Earlier this week,
Tenet Healthcare Corporation
) announced the private offering of 4.75% senior secured notes due
2020, worth $500 million and 6.75% senior unsecured notes due 2020,
worth $300 million. The offer is projected to close on October 16,
2012, subject to the fulfillment of customary closing
Tenet will use the proceeds from the issuance for buying back
its outstanding 7.375% senior notes due 2013, worth $216 million.
The company has already announced a tender offer for the cash
purchase, which is scheduled to expire on October 29, 2012.
Holders of the senior notes who validly tender their notes
before the specified early tender time on October 15, 2012, will
receive an early tender premium of $30 per $1,000 principal value
of the notes. This takes their total consideration to $1,019.67 per
$1,000 principal value. They will also receive any accrued and
unpaid interest till the date when the initial settlement is made,
which is projected to be on October 16, 2012.
Further, holders of the senior notes, who validly tender their
notes between the early tender time and the expiry of the tender
offer, will not receive the early tender premium. Thus, their
consideration will be of $989.67 per $1,000 principal value of
notes. However, they will also receive the accrued and unpaid
interest till the final settlement date, which will likely be
October 30, 2012.
Remaining proceeds from the private offer of senior notes will
be used for repurchasing Tenet's outstanding senior notes and for
funding general corporate needs such as financing planned
acquisitions and repayment of debt and drawings under the senior
secured revolving credit facility.
Fitch has assigned a 'BB/RR1' rating to the senior secured notes
and 'B-/RR5' rating to the senior unsecured notes. Further, the
rating agency revised the rating of the outstanding senior
unsecured notes to 'B-/RR5' from 'B/RR4.' The outlook on these
ratings is stable.
Meanwhile, according to Reuters,
) has rated the secured and unsecured noted at 'b1' and 'caa1',
respectively. Standard & Poor's Rating Services (S&P) has
also assigned a 'B+" issuer level rating to the senior secured
notes and 'CCC+' to the senior unsecured notes, as per Reuters.
Further, this rating agency downgraded the issuer level rating on
Tenet's senior secured term debt to 'B+' from 'BB-.'
The senior notes offer is a part of Tenet's financial and
strategic plans, announced on October 1, 2012, comprising
acquisitions, share repurchases, debt repayment and a reverse stock
split. With these plans, the company is aiming at enhancing
business growth and optimizing capital structure, thereby boosting
Tenet Healthcare, which competes with
Community Health Systems Inc.
), carries a Zacks #2 Rank, which translates into a short-term Buy
rating. We maintain a long-term Outperform recommendation on the
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