Healogics, an operator of advanced wound care centers and services to hospitals, has launched a $720 million loan offer to fund a buyout by private equity firm Clayton, Dubilier & Rice that was announced May 21.
The offer includes a $400 million first-lien cov-lite term loan, a $100 million first-lien revolver and a $220 million second-lien term loan, according to sources. The first-lien term loan matures in seven years, while the second-lien has an eight-year tenor. The upper middle market has seen a resurgence in covenant-lite loans as lenders continue to compete for deals.
A lender’s meeting is scheduled for June 11.
JPMorgan is lead left on the first-lien, and Credit Suisse is the lead bookrunner for the second-lien facility.
Price talk is to be determined, and both loans will include initial call protection of101 (first-lien) and 102 (second-lien).
Healogics is rated B2 by Moody’s Investors Service, but has been under review for a downgrade since the acquisition announcement. The transaction, valued at $910 million, already assumed the assumption of $400 million in debt.
The transaction is expected to close in the third quarter.
Standard & Poor’s rates Healogics’ corporate rating at B, and also placed the company under credit watch following the buyout deal.
The company’s leverage prior to the buyout was 6.4x, according to S&P, through debt accumulated via a late 2012 acquisition of Nautilus Health Care Group as well as a $66 million distribution to owners Metalmark Capital and Scale Venture Partners.
The company’s existing debt includes a $290 million first-lien due 2019 and a $30 million revolver maturing in 2018 (each rated B1 by Moody’s, B by S&P), and a $125 million second-lien due 2020 (Caa1/CCC+).