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 THE RESULT: Less than a year after its initial debt recapitalization, CareSouth Home Health Services (“CareSouth” or the “Company”) chose Caymus Partners to negotiate a newer, larger credit facility with a new lender. This new line of credit allowed the Company to begin an acquisition strategy, which has consequently resulted in increased growth in revenues. In addition, Caymus Partners’ capital strategy allowed CareSouth to retire legacy bank debt that contained onerous covenants, high interest rates and unattractive payment terms. The first debt placement retired all of the legacy debt and permitted additional availability on the Company’s revolving bank lines.
“Caymus Partners served as a much needed partner to management—they were committed to the transaction and were instrumental to the ultimate success of the deal. Caymus Partners’ knowledge and relationships within the lending community provided us with multiple options and significant negotiating leverage. They were invaluable in helping us determine who to approach, in negotiating optimal terms in an efficient manner, and in reaching our objectives.”
Rick Griffin, President & CEO
CareSouth Home Health Services
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Company Description
CareSouth is one of the largest providers of home healthcare services in the Southeast. Through its large, integrated healthcare delivery system, CareSouth provides cost-saving services to its patients and business services clients across the country. CareSouth manages or provides business services to approximately 26 agencies (representing 65 locations), 14 Medicare certified home health agencies, and three affiliated Medicare certified home health agencies.
Client Objective
CareSouth, which was acquired by a management-led buyout sponsored by Capitol Partners in 1998, believed that the best strategic plan was to retire current indebtedness, while simultaneously acquiring CarePartners@Home, Inc., an affiliate and portfolio company of Capitol Partners. The Company’s old debt dated back to the initial acquisition by Capitol Partners and contained higher than market interest rates and a variety of onerous covenants.
Challenges Overcome
Caymus Partners overcame a number of key challenges in making this transaction successful:
- Challenging Industry. Caymus Partners was able to navigate past recent unfavorable media attention and pitfalls inherent in the home healthcare industry and position the Company in an attractive manner to numerous senior and mezzanine lenders;
- Generating Rapid Interest. Caymus Partners contacted six senior lenders and 12 mezzanine (subordinated) debt providers in an expeditious manner;
- Efficient Process. Caymus Partners constructed an offering memorandum and investor presentation for senior management that properly positioned the Company to a select number of pre-approved lenders and generated interest in a timely manner; and
- Positioning Company for Future Growth. Since the completion of this transaction, the Company has aggressively grown through a mix of internal and external initiatives, most of which have been financed internally.
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