Athenahealth circulates guidance for $2.35B of senior notes backing buyout

Athenahealth Group Inc.'s $2.35 billion offering of eight-year (non-call three) senior notes backing the buyout of the company by Bain Capital and Hellman & Friedman is guided to price in the 6.5% area, according to market sources. Books for the deal will close today at 12:30 p.m. ET.

The tranche size reflects a downsize from an initial pitch of $2.5 billion. The removed $150 million has been shifted to a concurrent term loan transaction.

The bookrunner group comprises Goldman Sachs (lead left), J.P. Morgan, BofA Securities, BMO, Barclays, Deutsche Bank, Morgan Stanley, KKR, Credit Suisse, RBC, HSBC, Truist Securities, Jefferies, Macquarie, Mizuho, Nomura, Wells Fargo, BNP Paribas, MUFG, US Bancorp, SMBC, KeyBanc, Fifth Third, Citizens, IMI, Santander, TD Securities, Scotia, Stifel and Credit Agricole.

The issuer is Minerva Merger Sub Inc.

The structure includes a first call at par plus 50% of the coupon, falling to 25%, then par thereafter. Further, in years two or three post-closing, the issuer may redeem all of the notes from the proceeds from any qualified IPO, at par.

The wider financing package also includes a now-$5.9 billion term loan B and a $1.0 billion delayed-draw TLB, while $2.36 billion of preferred equity and around $6.2 billion of new common equity rounds off the deal.

Along with the upsizing to the TLB, pricing for the loan was tightened. The seven-year, covenant-lite TLB is talked at a spread of 350 basis points over the secured overnight financing rate, with a 0.5% floor and an original issue discount of 99.5. Initial guidance was for a range of 375-400 bps. There is now just one 25 bps leverage-based step-down at 0.5x inside closing first-lien net leverage as well as an additional 25 bps step-down upon an IPO. Lenders are offered six months of 101 soft call protection. Commitments to the TLB were due this morning.

Also note that the commitment period on the $1 billion delayed-draw first-lien term loan was trimmed to 18 months, from 24 months, and ticking fees were revised to no fee for 45 days, then 50% of the margin for days 46-90, stepping to 100% of the margin thereafter.

The unsecured debt is rated CCC/Caa2/CCC+, while the loan is graded B-/B2/B+.

Athenahealth announced in November 2021 that it was being acquired by Bain Capital and Hellman & Friedman for $17 billion. As part of the transaction, existing sponsors Veritas Capital and Evergreen Coast Capital will retain a minority stake in the business. Other new co-investors include GIC, Singapore's sovereign wealth fund and a wholly owned subsidiary of the Abu Dhabi Investment Authority. The transaction is expected to close in the first quarter.

Athenahealth provides cloud-based software and technology-enabled solutions to ambulatory practices and health systems.

For the 12 months ended Sept. 30, 2021, the group recorded adjusted EBITDA of $1.057 billion, according to the offering memorandum.