Huntsman Gay Buying Laboratory Software Company: Moody’s

Huntsman Gay Global Capital LLC, an upstart buyout shop working through a $1.1 billion debut fund, is leading an investor group expected to pay $208 million for a 51 percent stake in Sunquest Information Systems Inc., a provider of laboratory, radiology and pharmacy software products to hospitals and commercial laboratories. Get the full story at Buyouts.

Details of the complex transaction remain sketchy. But according to Moody’s Investors Service, the company would simultaneously borrow $655 million as part of proposed bank credit facilities. Along with $38 million of cash on hand, the company would use $630 million in proceeds from the debt offering to “fund a dividend to existing shareholders, refinance $115 million of outstanding debt, and pay related fees and expenses,” Moody’s said.

Vista Equity Partners, a technology-focused buyout shop with offices in San Francisco, Chicago, and Austin, Texas, helped create Sunquest in 2007 after buying the diagnostic systems business from Misys Healthcare Systems for a reported $381 million. The company is still listed as a portfolio company on the Vista Equity Partners Web site, suggesting it is one of the existing shareholders benefiting from the dividend. We were unable to reach executives at Vista Equity for comment, and an executive at Huntsman Gay declined to comment.

The $208 million that Huntsman Gay Global would invest for its 51 percent stake values the Tucson, Ariz.-based company at 10.3x EBITDA, according to Moody’s. At the same time, Moody’s reports that the leverage multiple following the transaction would be 6.8x EBITDA. According to a Buyouts analysis, these figures would suggest an enterprise value of $1.2 billion for Sunquest, annual EBITDA of $116.5 million, and outstanding debt following the transaction of $792 million.