(Bloomberg) — A group of private credit lenders led by Oak Hill Advisors is in discussions to provide about $1 billion of debt to support Vista Equity Partners’ acquisition of Model N, according to people with knowledge of the matter, who asked not to be identified because the details are private.
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Brinley Partners, KKR & Co., Morgan Stanley’s direct lending arm and New Mountain Capital are also participating in the financing, one of people added. The package consists of a $735 million loan, a $150 million delayed-draw term loan and an $80 million revolving credit facility, the person said.
Pricing is expected at 5 percentage points over the Secured Overnight Financing Rate, at a discounted price of 99 cents on the dollar, the people said. Leverage, a ratio of debt to earnings, is around 8 times based on roughly $90 million of earnings before interest, taxes, depreciation, and amortization, they said.
Representatives for Vista, Oak Hill, Brinley, KKR, Morgan Stanley and New Mountain declined to comment. A representative for Model N did not immediately reply to requests for comment.
Private credit firms have a healthy pool of cash to put to work, but they face competition from other lenders to win a role financing leveraged buyouts. The Model N talks come as other sponsors are considering direct lenders for their own acquisitions.
Guggenheim Partners is talking to lenders, including private credit firms, to gauge their interest in financing the potential buyout of Macy’s Inc., while materials company Kymera International has reached out to private credit firms to refinance its debt and pay for a potential acquisition, Bloomberg reported.
Model N, a revenue management solutions business, is being taken private by Vista Equity Partners in an all-cash transaction valued at about $1.25 billion, according to a news release from April 8. The acquisition is expected to close in mid-2024.
Read more: With 88 Deals in 72 Hours, It’s Risk-On in Global Credit Markets
–With assistance from Davide Scigliuzzo.
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