Emdeon's upsized $1.224 billion term loan allocates, trades higher

By Paul A. Harris

Portland, Ore., Oct. 14 - Emdeon Inc.'s upsized $1.224 billion seven-year term loan priced and allocated, market sources said on Friday.

The deal, which came with a 550 basis points spread to Libor and a 1.25% Libor floor, priced at 97 and traded to 99¾ bid, par ¾ offered, according to a mutual fund manager.

The loan, which was upsized from $1.2 billion, priced at the rich end of the 96 to 97 discount talk and at the tight end of the Libor plus 550 bps to 575 bps spread talk.

The loan comes with 101 soft call protection for one year.

The credit facility (Ba3), which was upsized to $1.349 billion from $1.325 billion, also features a $125 million revolver.

Covenants include a maximum first-lien net leverage ratio and a minimum consolidated cash interest coverage ratio.

Bank of America, Citigroup and Barclays are the joint lead arrangers and bookrunners on the deal, with Bank of America the left lead. Goldman Sachs & Co. is also a bookrunner.

Proceeds will be used to help fund the buyout of the company by Blackstone Capital Partners VI LP for $19.00 per share in cash. The transaction is valued at about $3 billion.

Other funds for the transaction will come from $375 million of senior notes, and the company has already placed $375 million of notes with a single investor. As a result, the company reduced the size of its bridge loan commitment to $375 million.

Also, the company plans on getting $870 million of equity, along with the rollover of about $330 million of equity.

Following completion of the acquisition, Hellman & Friedman will maintain a significant minority equity interest in the company.

Closing is subject to customary conditions, including approval by Emdeon's stockholders and clearance under the Hart-Scott-Rodino Act.

A special meeting for shareholders to vote on the transaction is scheduled for Nov. 1.

Emdeon is a Nashville-based provider of revenue and payment cycle management services that connect payers, providers and patients in the U.S. health care system.

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