Tenet Closes Senior Notes Offering - Analyst Blog
February 08 2013 - 12:50PM
Zacks
Earlier this week, Tenet Healthcare Corporation
(THC) completed the previously-announced private offering of senior
notes. Consequently, the company issued $850 million worth of 4.5%
senior secured notes, scheduled to mature in 2021.
Tenet Healthcare will use the amount raised to repurchase its
outstanding 10% senior secured notes due 2018. Residual proceeds
will be used by the company to buy back other outstanding senior
secured notes, repay debts and drawings made under the senior
secured credit facility, acquisition and for other corporate
expenses.
Tenet Healthcare announced a tender offer for the repurchase of
the 10% senior secured notes in January and received valid tenders
for $644.5 million worth of notes till the consent payment deadline
on Feb 4, 2013. Holders of these notes will receive the principal
amount along with accrued and unpaid interest and a consent payment
of $30 per share. This amounts to a receipt of $1164.50 for every
$1000 principal amount held.
Holders of the 10% senior notes who submit a valid tender after
the consent payment ate but prior to the expiry of the tender offer
will not receive the consent payment. As a result, they will
receive only $1134.50 for every $1000 principal amount held. The
final settlement for the tender offer is expected on Feb 20,
2013.
The new issuance would require Tenet Healthcare to pay an annual
interest of $38.3 million. Nevertheless, the company’s solid
operational performance generates enough funds to service the debt
uninterruptedly. Its interest expense in the third quarter shot up
74.6% year over year.
Tenet Healthcare is expected to release its fourth-quarter and
full year 2012 earnings results on Feb 25. The company currently
carries a Zacks Rank #2 (Buy).
Other healthcare service companies like Acadia
Healthcare Company, Inc. (ACHC) – Zacks Rank #1 (Strong
Buy) – and Coventry Health Care Inc. (CVH) and
Molina Inc. (MOH) – Zacks Rank #2 (Buy) – are
worth considering.
ACADIA HEALTHCR (ACHC): Free Stock Analysis Report
COVENTRY HLTHCR (CVH): Free Stock Analysis Report
MOLINA HLTHCR (MOH): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis Report
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