R1 RCM launches $270 million term loan B at Libor plus 475-500 bps

By Sara Rosenberg

New York, April 17 – R1 RCM Inc. launched on Tuesday its $270 million seven-year covenant-light term loan B with price talk of Libor plus 475 basis points to 500 bps with a 0% Libor floor and an original issue discount of 99.5, according to a market source.

The term loan B has 101 soft call protection for six months.

Amortization on the term loan B is 1% per annum.

The company’s $295 million of credit facilities also include a $25 million five-year revolver.

Incremental allowance is $50 million plus unlimited amounts up to net first-lien leverage of 3.75 times and up to net total leverage of 5.5 times for junior lien and unsecured debt, subject to 50 bps MFN for life.

Mandatory prepayments are 100% of net cash proceeds from asset sales, subject to reinvestment rights, 100% of net cash proceeds from debt issuance, other than permitted debt, and 50% excess cash flow sweep with step-downs to 25% and 0% based on total leverage.

Bank of America Merrill Lynch and Ares are the lead arrangers on the deal.

Commitments are due at noon ET on April 27, the source added.

Proceeds will be used to help fund the acquisition of the health care division of Intermedix Corp., comprised of its physician and emergency medical services revenue cycle management, practice management and analytics businesses.

Other funds for the transaction will come from $104 million of cash on hand and $110 million eight-year subordinated PIK toggle notes that were privately placed with TowerBrook Capital Partners, Ascension Health and Intermountain Health.

First-lien leverage is 3.4 times and total leverage is 4.8 times based on fiscal year Dec. 31, 2017 pro forma adjusted EBITDA of $79 million, including $15 million of expected synergies.

Closing is expected during the week of April 30.

R1 RCM is a Chicago-based provider of revenue cycle management and physician advisory services to health care providers.

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