Daily News: December 23, 2013

HFG Closes $475MM Financing for Prime Healthcare

Healthcare Finance Group said it acted as sole lead arranger of the $475 million financing transaction for Prime Healthcare Services.

Prime Healthcare, headquartered in Ontario, CA, is one of the largest healthcare systems in the U.S. with hospital operations in California, Nevada, Texas, Kansas and Pennsylvania. HFG has been a lender to Prime Healthcare for more than seven years and agented a five-year $175 million asset-based revolving facility for Prime Healthcare in 2012.

HFG, a portfolio company of Fifth Street Finance, closed the five-year, $475 million financing for Prime Healthcare that is comprised of a $225 million asset-based revolving facility and a $250 million senior secured term loan (a portion of which is to be available at a later stage). The term loan will be utilized to complete certain targeted acquisitions by Prime Healthcare and is fully secured by the real estate of the targeted acquisitions as well as by a variety of other collateral of Prime Healthcare. HFG was the sole lead arranger of a large lender group and underwrote a substantial part of the transaction. Other financial institutions that participated in the transaction include Sumitomo Mitsui Banking Corporation as co-arranger, and Siemens Financial Services, Inc. and City National Bank as co-syndication agents.

Dr. Prem Reddy, Chairman, president and CEO of Prime Healthcare, commented, “This transaction is a significant step in furthering our ability to continue to execute a growth strategy of turning around underperforming but essential community hospitals in various regions of the country. HFG was able to explain our unique model to a broad lender group and navigate the different lender interests flawlessly.”

Michael Sarian, president of Hospital Operations for Prime Healthcare, said, “We continue to have a great relationship with the entire HFG team, and want to particularly express our thanks to Jim Gelwicks who directed all of the capital markets activities and to the HFG portfolio management group who have provided us excellent customer service over the years. With the closing of this transaction, Prime Healthcare is now poised to take the next step in its growth and development strategies.”

Jim Gelwicks, head of Capital Markets and Business Development for HFG, added that, “We are delighted to have been able to execute this financing for our long-standing client. The transaction is a great example of blending the benefits of a large asset-based revolver and a term loan. The asset-based revolving facility enables Prime Healthcare to lower its borrowing costs while funding capital expenditures and working capital, and the term loan will be utilized to acquire new hospitals. This is a perfect example of the use of the bifurcated structure in a larger capital markets context and we are pleased that we were able to attract strong lender interest in this transaction.”