Allscripts reveals loan split of $320 million term loan A and $250 million term loan B

By Sara Rosenberg

New York, July 7 - Allscripts' proposed $570 million of term loan debt is split between a $320 million term loan A and a $250 million term loan B, according to a market source.

As was previously reported, the term loan A and a $150 million five-year revolver will be launched to banks with a meeting on Thursday, and the term loan B is expected to launch sometime thereafter.

JPMorgan, Barclays Capital and UBS are the lead banks on the $720 million credit facility (Ba2/BBB-).

The company previously said that it expects the revolver to be priced at Libor plus 300 basis points and the six-year term loan to be priced at Libor plus 350 bps. There was no mention of the two term loan tranches.

And, the commitment letter had the deal structure with one term loan tranche and outlined pricing as based on corporate ratings.

The letter said that if rated Ba1/BB+, pricing on the term loan will be in the Libor plus 300 bps to 325 bps range and pricing on the revolver will be in the Libor plus 250 bps to 275 bps range.

If rated Ba2/BB, pricing on the term loan will be in the Libor plus 325 bps to 350 bps range and pricing on the revolver will be in the Libor plus 275 bps to 300 bps range.

And, if rated Ba3/BB- or lower, pricing on the term loan will be in the Libor plus 350 bps to 375 bps range and pricing on the revolver will be in the Libor plus 300 bps to 325 bps range.

Also, the letter said that the term loan is anticipated to have a 1.5% Libor floor.

The revolver has a 50 bps unused fee.

Financial covenants include a minimum interest coverage ratio of 3.5 to 1.0, with step-ups to be agreed upon, and a maximum leverage ratio of 4.0 to 1.0, with step-downs to be agreed upon.

There is a $250 million accordion feature.

Proceeds will be used to fund the buyback of shares from Misys plc.

Misys is selling the majority of its 54.6% interest in its Allscripts subsidiary in a transaction that is expected to raise roughly $1.3 billion. The amount of shares being sold is about 68 million, and Misys will retain about 12 million shares.

Specifically, there will be a market placing of between 36 million and 40 million Allscripts shares held by Misys, with the actual price and offering size to be determined at the time of the placing.

And, Allscripts will buy back 24.4 million of shares from Misys for an aggregate consideration of $577 million, a price of $23.62 per share.

Allscripts will then merge with Eclipsys, an Atlanta-based provider of health care IT services, and following this merger, Misys will have an option to sell to Allscripts an additional 5.3 million of shares for $102 million.

The new credit facility will fund the initial buyback of shares, and any additional buyback will be funded with cash on hand.

Pro forma leverage is 2.1 times LTM EBITDA.

The proposed sale is conditioned on a minimum price of $16.50 per share through the placing as well as on approval by Misys shareholders. It is not conditioned on the Allscripts-Eclipsys merger.

However, the Allscripts-Eclipsys merger is subject to the Misys transaction as well as Allscripts and Eclipsys shareholder approval and other customary conditions.

In the Eclipsys merger, Allscripts will give Eclipsys shareholders 1.2 shares of its stock per Eclipsys share.

Subject to the conditions being met, the buyback of shares and the merger with Eclipsys are expected to be completed in September or October.

Allscripts is a Chicago-based provider of software, services, information and connectivity services to physicians and other health care providers. Misys is a London-based provider of services to the financial services and health care industries.

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