Healthcare Royalty/HCRX launches downsized $650 million notes at 4½%; pricing Thursday

By Paul A. Harris

Portland, Ore., July 15 – Healthcare Royalty, Inc. launched a downsized $650 million offering of eight-year unsecured notes (B2) at 4½%, according to market sources.

The deal is set to price Thursday.

The launch comes tight to talk in the 4 5/8% area. Initial guidance was in the high 4% area.

The downsize, from $750 million, reflects a $100 million shift of proceeds to the concurrent bank loan.

Credit Suisse Securities (USA) LLC is the left lead bookrunner on the notes offer. Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Truist, BMO Capital Markets Corp., Stifel, Nicolaus & Co. Inc., Raymond James & Associates and SVB Leerink are the joint bookrunners.

The notes become callable after three years at par plus 50% of the coupon. They feature a three-year 40% equity clawback and a 101% poison put.

The issuing entity will be HCRX Investments HoldCo, LP, a newly formed, wholly owned operating subsidiary of Healthcare Royalty.

The New York-based midmarket royalty acquisition company plans to use some or all of the proceeds to repurchase certain limited partnership units held by existing investors in a limited partnership formed to serve as the principal holding company for HCR’s operating subsidiaries. The proceeds may be escrowed pending completion of Healthcare Royalty’s initial public offering. Any remaining proceeds would be used for general corporate purposes.

With Thursday's shift of proceeds the size of the bank loan increased to $850 million from $750 million.

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