Prospect Medical shops $1.25 billion in first- and second-lien loans

By Sara Rosenberg

New York, Jan. 31 – Prospect Medical Holdings Inc. is seeking $1.25 billion in term loans, according to a market source.

JPMorgan is the lead bank on the deal.

The debt consists of a $1.05 billion six-year first-lien term loan (B1/B) talked at Libor plus 500 basis points to 525 bps with a 1% Libor floor and an original issue discount of 99, and a $200 million seven-year second-lien term loan (B3/CCC+) talked at Libor plus 900 bps to 925 bps with a 1% Libor floor and a discount of 98.5, the source said.

Included in the first-lien term loan is 101 soft call protection for six months, and the second-lien term loan has hard call protection of 102 in year one and 101 in year two.

Commitments are due on Feb. 12, the source added.

Proceeds will be used to refinance existing debt, reduce the underfunded pension liability and fund a dividend to shareholders.

Prospect Medical is a Los Angeles-based provider of health care and physician services.

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