Goldman Sachs affiliates take down $375 million of Emdeon 11¼% notes

By Paul A. Harris

Portland, Ore., Oct. 6 - Affiliates of Goldman Sachs have agreed to purchase $375 million of Emdeon Inc.'s 11¼% senior notes due 2020, according to a schedule 14 A document filed on Thursday with the Securities and Exchange Commission.

The affiliate in question is Goldman Sachs Asset Management, according to a high-yield mutual fund manager.

The 11¼% coupon may be signaling guidance to the market as to where dealers hope to price both the $1.2 billion term loan B, which is already in the market, and the remaining $375 million of senior unsecured notes, the fund manager said.

Emdeon's $1.2 billion seven-year term loan B launched on Wednesday at Libor plus 550 basis points to 575 bps with a 1.25% Libor floor and an original issue discount of 96 to 97, according to a market source.

That could render a yield of around 8%, the manager calculated.

The remaining $375 million of Rule 144A notes have an eight-year maturity, one year shorter than the 11¼% nine-year notes, and thus ought to price with a coupon that is less than 11¼%, the buysider added.

Barclays Capital Inc., Bank of America Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co. and SunTrust Robinson Humphrey are the joint bookrunners for the overall $750 million two-part bond deal.

The 11¼% notes will be non-callable but will feature a standard make-whole provision and equity clawback, according to Thursday's SEC filing.

Significant roll anticipated

The remaining $375 million of eight-year senior notes could hit the market as early as Friday, but will more likely be launched in the week ahead, sources close to the deal have said.

Those notes, in addition to the $1.2 billion term loan B, should benefit from a significant roll factor, according to the mutual fund manager who is active in both the bank loan and high-yield markets. That's because Emdeon is a known entity to holders of an existing $650 million term loan and an existing $157 second-lien loan. Hence those investors are expected to want to maintain their exposure to the credit.

The overall $750 million of bond debt and the $1.2 billion term loan, in addition to a $125 million revolver, as well as a planned $870 million of equity, along with the rollover of about $330 million of equity, will be used to help fund the buyout of Emdeon by Blackstone Capital Partners VI LP for $19.00 per share in cash in a transaction valued at about $3 billion.

Emdeon is a Nashville-based provider of revenue and payment cycle management services, connecting payers, providers and patients in the U.S. health care system.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.