Athletico Physical Therapy launched an $875 million term loan B via lead arrangers BofA Securities and BMO Capital Markets that will be used to finance an acquisition and to refinance debt, according to sources. Commitments are due by noon ET on Feb. 1.
Price talk for the seven-year TLB is a spread in the range of 425-450 basis points over the secured overnight financing rate, plus a credit spread adjustment, with a 0.5% floor and an original issue discount of 99-99.5. The credit spread adjustment is 10 bps for the one-month rate, 15 bps for the three-month rate and 25 bps for the six-month rate. Lenders are offered six months of 101 soft call protection.
At talk, the yield to maturity is 4.93%-5.28%.
Corporate and facility ratings are B/B2, with stable outlooks, and there is a 3 recovery rating on the loan from S&P Global Ratings. Accelerated Health Systems LLC and Athletico Management LLC are the borrowers.
Proceeds from the deal will be used to back the acquisition of Pivot Health Solutions, refinance existing debt and add cash to the balance sheet. The $550 million acquisition will also be funded with $220 million of new sponsor equity, rating agencies note. Athletico announced in December 2021 that it was acquiring Pivot Health, a PennantPark-backed provider of physical therapy, occupational health and on-site corporate health services. The combined company will have nearly 8,000 employees across more than 850 clinics in 21 states and Washington, D.C. The acquisition is expected to close in the first quarter.
In addition to the new term loan, financing will include a $100 million revolver due 2027 that is expected to be undrawn at close.
Existing debt at Athletico includes a covenant-lite term loan B due October 2025 priced at L+350, with a 0% Libor floor and a leverage-based step-down to L+325. That loan was placed in a 2018 refinancing. BofA Securities is administrative agent.
Athletico Physical Therapy, a portfolio company of BDT Capital Partners, provides orthopedic rehabilitation services to communities, employers and athletes.