MultiPlan Corp. said it is talking with some debtholders about revamping its capital structure, a move which could result in losses for some investors.
The healthcare analytics company is working with Guggenheim Partners and Kirkland & Ellis as counsel, according to people familiar with the matter who asked not to be named discussing private details. Secured lenders have engaged Gibson Dunn & Crutcher and unsecured lenders are working with Akin Gump Strauss Hauer & Feld, the people added.
MultiPlan disclosed the debt discussions in a short regulatory filing Wednesday. Large holders Oak Hill Capital Management and Franklin Resources Inc. are probably driving the talks, wrote Bloomberg Intelligence credit analyst Mike Holland. He added the likely outcome will be discounted exchanges and “meaningful haircuts” given MultiPlan’s increasingly over-leveraged balance sheet.
Oak Hill and Franklin declined to comment.
“We continue to explore ways to ensure our capital structure enables the company to operate as efficiently and sustainably as possible,” MultiPlan said in an emailed statement.
MultiPlan’s earnings have weakened amid ongoing scrutiny from lawmakers and legal challenges aimed at its business model and pricing algorithms. Much of the company’s $4.6 billion debt load trades at distressed levels and shares have plunged 85% this year to 22 cents.
Recent troubles began after an April story published by the New York Times said MultiPlan services prompted unexpectedly large bills for some patients. The company has maintained its services lower costs. Chief Executive Officer Travis Dalton said during MultiPlan’s second-quarter earnings call last month that “we’ll continue to protect our reputation to defend our business against misinformation.”
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