Akumin to use notes to acquire Alliance Health for $820 million

Chicago, June 25 – Akumin Inc. announced that it will acquire Alliance HealthCare Services, Inc. in a transaction with an enterprise value of $820 million, according to a press release.

The purchase price will be satisfied by way of a combination of cash on hand, the issuance of the share consideration, as well as certain financing arrangements, including debt and equity financing commitment with Stonepeak.

Stonepeak will subscribe for not less than $200 million and not more than $689,570,000 of notes with Akumin Corp. as issuer.

The notes will have an 11% interest rate, payable quarterly in cash.

Half of the principal will be due in 2032 and the remainder will be due in 2033.

Closing is expected in the third quarter of 2021, with an outside date of Oct. 23, 2021, provided that Akumin will have the option for a two-year period following closing to pay interest on any financing notes through a combination of cash and/or payment in kind. The rate steps up to 13% for any interest paid in kind.

Akumin will also issue to Stonepeak common shares representing approximately 4.9% of the currently issued shares.

There will also be warrants to purchase shares, together with the financing notes and the financing common shares, equal to 15% of the principal amount of the initial financing notes.

It is anticipated that an alternative debt financing will be completed prior to closing, the proceeds of which will reduce dollar-for-dollar the capital commitment by Stonepeak of the notes.

If the alternative financing does not happen or is less than $489,570,000 then Stonepeak will subscribe to enough notes to complete the transaction, up to the maximum amount.

Stonepeak may elect to fund up to 50% of any amount of its investment in excess of the base commitment as part of the alternative financing.

Any of the maximum amount not used will able to be utilized for a three-year period after closing, but will involve a further issuance of financing notes and financing warrants with a change in the calculation for the warrants.

The notes are callable after seven years at 105.

If the notes are not redeemed by the eleventh anniversary, Akumin will need to redeem half of the financing notes on the eleventh anniversary at par plus 5% and the rest on the twelfth anniversary at par plus 5%.

The notes will be issued at a discount of 98.

Akumin is a Toronto-based provider of diagnostic imaging services.

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