Payday at HCA
Community Health’s loans extended to 2017
HCA, Nashville, expects to make a $2 billion distribution to its shareholders in the fourth quarter, according to a company news release. The company also announced that it will offer nearly $1.53 billion in new senior unsecured notes due in 2021 to fund the distribution in part.
The distribution would be the third and largest HCA has made this year to its shareholders. The company announced distributions of $1.75 billion in January and $500 million in May. HCA is able to make distributions because of increases in earnings and cash flow that have led to improvements in its credit ratios, Richard Bracken, HCA’s chairman and CEO, said during a conference call.
An HCA joint venture in Texas separately agreed to buy the majority stake of Texsan Heart Hospital owned by MedCath Corp., Charlotte, N.C., marking MedCath’s fifth sales agreement since it formed a committee to study the company’s strategic options in March, according to a news release. MedCath owns 69% of 75-bed Texsan in San Antonio, with physician investors holding the rest. The buyer is Methodist Healthcare System, a 50-50 joint venture of HCA and Methodist Healthcare Ministries, San Antonio. In a securities filing, MedCath listed a sales price of $76.25 million plus an adjustment for retained working capital. The deal is expected to close in the first quarter of 2011.
In another financing move, Community Health Systems, Franklin, Tenn., and some of its creditors agreed to extend the maturity on $1.5 billion it owes under term loans that funded its acquisition of Triad Hospitals in 2007, according to a Community news release. The agreement pushes back the due date by 2½ years, from July 2014 to January 2017. Community agreed to pay 1.25 percentage points higher interest on the extended portion of its term loans, according to the company. The rate will be 3.5 percentage points above the London Interbank Offered Rate, or Libor. Community owes an additional $4.5 billion on term loans that remain due in July 2014.