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Credit Suisse Leads $65MM Acquisition Financing to AAC Holdings for Proposed AdCare Buyout

October 10, 2017, 07:15 AM
Filed Under: Healthcare

AAC Holdings, Inc. announced it has secured a $65 million acquisition financing commitment from Credit Suisse Securities (USA) LLC in conjunction with a senior secured incremental term loan facility arranged by Credit Suisse Securities (USA) LLC, Deutsche Bank Securities, BMO Capital Markets Corp. and Whitney Bank (d/b/a  Hancock Bank) which was priced and allocated on September 22, 2017. Upon closing, this incremental term loan facility would be issued in connection with AAC's existing senior secured credit facility that closed in June 2017 (having a $210 million term facility and a $40 million revolving credit facility) and proceeds from the incremental term loan facility would be used to fund AAC's proposed acquisition of AdCare, Inc., which is anticipated to close in the first half of 2018.

AAC also announced that it increased its revolving credit facility under its existing senior secured credit facility by $15 million to $55 million. Proceeds from the increased revolving credit facility will be used for general corporate purposes.

The terms of the incremental term loan facility would be consistent with AAC's existing $210 million senior secured term loan facility that is scheduled to mature in June 2023 and bears interest at LIBOR plus 6.75%. The increased revolving credit facility is scheduled to mature in June 2022 and bears interest at LIBOR plus 6.00%.

On September 13, 2017, AAC announced a definitive agreement to acquire AdCare, Inc., its affiliates and associated real estate assets for total consideration of $85 million. The AdCare facilities being acquired include a 114-bed hospital for substance abuse treatment and five outpatients centers in Massachusetts and a 52-bed residential treatment center and two outpatient centers in Rhode Island. The acquisition will accelerate AAC's longstanding plan to diversify into government pay, leverage an existing outpatient and business development presence in New England and continue the expansion of its hospital strategy.

Michael Cartwright, Chairman and Chief Executive Officer of AAC Holdings, noted, "We are pleased with the solid execution and strong demand for the incremental term loan and increase in the revolver. It was important for us to secure the necessary financing well in advance of the anticipated closing in the first half of 2018. We look forward to moving ahead on our integration plans for AdCare."

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