THC to Refinance Senior Notes - Analyst Blog

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Earlier this week, Tenet Healthcare Corp. ( THC ) announced an offer to sell new 4.375% senior secured notes due 2021. The notes, which are worth $1.05 billion, will be sold through private placement.

The offer is scheduled to close on May 30, 2013. Fitch Ratings has assigned a "BB/RR1" rating to the notes with a stable outlook.

The capital stock and other ownership interests of a few Tenet Healthcare subsidiaries will act as collateral for the secured notes. The new notes are ranked at par with 6.25% senior secured notes due 2018, 8.875% senior secured notes due 2019, 4.750% senior secured notes due 2020 and 4.500% senior secured notes due 2021, which are secured with similar collateral.


Moreover, these notes are effectively senior to Tenet Healthcare's existing and future unsecured indebtedness and other liabilities up to the value of the collateral and are senior to all the existing and future subordinated debt. However, the new notes will be subordinated to the company's senior secured revolving credit facility obligations and the secured guarantees of its subsidiaries up to the value of the collateral securing the borrowings made under the facility.

Tenet Healthcare will use the proceeds from the private placement to buy back its outstanding 8.875% senior secured notes due 2019. The company announced a tender offer for the same on May 15, 2013.

Tenet Healthcare will make the payment for the outstanding notes, worth $925 million, in cash. The company has also called for an amendment to the indenture related to the notes and is seeking the consent of the holders.

While the offer is set to expire on Jun 12, 2013, holders who give their consent for the amendment and submit valid tenders for the notes before the consent payment deadline on May 29, 2103, will receive a consent payment of $30 per $1,000 principal value of the notes in addition to the offer consideration of $1,103.18 per $1,000 principal value and any accrued and unpaid interest from Tenet Healthcare. Holders who tender their notes after the consent payment date but before the expiry of the offer will only receive $1,103.18 per $1,000 principal value and any accrued and unpaid interest.

Tenet Healthcare carries a Zacks Rank #3 (Hold). Other stocks worth considering in the medical sector are VCA Antech Inc. ( WOOF ) - Zacks Rank #1 (Strong Buy), Molina Healthcare Inc. ( MOH ) - Zacks Rank #1 (Strong Buy) and WellPoint Inc. ( WLP ) - Zacks Rank #2 (Buy).



MOLINA HLTHCR (MOH): Free Stock Analysis Report

TENET HEALTH (THC): Free Stock Analysis Report

WELLPOINT INC (WLP): Free Stock Analysis Report

VCA ANTECH INC (WOOF): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: MOH , THC , WLP , WOOF

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