Athenahealth to reprice $3.6B term loan after launching $985M add-on

athenahealth Inc. will reprice its existing roughly $3.6 billion first-lien term loan alongside the proposed $985 million fungible add-on after pricing was flexed tighter, according to sources. Timing is also accelerated, and commitments to the J.P. Morgan-led deal are due today by 5 p.m. ET, with allocations to follow on Jan. 29.

Price talk for the entire pro forma $4.581 billion covenant-lite first-lien term loan due February 2026 is now L+425 with a 0% Libor floor and an issue price of 99.875. At talk, the yield to maturity is roughly 4.58%. Lenders are offered six months of 101 soft call protection.

Note that the add-on was originally offered at 99, and that the spread is being lowered from the current L+450. Also, there is no separate consent fee for consenting existing lenders.

Proceeds from the add-on, along with cash from the balance sheet, will be used to repay the issuer's $800 million second-lien term loan due 2027 (L+850), to repay $770 million of preferred equity, and to pay transaction fees and expenses and associated redemption costs.

Moody’s upgraded the borrower's corporate rating to B2, from B3, and affirmed the B2 first-lien rating with a stable outlook. S&P Global Ratings says the transaction does impact the current corporate and facility ratings of B, or 3 recovery rating on the loan. Outlooks are stable from both.

VVC Holding Corp. and Athenahealth are the borrowers.

Both loans were placed in February 2019 to finance the acquisition of Athenahealth by Veritas Capital and Evergreen Coast Capital in a deal valued at $5.7 billion. Athenahealth then merged with Veritas portfolio company Virence Health, with the combined entity operating under the Athenahealth brand.