Team Health downsizes to $865 million, talks eight-year notes to yield 6½%-6¾%

By Paul A. Harris

Portland, Ore., Jan. 11 – The leveraged buyout financing for Team Health Holdings, Inc. saw $150 million of proceeds shifted to the bank loan from the bonds, reducing the bond offering to $865 million from $1,015,000,000 on Wednesday, according to a market source.

The bank loan increased to $2.75 billion from $2.6 billion.

The downsized offering of eight-year senior notes (Caa1/CCC+/CCC+) was talked to yield 6½% to 6¾%, tight to initial guidance in the 6¾% area.

Bond books close at 11 a.m. ET on Thursday, and the Rule 144A and Regulation S for life deal is set to price thereafter.

Barclays in the lead left bookrunner. J.P. Morgan Securities LLC, BofA Merrill Lynch, Morgan Stanley & Co. LLC and RBC Capital Markets LLC are the joint bookrunners for the high-yield offering.

The notes become callable after three years at par plus 50% of the coupon and feature a three-year 40% equity clawback and a 101% poison put.

The issuing entity will be Tennessee Merger Sub, Inc., which is to be merged with Team Health Holdings.

Proceeds, plus cash contributions from certain investment funds affiliated with sponsor Blackstone, will be used to help fund the LBO of the Knoxville, Tenn.-based physician services organization by Blackstone.

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