BankAmerica, Citicorp Lead $1.5B Credit for Health Firm

Foundation Health Systems Inc. has established a $1.5 billion secured revolving line of credit.

BankAmerica Corp. and Citicorp are leading the loan, while Chase Manhattan Corp., Dai-Ichi Kangyo Bank, Industrial Bank of Japan, and NationsBank Corp. are co-managing agents.

Credit Lyonnais, Sumitomo Bank Ltd., and the Union Bank of California unit of Bank of Tokyo-Mitsubishi Ltd. are co-agents.

Under terms of the five-year credit facility, Foundation Health, the fourth-largest managed health care company in the United States, will pay interest at a variable rate linked to the London interbank offered rate.

The company was created by the April merger between Foundation Health Corp. and Health Systems International Inc.

This credit facility replaces Health Systems' $700 million credit line and Foundation Health's $200 million and $300 million lines.

BankAmerica, Industrial Bank of Japan, and Citicorp led the lending syndicate for the earlier Health Systems credit line.

Lehman Brothers is leading a $450 million leveraged loan for Capstar Hotel Co., a management and investment corporation.

The loan will refinance existing credit lines and increase the company's borrowing capacity by $225 million. It will be used to fund hotel acquisitions and for general corporate purposes, according to Washington- based Capstar.

Bankers Trust New York Corp. is administrative agent on the loan, with BankBoston Corp. as documentation agent and Wells Fargo Bank as co- arranger.

The new credit facilities are structured as a five-year, $350 million revolving loan and a seven-year, $100 million term loan. Pricing on the revolver starts at the London interbank offered rate plus 200 basis points, with a 25-basis-point commitment fee, and on the term portion at Libor plus 212.5 basis points, according to Loan Pricing Corp.

Since its August 1996 initial public offering, managed by Lehman, Capstar has acquired or placed under purchase agreement 24 hotels, tripling its ownership portfolio.

- Compiled by Mahua Dutta and Omri Ben-Amos

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