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HealthEquity plans $1.91 billion loans, $300 million notes
By Angela McDaniels
Tacoma, Wash., June 27 – HealthEquity, Inc. received a commitment for $1.91 billion of credit facilities and plans to issue at least $300 million of notes in connection with its agreement to acquire WageWorks, Inc., according to an 8-K filing with the Securities and Exchange Commission.
The company plans to use the proceeds to finance the acquisition and to refinance some existing debt at both companies. Funds for the acquisition will also come from cash on hand.
HealthEquity said it entered into a commitment letter with Wells Fargo Bank, NA and Wells Fargo Securities, LLC for a $200 million senior secured revolving credit facility, a $1.41 billion senior secured term loan facility and a $300 million senior bridge facility to fund the consideration for the merger.
The interest rate will be Libor plus 300 basis points for the term loan and Libor plus 225 bps for the revolver, and the revolver will have a 37.5 bps commitment fee.
The bridge loan will bear interest for the first three months at one-month Libor plus 450 bps. The margin will increase by 50 bps every three months, subject to a cap.
The merger agreement contains termination rights for HealthEquity and Wageworks, including a right to terminate the agreement if the merger is not completed by Dec. 26.
HealthEquity is based in Draper, Utah, and provides solutions for managing health-care accounts, health reimbursement arrangements and flexible spending accounts for health plans, insurance companies and third-party administrators.
WageWorks is a San Mateo, Calif.-based on-demand provider of tax-advantaged programs for consumer-directed health, commuter and other employee spending account benefits.
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