More than 39 names are in the book for the $200 million financing backing MultiPlan's $213 million acquisition of US Health, a subsidiary of BCE Emergis Corp. UBS leads the deal, which comprises a $20 million revolver and a $180 million term loan. Price talk on the term loan is LIBOR plus 3%. The deal is oversubscribed and is set to close this week. There has been concern from some buyside accounts that the company has provided no GAAP audit. But sources deny that this is the case and have said the deal is being closed on the basis of audited financial statements.
According to one investor who voiced concerns, "What [MultiPlan] is planning on doing is putting money into escrow in anticipation that they will get clean audits. And if they don't, the escrow gets released back to the investors. If that were to happen, you've taken more risk than you've underwritten for. They're expecting us to take the risk of the company getting clean audits or not."
A source familiar with the deal responded by explaining the strategy is designed to take risk away from lenders in the event that there is a difference between the year-end numbers and audited numbers. The escrow arrangement is in place until year-end 2003 numbers are released. "The deal is closing on [the] basis of escrow in order to ensure that the leverage is never more than roughly 2.5 times," he said. "The funds are going to be released based on the receipt of year-end audited numbers." The source added that the deal is an "abnormally conservative structure." Richard Gerstein, executive v.p and cfo of MultiPlan, referred questions to UBS bankers, who declined comment.