New Frontier gets commitments for up to $300 million term loan

By Sarah Lizee

Olympia, Wash., July 30 – New Frontier Corp. entered into a commitment letter with Shanghai Pudong Development Bank Putuo Sub-Branch as lead arranger for the China renminbi equivalent of a $300 million seven-year senior secured term loan facility, according to an 8-K filing with the Securities and Exchange Commission.

NF Unicorn Acquisition Ltd. will be the borrower under the facility.

Interest will be equal to 126.53% of the applicable People’s Bank of China benchmark annual interest rate for loans denominated in China renminbi and with the tenors of over five years, subject to annual adjustment to reflect the benchmark rate applicable on Jan. 1 of each year.

The facility will amortize at 0.5% for the first two years, stepping up annually to 25% at maturity (or if higher the remaining outstanding balance).

The agreement permits additional senior secured debt by way of revolving and/or term loan facilities, subject to some conditions.

The net leverage ratio is not to exceed 6.8 to 1 from closing to Dec. 31, 2020, 5.8 to 1 to Dec. 31, 2021, 4.5 to 1 to Dec. 31, 2022, 4 to 1 to Dec. 31, 2023, 3.5 to 1 to Dec. 31, 2024, 3 to 1 to Dec. 31, 2025 and 2.5 to 1 onwards.

The term loan is subject to mandatory prepayment under some conditions.

As of the date of the commitment letter, the interest rate is 6.2% per annum.

The commitments are being made in connection with the company’s agreement to acquire United Family Healthcare for about $1.3 billion.

The new company will operate under the name New Frontier Health Corp.

Along with the new term loan, New Frontier will use about $478 million of cash proceeds from its initial public offering and from forward purchase agreements entered into at the time of the IPO and $565 million in private placement proceeds.

Closing of the merger is subject to customary conditions.

China Merchants Bank Shanghai Branch had previously issued a senior loan commitment letter to New Frontier, which also contemplated an up to $300 million senior secured credit facility. New Frontier said it only plans to use $300 million of loans for the merger, and expects to enter into a separate senior loan commitment letter or other agreement with Shanghai Pudong or China Merchants Bank later on.

New Frontier Group is a Hong Kong-based group that invests in, builds and operates diversified businesses in the Chinese new economy sectors. Beijing-based United Family Healthcare is a private health care provider.

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