Cross Country Healthcare completes acquisition of assets of Medical Staffing Network
This closing follows the execution of the Asset Purchase Agreement between Cross Country and MSN on June 2, 2014 which was previously announced.
"This acquisition increases Cross Country's branch network and market share, diversifies our customer base and brings us new service lines. I believe it positions us to serve our customers better and to increase earnings growth through improved fill rates, expansion of our MSP and per diem activities, and cost synergies," said William J. Grubbs, President and Chief Executive Officer of Cross Country.
The total purchase price will be up to $48.1 million, subject to a final net working capital adjustment. Cross Country funded $45.6 million at closing, net of cash acquired. An additional $2.5 million was deferred and is due to the seller in 21 months, less any COBRA expenses incurred by Cross Country on behalf of former MSN employees over that period.
Cross Country financed the purchase price using $55 million in new subordinated debt consisting of a $30 million, 5-year term loan and $25 million of convertible notes having a 6-year maturity and a conversion price of $7.10. The combined effective cash interest rate for the subordinated indebtedness is expected to be 7.72% for 2014. Cross Country also amended its loan agreement with Bank of America. N.A. to increase its borrowing capacity under its senior secured asset-based revolving credit facility from $65 million to $85 million.
For the year ended December 29, 2013 and the five-month period ended May 25, 2014, MSN had audited revenues of $229 million and unaudited revenues of $98 million, respectively. The acquisition is expected to be accretive to EPS in 2015.