Medline rejiggers buyout financing, shifting proceeds to secured notes and loans, sets price talk

By Paul A. Harris

Portland, Ore., Sept. 29 – Medline Industries rejiggered the financing backing the buyout of the company by shifting $1.5 billion of proceeds to the secured notes and bank loans from the unsecured notes, according to market sources.

Meanwhile, a $3.77 billion-plus tranche of 7.5-year senior secured notes (B1/B+/BB-) is talked at 3 7/8% to 4% versus initial talk in the low 4% area.

A downsized $2.5 billion tranche of eight-year senior unsecured notes (Caa1/B-/B-) is talked to yield 5¼% to 5½%, versus initial talk in the 6% area. The tranche is downsized from $4 billion. Proceeds will be shifted to the secured portions of the financing, including the secured notes and term loans.

Final sizes of the secured portion of the financing remain to be determined.

Order books for the notes close at 10 a.m. ET on Thursday.

Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, BofA Securities Inc., Barclays, Morgan Stanley & Co. LLC, MUFG, BMO Capital Markets Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., Jefferies LLC, Macquarie Capital (USA) Inc., UBS Securities LLC, Wells Fargo Securities LLC, BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, Mizuho Securities USA Inc., Nomura Securities International Inc., RBC Capital Markets LLC, Santander Investment Securities Inc., Truist Securities Inc., ING Financial Markets LLC, Scotia Capital (USA) Inc., SG Americas Securities LLC, SMBC Nikko Securities America Inc. and TD Securities (USA) LLC are the joint bookrunners.

Blackstone and TCG are the co-managers.

JPMorgan will bill and deliver for the secured notes.

Goldman Sachs will bill and deliver for the unsecured notes.

All of the notes are being sold with three years of call protection. All of the unsecured notes are callable at par plus the full coupon with proceeds from a qualified initial public offering of shares.

The issuing entity will be Mozart Debt Merger Sub Inc., which is to be merged with and into Medline Borrower, LP.

Proceeds plus a $6 billion term loan, a €1 billion term loan, $2.23 billion other secured mortgage debt and an equity contribution will be used to help fund the buyout of Medline, a Northfield, Ill.-based manufacturer and distributor of health care supplies, by Blackstone Group, Carlyle Group and Hellman & Friedman LLC.

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