Continental Completes HCR Financing

Continental Bank has wrapped up a $225 million financing for Health Care and Retirement Corp. by privately placing $100 million of senior notes with institutional investors.

The 10-year notes are pari passu - of equal standing - with the bank loans that make up the other portion of the financing for HCR, an Owens-Illinois Inc. subsidiary that is being spun off through an initial public offering of stock.

Initially, the entire $225 million financing was in the form of a bank credit underwritten by Continental in August.

As reported, Continental signed up three coagents in September, and planned to syndicate the loan package this month.

"We were comfortable doing an all-bank deal," a Continental official said.

Fixed Rate of 9.48%

However, the private placement market provided an alternate way of reducing the bank's underwriting exposure, while providing the borrower with longer-term financing at a fixed rate of 9.48%.

The floating-rate bank loans are priced at 1 1/2% over the London interbank offered rate, which currently hovers around 5 1/2%.

Joining Continental in the credit last month as coagents were NCNB Corp., Toronto-Dominion Bank, and Bank of Montreal, each committing $50 million. Long Term Credit Bank of Japan later committed $15 million.

The senior notes, which are considered investment grade, were placed mainly with insurance companies.

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