Arrangers have finalized pricing and tranche sizes on the cross-border first-lien term loan financing for Medline Industries Inc., and investors are being told to expect allocations this afternoon, according to sources.
The U.S. dollar-denominated tranche is upsized to $7.27 billion, from an initial target of $6 billion. The increase to this tranche came from a $500 million-equivalent downsizing of the euro tranche and a shift of funds from the concurrent offering of senior unsecured notes. Final size of the euro-denominated tranche is $500 million-equivalent.
Pricing for the dollar loan tranche is L+325, with a 0.5% Libor floor and an original issue discount of 99.5. There is a margin step-down to L+300 at 4.25x net secured leverage.
Pricing for the euro loan tranche is E+350, with a 0% Libor floor and an OID of 99.75. There is a step-down to E+325 at 4.25x net secured leverage and a step-down to E+300 at 3.75x net secured leverage.
Initial price talk was L/E+350-375 with OID guidance for both tranches of 99-99.5. The covenant-lite loans will have a seven-year maturity and will include six months of 101 soft call protection.
At final terms, the yield to maturity is 3.89% on the dollars and 3.59% on the euros.
BofA Securities is leading the deal, and an extensive list of joint lead arrangers includes Goldman Sachs, J.P. Morgan, Barclays, Morgan Stanley, MUFG, BMO Capital Markets, Citi, Deutsche Bank, HSBC, Jefferies, Macquarie, UBS, Wells Fargo, Bank of the West, BNP Paribas, Credit Suisse, Mizuho, Nomura, RBC Capital Markets, Santander, Truist Securities, ING Capital Markets, Société Générale, Sumitomo, Scotia and TD Securities. Blackstone and TCG Capital Markets will serve as co-managers.
Bond financing for the buyout will include a $4.5 billion issue of 7.5-year (non-call three) senior secured notes and a $2.5 billion issue of eight-year (non-call three) senior unsecured notes. The secured notes have launched to yield 3.875%, and the unsecured notes launched at 5.25%. Pricing is expected this afternoon.
Secured debt ratings are B+/B1/BB-, with recovery ratings of 3 from S&P Global Ratings and Fitch. Corporate ratings are B+/B2/B+.
Medline is being acquired by a private equity consortium that includes The Blackstone Group, The Carlyle Group and Hellman & Friedman in a deal valuing the business at about $34 billion. Additional financing for the deal will include $2.23 billion of secured mortgage debt, and the issuer will also have a $1 billion revolver due 2026 with a springing covenant. The transaction is also being funded with about $16.7 billion of total equity, including rollover equity, according to Moody's.
Medline is a manufacturer and distributor of healthcare supplies to hospitals, post-acute settings, physician offices and surgery centers.