Earlier this week,
Tenet Healthcare Corporation
) 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
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.
) - Zacks Rank #1 (Strong Buy) - and
Coventry Health Care Inc.
) - Zacks Rank #2 (Buy) - are worth considering.
ACADIA HEALTHCR (ACHC): Free Stock Analysis
COVENTRY HLTHCR (CVH): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis
TENET HEALTH (THC): Free Stock Analysis
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