Summit Behavioral Healthcare tees up $150M add-on term loan for M&A

Summit Behavioral Healthcare, LLC is launching this week a $150 million incremental first-lien term loan via lead arranger Jefferies that will be used to finance an acquisition, according to sources. A lender call is scheduled for 1 p.m. ET on Jan. 12.

The add-on will be fungible with the existing covenant-lite first-lien term loan due 2028 that is priced at L+475, with a 0.75% Libor floor. It will bring the total tranche size to $609 million.

Proceeds will be used to finance the company's acquisition of Strategic Behavioral Health. Summit announced on Jan. 6 that it was acquiring seven psychiatric hospitals in six states through the Strategic Behavioral transaction.

Summit in November placed the existing $459 million first-lien term loan alongside a $185 million second-lien term loan due 2029 (L+775, 0.75%) to back its buyout by Patient Square Capital.

Summit Behavioral, based in Franklin, Tenn., is a behavioral health services provider with a focus on the substance use disorder and acute psychiatric treatment end markets. Current corporate ratings are B-/B3.