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Banks Launch $3.3 Billion Loan Package for R1 RCM’s Buyout

The Deutsche Bank AG headquarters in the financial district of Frankfurt, Germany, on Thursday, Feb. 1, 2024. Deutsche Bank plans to cut 3,500 jobs over the coming years as Chief Executive Officer Christian Sewing seeks to make good on a pledge to lift profitability and return more money to shareholders. Photographer: Alex Kraus/Bloomberg (Alex Kraus/Bloomberg)

(Bloomberg) -- A group of banks led by Deutsche Bank AG launched a $3.3 billion leveraged loan package on Tuesday to help finance the buyout of hospital billing and payment company R1 RCM Inc.

The transaction consists of a $3.1 billion term loan and a $200 million delayed-draw term loan, according to a person with knowledge of the matter. Along with an additional $1 billion of expected secured debt, proceeds will help finance TowerBrook Capital Partners and Clayton, Dubilier & Rice’s acquisition of the company, the person said, who asked not to be named discussing a private transaction.

The $3.1 billion tranche ranks as the second-largest leveraged loan of the year used to help finance a buyout, tied with one for the acquisition of former Truist Financial Corp. unit TIH Insurance Holdings, according to data compiled by Bloomberg. This year’s largest is a $4.25 billion loan for Cotiviti Inc.’s buyout.

Meanwhile, at least 18 leveraged-loan transactions launched Tuesday morning to start the holiday-shortened week, already the busiest day since June 3, Bloomberg-compiled data show. 

R1 RCM’s buyout, announced in August, put an $8.9 billion enterprise value on the firm. Deutsche Bank and Royal Bank of Canada were prepping a $4.5 billion debt package to help fund the purchase, including a leveraged loan of as big as $4.1 billion, Bloomberg previously reported. The acquisition is targeted to close by year’s end. 

Commitments on the proposed loans are due at 12 p.m. ET on Oct. 25.

--With assistance from Andrew Kostic.

©2024 Bloomberg L.P.