Goldman Sachs, Banc of America Securities and Morgan Stanley last week changed terms on the financing to back the leveraged buyout of MultiPlan by The Carlyle Group. The lead arrangers upsized the senior secured term loan "B" by $25 million to $425 million, and decreased the bond portion of the package by the same amount. The size of the senior subordinated notes offering went from $250 million to $225 million. Leverage did not change. The shift from bonds to loans was due to the cost of capital, not because of weakness in the bonds, a banker said. The loan book is multiple times oversubscribed, he said. There is also a $50 million revolver priced at LIBOR plus 2 1/4%.
"MultiPlan is the best in class at what it does," Karen Bechtel, managing director in the healthcare group at Carlyle, said about the acquisition. "It is the largest PPO [Preferred Provider Organization] in the country and it has a first class set of customers--insurance companies and HMOs. It has a very scalable business model, which has a lot of growth potential and it is not subject to reimbursement risk and lastly and most importantly, it has a first class management team."
Goldman had been assessing a number of strategic alternatives for MultiPlan and helped introduce The Carlyle Group to the company. Bechtel anticipates expanding the business through organic growth but also to expand the products and services the company can offer to its customers and expanding customer bases. She said, however, that she does not anticipate any changes to the company. "[We] are very satisfied with the way the company is operating now," she noted.
Goldman Sachs introduced the two parties, Morgan Stanley advised MultiPlan on the transaction and Bank of America was very familiar with the company, Bechtel said about the choice of banks. Richard Gerstein, executive v.p. and cfo, was traveling and could not be reached.