Ares Management Corp. is arranging a $2.2 billion direct loan to bankroll a healthcare services acquisition, according to people familiar with the matter. The financing would support MedImpact Holdings Inc.'s planned purchase of Medical Card System, Inc., a company based in Puerto Rico that provides healthcare services.
Sources say the new borrowing is expected to carry a yield of at least 8 percentage points over the benchmark rate. The structure under discussion would place the new debt on a second-lien basis, which means the lenders taking part in this financing would not be first in line for repayment and, as a result, would face higher borrowing costs than senior creditors.
Negotiations for the loan are ongoing and specific terms are still being finalized, the people added. The arrangement represents one of the larger direct lending transactions reported since the private credit market experienced significant redemptions earlier this year.
Market reaction was visible in Ares' share price. Ares Management Corp Class A shares declined 2.3% on Wednesday following the reports.
This financing is intended to facilitate MedImpact's acquisition of Medical Card System, Inc. Beyond the headline size and lien position, details remain subject to change while parties continue to negotiate the final documentation and pricing.
Contextual note - details remain limited to the items above. The parties involved have not finalized all terms, and the transaction is still under discussion.