PSI to get $550 million of funded debt for Ardent facilities purchase

By Sara Rosenberg

New York, March 11 - Psychiatric Solutions Inc. (PSI) plans to get $550 million in funded debt, including some bank loan borrowings, to help fund its acquisition of 20 inpatient psychiatric facilities from Ardent Health Services, according to a market source.

The purchase price for the facilities is $560 million, of which $500 million is to be paid in cash and $60 million in PSI common stock.

Citigroup has committed to provide the financing for the cash portion of the deal and will be the lead bank on the new credit facility, the source said.

Although the details of the debt financing package are not being revealed at this time, the company did say in a conference call on Friday that it holds the point of view that not more than 50% of its debt should be floating, so it will be conservative as to how it structures the debt.

In addition to funding the acquisition, the new debt and the new equity will be used to repay about $30 million of existing revolving credit facility debt and to pay $20 million in fees and expenses.

The company also plans to get an amended revolver that will be undrawn at closing, according to slides shown during the company presentation.

Pro forma for the acquisition, total debt to EBITDA is expected to be 5.7x and last-12-months adjusted EBITDA is expected to be $118.3 million.

However, leverage is expected to come down about a turn a year through EBITDA growth, officials said in the call.

Closing of the acquisition, which the company hopes will occur in early May, is subject to customary closing conditions, including receipt of regulatory approvals. Based on the existing indentures, the company does not anticipate needing bondholder consents for the transaction.

Psychiatric Solutions is a Franklin, Tenn., provider of in-patient behavioral health care services.

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