Tenet Healthcare Corporation
) recently decided to issue $850 million 4.5% senior secured
notes with maturity scheduled in 2021.
Subsequently, credit rating agency Standard & Poor's Rating
Services allotted an issue-level rating at "B+" and a recovery
rating of "2". Additionally Fitch Ratings also assigned Tenet's
senior secured notes due 2021 a "BB/RR1" rating with a stable
The proceeds from the issuance will be deployed to finance the
purchase of Tenet's 10% senior secured notes worth $174 million
due 2018. The remaining proceeds will be utilized to buyback
outstanding senior notes of the company privately or publicly as
well as to engage in deleveraging activities.
As of Sep 30, 2012, the debt-to-capital ratio for the company was
0.79x which represented an increase of 4 percentage points from
0.75x at 2011 end. With the issuance of the $850 million debt,
the debt-to-capital ratio is expected to increase further 3
percentage points to 0.82x.
The new issuance would require Tenet 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.
Last December, another healthcare service provider
HCA Holdings Inc.
) also decided to offer $1.0 billion aggregate principal amount
of senior notes. The proceeds from the issuance were intended to
be distributed to its shareholders and optionholders.
Tenet is expected to release its fourth-quarter and full year
2012 earnings results on Feb 25. The Zacks Consensus Estimates
for the fourth quarter is currently pegged at 70 cents
translating into year-over-year improvement of 74.3%. Earnings
for full year 2012 are expected to be $1.96 per share down 9.2%
year over year.
Tenet carries a Zacks Rank #3 (Hold). Other healthcare service
Acadia Healthcare Company, Inc.
) carry favorable Zacks Rank #1 (Strong Buy) and Zacks Rank #2
(Buy) respectively and are worth noting.
ACADIA HEALTHCR (ACHC): Free Stock Analysis
HCA HOLDINGS (HCA): Free Stock Analysis
MEDNAX INC (MD): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis
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