KKR-backed GenesisCare taps US debt markets

GenesisCare is seeking $245 million in first lien, senior secured Term Loan B financing, plus a revolving credit facility of A$30 million ($28 million). The company will fully hedge its forecast principal and interest exposure for 5-6 years in order to address foreign exchange risk.

According to Standard & Poor's, GenesisCare's debt-to-EBITDA ratio will rise to around 5x following the recapitalization, assuming some of the proceeds are returned to equity holders.

KKR has a 48% stake in the company, with the balance held by doctors and management. The private equity firm made its investment last year, facilitating the exit of domestic GP Advent Private Capital. According to AVCJ Research, Advent paid around A$48 million for a 32% interest in GenesisCare in 2009 and secured a 2.8x money multiple on exit.

The Sydney-based company was founded eight years ago and is Australia's leading provider of cardiology, radiation oncology and sleep treatments. It employs more than 1,100 staff, including a team of around 100 full-time doctors, and operates across 115 sites nationwide, principally private clinics and public hospitals. As of June 2012, GenesisCare had assets of around $322 million.

Other PE-controlled companies to refinance debt in the US include mining contractor Barminco Holdings, which is owned by Gresham Private Equity, and Pacific Equity Partners (PEP)-owned movie theater operator Hoyts Group.

The restructuring of Nine Entertainment led by Apollo Global Management and Oaktree Management, which tapped the US Term Loan B market for $700 million last autumn, is credited for doing much of the groundwork for the spate of US financing that has followed. According to Bloomberg, in the five months to March 2013, Australian companies raised a record $6.2 billion in high-yield debt via the US markets.

"We can swap out the currency and interest rate risk. That is one thing that has really changed in the last 12 months," Tony Duthie, managing director at PEP, told AVCJ this month. "We can swap these packages back and still be very competitive with a domestic structure. In addition to that, we find that some of the terms outside of pricing - such as tenor, covenants, and use of the funds - are more favorable than what we would get domestically."

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• Topics
• Financing
• Australasia
• Healthcare
• Buyout
• Leveraged finance
• Australia
• KKR
• healthcare