Smile Doctors LLC is privately pursuing options to refinance about $2 billion of outstanding debt, according to people familiar with the discussions. The company is seeking lower borrowing costs by moving existing loans into the US leveraged loan market, with Barclays Plc appointed to run the potential transaction.
The dental-services operator currently has debt held by a number of private lenders, among them Blackstone Inc. and Antares. Those loans presently carry an interest spread of 5.75 percentage points above the Federal Reserve's secured overnight financing rate benchmark. Company representatives believe that placing the loan with a wider set of investors could reduce the effective cost of borrowing.
Proceeds from the debt now being considered for refinancing were used to finance an investment by THL in January 2022. Prior to that, Linden took a majority stake in Smile Doctors in 2017.
People familiar with the matter emphasize that conversations are in early stages and that a transaction may ultimately not occur. No additional details on timing, structure or pricing have been disclosed in the discussions reported so far.
Context and market focus
This effort would route existing private loans into the syndicated US leveraged loan market, a venue where collateralized debt obligations and institutional investors commonly purchase loans. The goal stated by those involved is to reduce the company's borrowing costs by expanding the investor base for the debt.
What is known
- Smile Doctors is considering refinancing approximately $2 billion of debt.
- Barclays Plc has been appointed to lead potential activity in the US leveraged loan market.
- Existing lenders include Blackstone Inc. and Antares, and the loans carry a spread of 5.75 percentage points over the Fed's SOFR benchmark.
Deal status
Those familiar with the conversations caution that the process is exploratory. There has been no confirmation that terms have been agreed or that financing will proceed. The company and advisors are, by these accounts, examining whether a broader sale of the loan can deliver lower interest costs.