Pacific Investment Management Co, King Street Capital Management, and Partners Group are among the AmSurg owners netting nearly US$4bil from the deal. — Bloomberg
NASHVILLE: The sale of AmSurg, an ambulatory surgery company once part of KKR & Co-backed Envision Healthcare Corp, caps an epic distressed-debt saga that will hand a windfall to investors that took ownership of the business after an ugly debt brawl.
Pacific Investment Management Co, King Street Capital Management, and Partners Group are among the AmSurg owners netting nearly US$4bil from the deal to sell the company to Ascension Health, one of the biggest nonprofit health systems in the United States.
The deal closes a chapter that began when KKR shook markets in 2022 with a massive debt restructuring that divided investors in a way that would become only more common – and controversial.
The denouement offers a chilling warning to those unwilling – or unable – to break ranks and double down on troubled investments in order to salvage potential recoveries.
That complex 2022 restructuring saw Pimco, King Street and Partners Group – then Envision creditors – help provide an infusion of more than US$1bil to Envision at a time when higher labor costs and the impact of Covid-19 had damaged its prospects.
The financing came as a blow to other existing creditors, who had formed a group to negotiate as one unit with the company and sought to block Envision from raising new financing from third-party funds.
The trio is now cashing in through the deal which values AmSurg at more than fifteen times a measure of its annual earnings, according to sources.
The sale price represents an almost 90% return on just one portion of that investment, which involved the 2023 purchase of a remaining stake in the business, according to figures shared by two people with knowledge of the calculations.
Columbus Hill Capital Management, also an AmSurg shareholder at the time of the sale, wasn’t a part of the pre-bankruptcy transactions, some of the source said.
Representatives for Columbus Hill, Pimco, King Street and Partners Group declined to comment. — Bloomberg
