West Penn Allegheny Health System in Pittsburgh is poised to refinance the massive, speculative-grade debt it took on when it was formed out of the remains of the 1998 bankruptcy of the Allegheny Health Education, Research Foundation.
The purpose of the transaction of approximately $700 million is to take advantage of the systems financial turnaround and current market conditions, said David Cyganowski, managing director and healthcare co-head for Citigroup, the senior manager of the deal. Officials anticipate the existing 9% debt will be refinanced to below 5%, he said.
The deal structure is being finalized, and ratings are expected soon, according to Cyganowski. The bonds will likely be priced in March or April, he said. Given the current favorable market conditions coupled with the progress the system has realized since its inception, we believe the timing of this initiative is most prudent, said Tom Chakurda, a West Penn Allegheny spokesman. Shattuck Hammond Partners is the financial adviser. -- by Cinda Becker