UPDATE 9: Ares’s, QIC’s Up-To AUD 240M Five-Year Facility to Finance Genesis Takeover Bid of Pacific Smiles Pays BBSY + 5-6.00%, PIKable; Caps Net Leverage At 5x-7.25x

Thu Sep 19, 2024 11:36 PM ET: The Ares Management and QIC Limited up-to 240 million Australian dollar ($119.25 million) secured five-year private credit facility backing a Genesis Capital-led consortium’s up-to AUD 224 million ($152 million) bid for Australian dental clinic operator Pacific Smiles Group Ltd. will carry a cash interest rate of bank bill swap bid rate (BBSY) plus 5%-6.00% per annum, based on a leverage grid, according to the Sept. 17 bidder’s statement. The committed facility includes up-to AUD 175 million to back the bid; AUD 55 million that could fund future permitted acquisitions, growth capital expenditure and restructuring costs; and AUD 10 million that could be retained as balance sheet cash, as per the statement. The margin varies for each interest period based on the prevailing net-leverage ratio, implying a cash interest expense of AUD 12.3-17.7 million, assuming a BBSY of 4.50%, according to the statement. That illustratively implies an interest coverage ratio of 1.6–2.3x, based on the financial year 2024 underlying EBITDA of AUD 28.2 million. The BBSY floor is 1%. Genesis can PIK up-to 2 percentage points of the interest margin during the first 24 months following the draw down but the margin would increase by[...]