Pay­day at HCA

Com­mu­nity Health’s loans ex­tended to 2017

Modern Healthcare - - The Week In Healthcare - Vince Gal­loro

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.

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