MModal plans to launch upsized $515 million credit facility on Monday

By Sara Rosenberg

New York, Aug. 2 - MModal Inc. has set a bank meeting for Monday to launch its proposed $515 million credit facility, according to a market source.

Bank of America Merrill Lynch and RBC Capital Markets LLC are the joint lead arrangers and bookrunners on the deal. SunTrust Robinson Humphrey Inc. is also a bookrunner.

The facility consists of a $75 million five-year revolver and a $440 million seven-year term loan, the source said.

Initially, according to filings with the Securities and Exchange Commission, the revolver was expected at $60 million. The revolver was then increased to $65 million when SunTrust was added to the deal. It has now been upsized again as a result of additional commitments.

According to the filings, 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, while 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.

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 to 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.

In regulatory filings, pricing on the bridge loan was outlined as 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.

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

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