deal was expected
to price at 450 to 475 basis points over the London interbank
offered rate, which tracks the amount banks charge one another to
borrow, with a 1.75% minimum Libor rate. Initial investors in the
deal would also be granted a discount of two cents on the dollar,
in what's referred to as the original issue discount, or OID.
Bank of America Merrill Lynch, Barclays Capital, GE Capital and
SunTrust are running the deal.
Considering the doubt surrounding the company and other options
for investors, market participants said Gentiva's banks will have
to tack on more yield to close the deal.
InVentiv Health Inc., which is undergoing a buyout by private
equity firm Thomas H. Lee Partners, is selling its $525 million
term loan at 500 basis points over Libor and a two-cent OID. That
deal is expected to close early Thursday.
And several other deals on the loan market's forward calendar
are selling at higher yields than Gentiva's offering, according to
KDP Investment Advisors.
Regardless of pricing, Gentiva needs the loan--it can't back out
of the deal to buy Odyssey, according to the agreement. And banks
have already committed to fund the revolver and smaller term loan
portion of the facility.
The company has been telling investors it's not worried about
securing the funds, several said. But, they pointed out, the
company can't exactly afford to show weakness in the face of
lenders turning their backs on the loan.
Representatives of the banks running the deal couldn't be
reached for comment, nor could executives at Gentiva.
-By Katherine Greene, Dow Jones Newswires; 212-416-2984;
katherine.greene@dowjones.com
Odyssey Healthcare (MM) (NASDAQ:ODSY)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Odyssey Healthcare (MM) (NASDAQ:ODSY)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024