Craegmoor refinancing defies debt crunch(4)

A UK provider of specialist long-term healthcare has completed its second refinancing since being acquired by Legal & General Ventures six years ago.

Craegmoor Healthcare has completed the refinancing of a whole business securitisation with a £255 million (€366 million; $516 million) bank facility arranged by Bank of Scotland. 

The refinancing allows Craegmoor to fully redeem all the outstanding notes of Craegmoor Funding No 2 Limited, a £245 million securitisation that was completed in November 2003. That package had enabled the company to pay down mezzanine and debt financing that supported Legal and General Ventures’ £200 million buyout of the business from a shareholder group led by Warburg Pincus in July 2001.

In a statement, Craegmoor said the latest refinancing provides it with “a strong capital base, substantially reduces its ongoing debt service obligations and provides it with the financial and operational flexibility to move to the next stage of its development”.

The statement listed a number of factors that had enabled the deal to go ahead “in spite of turbulent debt market conditions”. These included: strong and improving operating performance; a diversified and substantially freehold portfolio of 234 care homes; and attractive growth prospects in the long-term specialist care market (as well as its defensive nature and predictable cash flows).

The deal is the second refinancing of a European private equity-backed company to defy market conditions in the last couple of weeks. On 12 September, Aster, a Polish telecommunications company backed by Mid Europa Partners, completed a €415 million refinancing of senior, mezzanine and payment-in-kind facilities.