What is HCA thinking /
Possible stock offering could raise $3 billion, cut debt
HCA continued last week to take steps toward resolving the debt maturities it faces in 2012 and 2013. The biggest step could come in the form of an initial public offering of stock used to pay down some of that maturing debt, according to two unnamed sources quoted by Bloomberg News. The sources said that the offering could be worth between $2.5 billion to $3 billion, while another unnamed source cited in the report said it could go as high as $4 billion.
The company also said in a securities filing that lenders who financed its 2006 buyout have agreed to push back by four years the maturity on $2 billion in different tranches of a term loan due in November 2013. In return, HCA is agreeing to boost the interest it pays on those tranches by 1 percentage point, the filing said.
The two original sources in the Bloomberg story said that the proceeds of an IPO would go toward reducing HCA’s debt, rather than providing returns to the company’s owners. The $33 billion leveraged buyout of HCA in November 2006 was led by three privateequity firms—Bain Capital, BAML Capital Partners and Kohlberg Kravis Roberts & Co.—and members of both the Frist family and the management team. The company’s debt stood at $25.67 billion as of Dec. 31, 2009, according to a securities filing. Since then, the company has announced a $1.75 billion distribution to its shareholders