$300m (+45m) sen unsec cb coming tonight from JPM/Citi. Terms : 7 yr 1-1.5% up 27.5-32.5%, full pctns. UOP = hedge/repay debt. Co has experienced a weak op/environment but vitals still relatively solid.
CB ranks behind sec/loan & revolver. We’d assume L+350 for 7 yr. ADV = 3.2m, low OI in leaps but 01/14 same delta calls is 35iv bid, 2y90d 10/50ile = 36/48 vol. We’d assume 32 vol. Theo = 103.2
Software space popular in CB market but spreads are very tight in sector (ok in short term but this is 7 yr). Given CSOD/WDAY pricing MDRX actually looks decent. TTWO, MDRX, N, CRM, CSOD and WDAY replacing SYMC. MDRX will be one of the better profiles/valuations. We’d BUY
—> Daiwa New Issue Credit Color: Allscripts Healthcare Sol <–
* Healthcare s/w solutions for hospitals, health systems, physician’s practices, post-acute orgs.
* PF Cash $94mm PF Debt $544mm LTM EBITDA $139mm
LTM FCF $110mm Leverage 3.9x Mkt Cap $2437mm
* MDRX has exp weak op perf in recent qtrs from prod integration issues, declining new system sales, & higher debt load due to acq & share repurchases. Co competes against CERN & Epic who dominate space. Benefit from recurring rev of s/w maint contr & increasing healthcare IT adopt. Consistent +FCF generator. Liquidity good w/ full $250mm rev avail following pay down w/ proceeds. Converts rank behind secured term loan & revolver.
* Our assigned spread —>L+350<— Src: Bloomberg, Co Filing