Gentiva Borrows More for Next Five Years

StrangeTony,

S&P Global noted that Gentiva is exchanging its debt for a new issuance due 2031.  It will borrow up to $3 billion to retire a debt package of $2.76 billion (that currently shows $2.43 billion owed).  

The borrowing subsidiary is Charlotte Buyer which is under the control of majority owner Clayton, Dubilier & Rice, a financial rapscallion.  CD&R Falcon Holdings is the entity that controls Gentiva.

I was able to find the interest rates paid on the current debt and estimate Gentiva Hospice pays over $200 million per year in interest expenses.  Total revenue is around $2 billion.  Interest expenses are roughly 10% of the money that comes in.

There is no way to see how much cash CDR has pulled out of Gentiva Hospice since they purchased the firm via a Cayman Islands subsidiary in 2022.  That information is not public.  I wonder if there is a special distribution/dividend to sponsor in this refinancing.  

S&P Global showed projected recovery on the debt if Gentiva declared bankruptcy under CDR.  They lowered the overall recovery rate from 55% to 50% and the rating dropped from a B to a B- in their new analysis.

Financial rapscallions need to keep Gentiva Hospice going until they can flip it for a major payday.  Debt refinancing is a critical step for that cash bonanza to occur.  

The big money boys still trust one another to make good on their debts.  Financial crises tend to change that.  Should that happen financial rapscallions are often on both sides of a company, the equity and debt.  Bankruptcies mean affiliates, like Gentiva Hospice, change hands.  The loaner of funds becomes the new owner.

The rapscallion game remains energized enough to keep Gentiva going.  When that cools further or even ices, watch out.  Chaos usually follows, which means the sorry hand given to employees gets far sorrier.

Anonymous