Adtalem to launch $1.4 billion credit facilities on Thursday

By Sara Rosenberg

New York, Feb. 3 – Adtalem Global Education Inc. is scheduled to hold a lender call at 1 p.m. ET on Thursday to launch its $1.4 billion of senior secured credit facilities, according to a market source.

Morgan Stanley Senior Funding Inc. is the left lead arranger on the deal. Other lead arrangers include Barclays, Credit Suisse Securities (USA) LLC and MUFG.

The facilities consist of a $400 million revolver and a $1 billion term loan B.

Based on a commitment letter filed last year with the Securities and Exchange Commission, the revolver is expected to have a five-year maturity and be priced at Libor plus 375 basis points with a 0% Libor floor, and the term loan B is expected to have a seven-year maturity, be covenant-lite, have 101 soft call protection for six months and be priced at Libor plus 400 bps with a 0.5% Libor floor. Both the revolver and the term loan are expected to include a 25 bps step-down at 0.5x less than closing date first-lien net leverage and another 25 bps step-down at 1x less than closing date first-lien net leverage.

Proceeds will be used to help fund the acquisition of Walden University from Laureate Education Inc. for $1.48 billion and refinance Adtalem’s existing credit agreement.

Other funds for the transaction are expected to come from cash on the balance sheet and $650 million of senior secured notes, which are backed by a commitment for a $650 million one-year senior secured bridge loan priced at Libor plus 400 bps with a 1% Libor floor. The bridge loan spread will increase by 50 bps every three months until it hits a specified cap.

Closing is expected in the first quarter of fiscal year 2022, subject to regulatory approvals and other customary conditions.

Net leverage is anticipated to be 2.8x, and total gross leverage is expected to be 3.6x. The company believes it will be able to delever to under 2x within 24 months of close.

Adtalem is a Chicago-based workforce solutions provider. Walden University is an online health care education provider.

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