Pricing is still in flux, but based on comparable transactions in the space would likely be in the mid-500bps range over SOFR, the sources said. Some suggested that Carlyle is leaning towards the private credit financing; Carlyle declined to comment.

Investment banks are also trying to get in on the action, however — and the solutions they are offering could be much cheaper for the sponsor.

Underwritten debt proposals are understood to offer coupons in the low-to-mid 400bps range over SOFR, with two or three points of OID. Leverage is being talked in the mid-5x range, sources said.

An underwritten bank deal would involve significant fees, however. Certainty of execution could also be a concern, sources noted. As we’ve reported, multiple issuers in the leveraged loan market have been forced to make concessions in recent syndications as broader equity and bond markets sell off.

Alphia is one such example from this week. The pet food company offered documentation changes, and priced its deal later than expected and wide of initial talk.

In light of that, a private credit financing could be especially attractive for Carlyle given the complexity of the proposed transaction, sources noted: getting a small group of private lenders comfortable with the deal would likely be easier than a broad syndication.

Carlyle is bidding to carve out assets from Medtronic, rather than acquire the entire company. While those businesses have a stable end market, they would also form a very large organization with a complex and diverse product line, one source said.

Blackstone and Ares declined to comment. Medtronic did not respond to a request for comment.