Prime Healthcare Services, Inc.’s $700,000,000 Senior Secured Notes & $450,000,000 Senior Secured ABL Revolving Credit Facility
November 6, 2020
|KeyBanc Capital Markets (“KBCM”) acted as Joint Bookrunner on Prime Healthcare Services, Inc.’s (“Prime” or “PHSI”) $700 million Senior Secured Notes (the “Notes”) offering. Simultaneously, KeyBank N.A. acted as Documentation Agent on PHSI’s $450 million Senior Secured ABL Revolving Credit Facility.
Prime is the fifth largest “for profit” acute care provider in the U.S. by number of acute care hospitals that it owns, leases and/or manages. Prime delivers quality, cost-effective health care across its broad network of 46 hospitals in 14 states, including 31 facilities that it owns or leases and 15 facilities that it manages for Prime Healthcare Foundation (“PHF”), a private foundation affiliated with PHSI.
KBCM’s role as Joint Bookrunner on the transaction is a result of Cain Brothers’ long-term relationship with PHF in leading over $500 million of previous financing transactions, transaction-specific advice to PHSI, and KBCM’s support of PHSI’s new ABL Revolving Credit Facility. This transaction represents KBCM’s and Cain Brothers’ first high-yield bond offering with Prime and builds off a relationship that began in 2013.
Proceeds from the Notes, rated B2/B-/B from Moody’s, S&P, and Fitch, respectively, will be used to repay: all $278 million of outstanding indebtedness under Prime’s MPT Loan Agreements, a $115 million Term Loan Facility that was set to mature in January of 2021, a $20 million FILO Facility that was due in June of 2021, and to fund $268 million for general corporate purposes and $19 million of transaction fees and expenses. The deal was whispered at mid-7.00% and official price talk opened at 7.25%-7.50%. Through tenacious marketing efforts the transaction ultimately priced at the tight end of guidance for a coupon of 7.25%. Strong investor demand resulted in an order book that was 2.5x oversubscribed and allowed for the deal to be upsized by $90 million. Similarly, the ABL Revolver, which was originally launched at $400 million, was subsequently increased to $450 million amid robust investor demand.