Emdeon Inc. (EM), a provider of billing systems and software for health-care companies that was acquired by Blackstone Group LP (BX) last year, set the rate on its $1.22 billion term loan repricing, according to a person with knowledge of the transaction.
The debt due in November 2018 will pay interest at 3.75 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private. Libor, a rate banks say they can borrow in dollars from each other, will have a 1.25 percent floor. The debt is being sold to investors at par, the person said.
Lenders on the repricing will be offered one-year soft-call protection of 101 cents, the person said, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first year.
Bank of America Corp., Citigroup Inc. and Barclays are arranging the transaction and investors have until April 17 at 5 p.m. in New York to submit commitments, the person said. The deal is expected to close and fund the week of April 23.
The company’s existing term loan was sold in November 2011 and was quoted at 101.5 cents on the dollar at 4 p.m. in New York, down from 101.88 cents earlier today, according to data compiled by Bloomberg. The debt pays interest at 5.5 percentage points more than the London interbank offered rate with a 1.25 percent floor and was sold to investors at 97 cents, the data show.
Emdeon is also seeking a $60 million incremental term portion due in November 2018 that will pay the same interest. Proceeds from the financing will be used for general corporate purposes including potential acquisitions, the company said in a statement yesterday.
The Nashville, Tennessee-based company also lowered the rate it will pay on a $125 million revolving line of credit due in November 2016, the person said. The revolver will now pay interest at 3.5 percentage points more than Libor with no floor. The spread on the debt was originally 5.25 percentage points more than Libor with a 1.25 percent floor, Bloomberg data show.
Blackstone, a New York-based private-equity firm, acquired Emdeon for approximately $3 billion in November 2011, Bloomberg data show.
Peter Rose, a spokesman for Blackstone, declined to comment. Amanda Woodhead, a spokeswoman for Emdeon, declined to comment beyond yesterday’s statement.
In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan it can’t. So-called B loans are mainly bought by non-bank lenders such as collateralized loan obligations, mutual funds and hedge funds.
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