NU Online News Service, Jan. 23, 1:33 p.m. – PlanVista Corp., Tampa, Fla., has agreed to cut its debt load by negotiating a deal that uses control of the company as collateral.
PlanVista, a company that rents provider networks to health plans, says it will use common stock to pay off $5 million in debt, and convertible preferred stock to pay off $29 million in bank debt.
The preferred shares will pay a 10% annual dividend for the first year after the deal closing, and the equivalent of a 12% annual dividend for the next six months.
The banks that hold the preferred stock will also get three seats on the seven-seat PlanVista board.
If PlanVista misses quarterly performance benchmarks, defaults on its remaining debt payments, or fails to redeem the preferred stock within 18 months, the holders of the preferred stock will get four seats on the PlanVista board and the right to acquire 51% of the stock of the company at a price of about $1.80 per share, PlanVista says.
PlanVista shares have been selling for more than $4 each since early October, according to Commodity Systems Inc., Boca Raton, Fla.
PlanVista says it has also negotiated a deal to replace a revolving credit facility that expired Aug. 31, 2001.
The new credit facility is scheduled to last two years, with an interest rate set at 1 percentage point over the prime bank lending rate.
PlanVista is supposed to begin making interest payments on the new credit facility by March, and principal payments by June.
PlanVista still needs final approval from its lenders to put the new credit arrangements into effect.
PlanVista has not named the lenders in its latest announcements, but, in the past, it has reported that First Union Corp., Charlotte, N.C., which recently changed its name to Wachovia Corp., led the syndicate that provided the credit facility.
PlanVista Chairman Phillip Dingle says the debt restructuring deal has eliminated uncertainty about his company by strengthening its balance sheet.
“Whereas the competition used our balance sheet against us during 2001, we have now leveled the playing field,” Dingle says in a statement discussing the debt negotiations.
PlanVista carries a large debt load relative to its size in part because it has made dramatic changes in its operations over the past year. The company once owned a large benefits administration operation as well as a provider network company, but it recently spun off the benefits administration operation as a separate company.