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Providence Service Corporation Case Study
Customer: Providence Service Corporation
Development Country: United States
Industry: Healthcare

Situation Overview:

In October 2007, Providence Service Corporation (“Providence”), North America’s leading provider of non-institutional counseling and case management services, primarily to Medicaid recipients, announced the acquisition of LogistiCare, Inc. (“LogistiCare”), the leading manager of Medicaid non-emergency medical transportation services. Providence partnered with CIT based on CIT’s dedicated healthcare sector expertise, financial advisory capabilities and capital markets execution skills to assist Providence in completing the transaction.

Role of CIT Healthcare:

CIT Healthcare served as co-financial advisor for Providence’s $220 million acquisition of LogistiCare. CIT Healthcare also underwrote $213 million of senior credit facilities acting as Sole Lead Arranger and Sole Bookrunner.

Process:

CIT assisted Providence in all key aspects of the transaction, including:

  • Extensive financial and business due diligence along with strategic advice to Providence management
  • Detailed input on transaction terms, structuring, and timing
  • Capital structuring and corporate finance advisory
  • Rating agency advisory and obtaining Providence’s inaugural credit ratings from Moody’s and S&P
  • Providing a fully underwritten debt package allowing Providence and LogistiCare to execute the merger agreement in the middle of significant credit market upheaval (August and November)
  • Serving as Sole Lead Arranger and Bookrunner on the successful syndication of $213 million in senior credit facilities on attractive terms amidst unprecedented market volatility
  • Spending considerable effort and time marketing to potential lenders, walking them from sector and company education through credit approval meetings
  • Maintaining a strong hold position in the senior credit facilities as a long-term capital partner to Providence

 

Result:

  • CIT generated an over-subscribed syndication at the low end of the marketed range (L+350) and below average comparable market spreads, despite secondary market spreads hitting an all time low
  • Providence closed the acquisition of LogistiCare on December 7, 2007, creating a successful monetization event for LogistiCare’s private equity investors