CRC Health sets first- and second-lien term loan talk with launch

By Sara Rosenberg

New York, March 14 - CRC Health Corp. released price talk on its $475 million seven-year first-lien covenant-light term loan and $300 million 71/2-year second-lien covenant-light term loan with its bank meeting on Friday, according to market sources.

The first-lien term loan is talked at Libor plus 375 basis points to 400 bps with a 1% Libor floor and an original issue discount of 991/2, and the second-lien term loan is talked at Libor plus 725 bps with a 1% Libor floor and a discount of 99, sources said.

Included in the first-lien term loan is 101 soft call protection for six months and amortization of 1% per annum, and the second-lien term loan has hard call protection of 102 in year one and 101 in year two and no amortization.

The company's $840 million credit facility also provides for a $65 million five-year revolver that has a net first-lien springing leverage covenant.

There's an accordion of $100 million plus certain prepayments and commitment reductions with respect to the facilities, plus additional first-lien amounts subject to 4 times net first-lien leverage and additional second-lien amounts subject to 6.5 times net secured leverage. The accordion is subject to 50 bps MFN with an 18-month sunset provision.

Permitted change of control in the credit agreement will allow for sale of the business to a new sponsor, or a portfolio company or a corporate purchaser engaged in substantially similar business, within 24 months after the closing date subject to net first-lien OpCo leverage of 4 times and total OpCo leverage of 6.5 times, minimum equity contribution of 25%, and minimum sponsor AUM of $1 billion, sources continued.

Commitments are due at 5 p.m. ET on March 25.

Allocations are targeted for March 27, and closing is expected on March 28, sources added.

Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC are the lead arrangers on the deal, with Citi the left lead on the first-lien debt and Credit Suisse the left lead on the second-lien debt.

Proceeds will be used to refinance existing debt.

In a news release, the company said it plans to refinance all of the outstanding debt under its existing senior secured credit agreement and senior subordinated bonds and to retire a portion of its parent company debt.

CRC is a Cupertino, Calif.-based operator of addiction recovery centers.

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