Lori Livers Senior Vice President, Charterhouse Group International –

Lori Livers, senior vice president at New York-based buyout firm Charterhouse Group International, oversees new business in health care and business services. Charterhouse acquired Cross Country Inc., the largest provider of health-care staffing services based on revenue, in August 1999 for an undisclosed value (though sources close to the deal said at the time it was over $150 million). Cross Country saw a successful IPO in October 2001. Holly Werner from Buyouts and The IPO Reporter recntly spoke with Livers about Cross Country and the IPO.

Buyouts: The IPO priced at the top of its range ($15 to $17) and popped when it opened the next day. This left money on the table by the underwriters. Was this a strategy aimed at achieving the pop?

Livers: No, these ranges were set with the initial filing, which was pre-Sept. 11. It was more a question of not knowing the market [after the terrorist attacks]. In light of the market in October, the question was, would we even be able to get it done?

Buyouts: How did the events of Sept. 11 affect this offering?

Livers: There was some thought given to waiting, but we would have had to re-file. We were the second offering [since Sept. 11] and Given Imaging, a medical technology company that Lehman Brothers led, was the first, I believe. There was momentum in health-care stocks. The underwriters felt confident. Also, Cross Country’s business was not really affected by 9/11.

Buyouts: How was the IPO road show affected?

Livers: The road show was due to begin Sept. 11, and company management was staying at the Marriott World Trade Center. No one was injured. It was called off, and management went back to Florida. We began to watch the market again at the end of September.

Buyouts: As a staffing company, was it easy or a bit tricky to build on the momentum health-care IPOs had achieved, given that most of those IPOs were medical device manufacturers?

Livers: The success of medical device companies was not a factor, we didn’t look at those. Everyone was bullish on Cross Country because of the fundamental drivers of the business – the nurse shortage, for example.

Buyouts: Given the rough year the market had, wasn’t it important to have the IPO perform well out of the gate, with a jump in opening price, in order to attract institutional investors?

Livers: A lot of institutional investors signed up even at the IPO price, and it’s always important to perform well out of the gate. But in the current market, health care represents a defensive position. Cross Country is even safer because of the dynamics of the nurse staffing industry – there’s a huge demand/supply imbalance that is predicted to continue through 2010.

Buyouts: Proceeds were aimed at paying off debt. Why was this an important strategy for Cross Country at this time?

Livers: It allowed them to pay of a portion of the debt, including the mezzanine, which is more expensive. They paid off that. [Deutsche Banc Alex. Brown, now DB Capital Partners, provided $20 million of the $30 million mezzanine tranche. Northwestern Mutual picked up the balance.] It also allows the company to free up debt for acquisitions. On Jan. 4, Cross Country announced it acquired NovaPro, another travel nurse company with $15 million in revenue, for $7.1 million in cash.

Buyouts: What is the potential for a secondary offering?

Livers: I think it’s high. However, we’re locked up for 180 days. We will review the market at the appropriate time.

Buyouts: Why did you select Merrill Lynch to lead the offering?

Livers: Actually, the offering was co-led by Merrill Lynch and Salomon Smith Barney, with Merrill controlling the books. Merrill Lynch has been very successful in health-care underwriting. They also have the number one health-care. But both firms really have great research and distribution capabilities. Along with the other underwriters, they completed a very successful IPO.

IPO Snapshot

Issuer:Cross Country Inc.

Symbol:(CCRN)

Date Filed: 7/11/01

Date Priced: 10/24/01

Offer Price: $17.00

Open Price: $19.00

Deal Size: $132.0 Million

Current Price: $25.45

Lead Underwriter: Merrill Lynch/Salomon

Smith Barney

Co-Managers: Banc of America Securities,

Robinson-Humphrey, CIBC World Markets

Business: Provider of health-care staffing services.