Allscripts likely to drop $250 million term loan B, upsize pro rata

By Sara Rosenberg

New York, July 23 - Allscripts is expected to eliminate its $250 million term loan B from its credit facility and upsize its pro rata bank debt since syndication of the pro rata went so well, according to a market source.

The company's $150 million five-year revolver and $320 million term loan A were launched to banks on July 8.

The original plan was to wrap up the pro rata and then bring the term loan B to market, with some even expecting that the B loan was going to be launched late in the July 26 week.

The revolver and term loan A are being talked at Libor plus 325 basis points. Pricing on the tranches can range from Libor plus 250 bps to 350 bps based on leverage, with the lowest point on the grid being 0.5 times leverage and the highest point being 2.5 times.

The revolver has a 50 bps unused fee.

Originally, the deal was outlined as containing one term loan sized at $570 million, but the loan was later divided into an A and a B tranche. It was said from the start that sizes could be moved around based on demand.

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

The credit facility includes a minimum interest coverage ratio of 3.5 to 1.0 with step-ups and a maximum leverage ratio of 4.0 to 1.0 with step-downs.

Proceeds from Allscripts' credit facility will be used to fund the buyback of shares from Misys plc.

There will be a market placing of between 36 million and 40 million Allscripts shares held by Misys, and Allscripts will buy back 24.4 million of shares from Misys for a total consideration of $577 million.

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 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 last 12 months EBITDA.

Subject to certain 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.

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