Hill-Rom to launch roughly $2.23 billion credit facility on Tuesday

By Sara Rosenberg

New York, July 20 – Hill-Rom Holdings Inc. is scheduled to hold a bank meeting at 10 a.m. ET on Tuesday to launch its proposed $2,225,000,000 senior secured credit facility (Ba1), according to a market source.

Goldman Sachs Bank USA is the lead bank on the financing.

The credit facility consists of a $500 million revolver, a $1 billion term loan A and a $725 million term loan B.

Proceeds will be used to help fund the acquisition of Welch Allyn Inc. for about $1,625,000,000 in cash and around 8.1 million newly issued shares of Hill-Rom common stock. The total transaction value is $2.05 billion.

The company has also received a commitment for a $500 million senior unsecured bridge loan to fund the acquisition.

Closing is expected before the end of September, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

Hill-Rom expects the combined company to have $2.6 billion in revenues and generate more than $500 million in adjusted EBITDA.

Leverage will be 4.5 times; however, the company expects to delever to below 3.5 times adjusted EBITDA by the end of fiscal 2017 due to anticipated strong cash flow generation.

Hill-Rom is a Chicago-based medical technology company. Welch Allyn is a Skaneateles Falls, N.Y.-based manufacturer of medical diagnostic equipment.

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