(Updates pricing step-down details in third paragraph)
Oct. 13 (Bloomberg) -- Emdeon Inc., a provider of billing systems and software for health-care companies, set the interest rate on the financing backing its buyout by Blackstone Group LP, according to a person with knowledge of the transaction.
A $1.2 billion term loan B maturing in seven years was increased to $1.224 billion. The debt will pay 5.5 percentage points more than the London interbank offered rate compared with 5.5 percentage points to 5.75 percentage points initially offered, said the person, who declined to be identified because the terms are private. Libor, a rate banks charge to lend to each other, will have a 1.25 percent floor.
Emdeon will no longer seek a pricing step-down to 5.25 percentage points more than Libor when leverage, or debt to earnings before interest, taxes, depreciation and amortization, is less than 5.75 times, the person said.
The company will sell the loan at 97 cents on the dollar, compared with 96 cents to 97 cents initially proposed, the person said. Selling below face value reduces proceeds for the company and boosts the yield to investors.
The Nashville, Tennessee-based company is also seeking a five-year $125 million revolving line of credit that will pay 5.25 percentage points more than Libor. The revolver will not have a Libor floor.
Bank of America Corp., Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc. and SunTrust Banks Inc. are arranging the deal and lenders must submit commitments by 12 p.m. today in New York. The banks plan to distribute the debt to investors Oct. 14. The deal is expected to close and fund on Nov. 2, the person said.
Blackstone spokeswomen Christine Anderson and Amanda Woodhead for Emdeon, declined to comment.
A term loan B is mainly bought by non-bank lenders such as collateralized loan obligations, bank-loan mutual funds and hedge funds. In a revolving credit, money can be borrowed again once it’s repaid; in a term loan, it can’t.
--Editors: Faris Khan, John Parry
To contact the reporter on this story: Michael Amato in New York at email@example.com
To contact the editor responsible for this story: Faris Khan at firstname.lastname@example.org