Heartland Dental shifts funds between term loans, flexes higher

By Sara Rosenberg

New York, Dec. 12 - Heartland Dental Care Inc. downsized its first-lien term loan to $400 million from $450 million and upsized its second-lien term loan to $250 million from $200 million, according to market sources.

Also, pricing on the first-lien term loan was increased to Libor plus 500 basis points from Libor plus 450 bps; and pricing on the second-lien term loan was lifted to Libor plus 850 bps from talk of Libor plus 800 bps to 825 bps, sources said.

As before, the first-lien loan has a 1.25% Libor floor and an original issue discount of 99. The second-lien term loan has a 1.25% Libor floor and a discount of 981/2.

All-in yield is 6½% on the first-lien loan and 10 1/8% on the second-lien loan, sources said.

Other changes included adding 101 soft call protection for one year to the first-lien term loan. The second-lien loan still has hard call protection of 103 in year one, 102 in year two and 101 in year three.

Additionally, the first-lien maturity was shortened to six years from seven years, while the second-lien maturity was shortened to 6½ years from eight years.

Regarding incremental first-and second-lien debt, the MFN sunset provision was removed and the starter basket was reduced to $100 million from $125 million. For second-lien incremental loans, the leverage test was reduced to 6 times from 6.25 times.

The company's $750 million credit facility also provides for a $100 million revolver.

Recommitments are due at noon ET on Thursday, sources said.

RBC Capital Markets LLC, BMO Capital Markets Corp. and Jefferies & Co. are the lead banks on the facility.

Proceeds will be used to help fund the roughly $1.3 billion buyout of the company by Teachers' Private Capital.

As part of the transaction, Heartland Dental founder and chief executive officer Rick Workman will retain a significant minority position along with management and employees.

First-lien leverage is 3.6 times.

Heartland Dental is an Effingham, Ill.-based provider of office support services to dental offices.

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