September 8, 2017 / 3:19 PM / 10 months ago

LPC: KKR's Covenant Surgical Partners buy supported by US$195m loan

NEW YORK, Sept 8 (Reuters) - US private equity firm KKR & Co will finance its acquisition of US ambulatory surgery center operator Covenant Surgical Partners with a US$195m term loan, two sources close to the matter said.

The loan will be secured with a first-priority claim and is structured as a US$150m tranche that will be funded when the buyout closes and a US$45m delayed-draw tranche, the sources said.

Goldman Sachs and KKR Capital Markets are providing debt commitments, according to a press release. Goldman has been selectively approaching investors to gauge interest in the deal, one of the sources said. The bank and KKR declined to comment.

KKR on August 8 announced it will acquire Covenant Surgical from existing owners including DFW Capital Partners, Iroquois Capital Group and PineBridge Investments.

The transaction is the latest in a flurry of recent investments by KKR in US health and wellness companies. Since July, the buyout shop has struck deals to acquire online health information provider WebMD, vitamin and supplements maker Nature’s Bounty, pharmacy services provider PharMerica and medical transportation company American Medical Response.

Tennessee-based Covenant's last 12 months' Ebitda, or earnings before interest, taxes, depreciation and amortization, is roughly US$29m, the sources said. Based on that figure, the funded portion of loan will put the company’s debt-to-Ebitda at roughly 5.2 times.

The company will be capitalized with US$226m of equity, creating an enterprise value of roughly US$375m, the same sources said. (Reporting by Andrew Berlin; Editing By Michelle Sierra, Lynn Adler)

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