M*Modal adds SunTrust as lead on credit facility, upsizes revolver

By Sara Rosenberg

New York, July 30 - M*Modal Inc. amended its senior secured credit facility commitment letter, adding SunTrust Robinson Humphrey Inc. as a bookrunner and increasing the five-year revolver to $65 million from $60 million, according to an SC TO-T filed Friday afternoon with the Securities and Exchange Commission.

Other bookrunners on the deal are Bank of America Merrill Lynch and RBC Capital Markets LLC, and it is only these two banks that are the joint lead arrangers.

In addition to the revolver, the upsized $505 million credit facility also provides for a $440 million seven-year term loan.

Pricing on both the revolver and the term loan is expected to be Libor plus 525 basis points with a 1.25% Libor floor.

The term loan is expected to have 101 soft call protection for one year, and the revolver is expected to have a 50 bps unused fee.

There is a $150 million accordion feature plus additional amounts if total net senior secured leverage is 3 times.

Amortization on the term loan is 1% per year.

Covenants include a maximum total net leverage ratio.

A bank meeting for the credit facility is anticipated to take place in the first half of August, a market source previously told Prospect News.

Proceeds will be used to help fund the buyout of the company by One Equity Partners for $14 per share in an all-cash transaction, valued at about $1.1 billion, and refinance existing debt.

Other funds for the transaction will come from $447 million in equity and the sale of $250 million senior unsecured notes, which are backed by a commitment for a $250 million one-year senior unsecured bridge loan that is currently in the process of syndicating.

Based on filings with the Securities and Exchange Commission, pricing on the bridge loan is expected to be Libor plus 875 bps, stepping up by 50 bps after three months and every three months thereafter, up to a cap. There is a 1.25% Libor floor.

Closing is expected in the third quarter, subject to a majority of shares being tendered or shareholder approval.

The tender offer expires on Aug. 13.

M*Modal is a Franklin, Tenn.-based provider of clinical documentation services and speech understanding services.

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