Heartland Dental’s $650 Million of Buyout Loans Rise in Trading

Heartland Dental Care Inc.’s $650 million of loans to back its buyout by Ontario Teachers’ Pension Plan rose in their first day of trading, according to information provider Markit Group Ltd.

A $400 million first-lien term loan began trading at par, while a $250 million second-lien piece first changed hands at 99.5 cents on the dollar, according to Markit. Both portions of the debt were sold to investors at 99 cents and 98.5 cents, respectively, according to data compiled by Bloomberg.

The first-lien slice pays interest at 5 percentage points more than the London interbank offered rate, while the second- lien portion pays interest at 8.5 percentage points more than Libor, the data show. Both portions have a 1.25 percent floor on the lending benchmark.

First-lien lenders were offered one-year soft-call protection of 101 cents while second-lien creditors are being offered hard-call protection of 103 cents during the first year, 102 cents in the second year and 101 cents in the third, the data show.

Royal Bank of Canada, Bank of Montreal (BMO) and Jefferies Group Inc. arranged the financing for the Effingham, Illinois-based provider of dental services. The deal also includes a $100 million revolving line of credit, Bloomberg data show.

Ontario Teachers’ acquired a majority interest in the company for $1.3 billion. As part of the transaction, Chief Executive Officer Dr. Rick Workman along with management and employees will retain a significant minority position in the company, according to a Nov. 5 company statement.

First-lien debt is repaid first in a bankruptcy or liquidation, second-lien borrowings are repaid next.

To contact the reporter on this story: Michael Amato in New York at Mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.