Golden State Medical Supply Pulls $145 Million Financing

Golden State Medical Supply Inc., a generic drugs supplier owned by LKCM Headwater Investments, pulled a $145 million loan to refinance debt and fund a shareholder dividend.

The financing was scrapped because “pricing was becoming less favorable”, Bradley Wallace, a partner at LKCM Headwater, said in a telephone interview. The company had proposed paying an interest rate margin of 5.5 percentage points more than lending benchmarks, according to data compiled by Bloomberg.

At least 15 borrowers last week had to increase the rate on loans they were seeking amid weakened demand for the junk-grade corporate debt, Bloomberg data show. More deals were forced to boost yield to investors in that period than any week so far this year.

Golden State, which had about $149 million of revenue last year, is majority owned by LKCM Headwater Investments I LP, according to a July 30 report from Moody’s Investors Service.

“We have decided to pursue more favorable financing options,” Wallace said.

Golden State supplies drugs to the government agencies, with more than 85 percent of its revenues coming from the Department of Veteran Affairs and the remainder from the Department of Defense, according to a July 30 report from Standard & Poor’s.

Jefferies LLC was leading the financing for the Camarillo, Calif.-based company, Bloomberg data show. Richard Khaleel, a spokesman for Jefferies, declined to comment on the loan being pulled.

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