LOS ANGELES (AFX) - Managed health care company HealthNet Inc. said Wednesday it is refinancing $400 million in senior notes due 2011.
The company, which provides health benefits to about 6.6 million Americans, entered into a bridge loan facility with the Bank of Nova Scotia and a term loan credit facility with JP Morgan Chase Bank. The two loans totaled $500 million.
HealthNet used the proceeds to purchase U.S. Treasuries, which it pledged as collateral to secure the senior notes, and which will be enough to make all remaining payments on the notes.
The company expects to take a one-time charge of $80 million for costs related to the refinancing in the second quarter ending June 30.
HealthNet said debt ratings on the notes will probably be upgraded to investment grade, in which case the interest rate would fall from 9 7/8 percent to 8 3/8 percent.
HealthNet plans to redeem all outstanding notes following a ratings upgrade from Moody's Investors Services and Standard & Poor's Ratings Services.
HealthNet fell 62 cents to close at $43.06 on the New York Stock Exchange.
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