Radiology Partners is seeking to raise at least USD 300m of preferred equity in a move to strengthen its financing position and flexibility, three sources familiar with the matter said.

The healthcare services group today (January 19) announced a set of new financing transactions to extend debt maturities without providing details on the amount of equity it planned to raise.

The news sent Radiology Partners’ debt up sharply with the USD 800m 5.25% senior secured notes due 2025 trading at 91 for a yield of 10.61% compared to 82.5 on Tuesday, according to MarketAxess. The issuer’s USD 710m 9.25% senior notes due 2028 traded at 65.5 today, rallying 10 points from the last sizable trade of 51.9 on 2 January.

In early quotes, Radiology Partners’ USD 1.6bn Libor+ 425bps first lien term loan was quoted at 89/90, up from 84.15/85.45 on Thursday, according to Markit.

As part of the recapitalization plan announced Friday, Radiology Partners said it had reached an agreement with lenders to extend maturities on its revolving credit facility and first lien term loan to 2028 and 2029, from 2024 and 2025, respectively. It also launched an exchange offer for the 2025 senior secured notes to move into new first lien notes due 2029, and 2028 unsecured notes to switch to new second lien notes due 2030.

Radiology Partners’ liquidity came under pressure last year amid rising employee costs and delays in collecting some receivables due to the No Surprises Act, according to ratings agencies.

The company — backed by Starr Investment Holding, New Enterprise Associates and Future Fund — started to look for new preferred equity over the summer to help facilitate a refinancing of upcoming maturities. Creditors, meanwhile, organized with Gibson Dunn and Centerview Partners advising.

Since then, Radiology Partners reported improving earnings and won a favorable ruling in a dispute with United Healthcare Group over payments. The next phase of the arbitration process with United is slated for February 2024.

For 3Q23 earnings, Radiology Partners reported adjusted EBITDA jumped 11.5% YoY to USD 126.1m, compared to USD 113.1m posted in 3Q22, as reported. Liquidity at quarter-end totaled roughly USD 161m split between USD 56.8m of cash and USD 104.2m of revolver availability. As of 30 September, total net leverage stood at 6.7x, through USD 3.35bn of total net debt and consolidated pro forma EBITDA of USD 500.32m.

Kirkland & Ellis, Sidley Austin and Moelis & Company advised Radiology Partners.

Representatives for the investors did not respond to a request seeking comment. Radiology Partners declined to provide additional comment aside from information shared in its press release.