HCA sets price talk on $16.8 billion facility ahead of three-day launch fest

By Sara Rosenberg

New York, Oct. 20 - HCA Inc. started floating price talk on its $16.8 billion credit facility around the market as the deal is getting ready to launch into general syndication with bank meetings in Los Angeles on Monday, in New York on Tuesday and in London on Wednesday, according to a market source.

The $8.8 billion seven-year term loan B (Ba3) is being talked at Libor plus 275 bps, the $1.25 billion eight-year euro term loan (Ba3) is being talked at Euribor plus 275 bps, the $2.75 billion six-year term loan A (Ba3) and $2 billion six-year revolver (Ba3) are being talked at Libor plus 250 bps, and the $2 billion six-year asset-based revolver (Ba2) is being talked at Libor plus 175 bps, the source said.

Previously, the term loan A was expected to carry a size of $2.25 billion and the term loan B was expected to carry a size of $9.3 billion, but the syndicate opted to shift $500 million to the A loan from the B loan before the general syndication launches on strong pro rata interest.

A senior managing agents meeting for the deal took place on Aug. 15.

Bank of America, Citigroup, JPMorgan, Merrill Lynch, Deutsche Bank and Wachovia are the bookrunners on the deal, with Bank of America acting as the left lead.

Proceeds from the bank deal, along with up to $5.7 billion in high-yield notes, will be used to help fund the leveraged buyout of HCA by Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

The financing structure contemplates a leverage multiple of 6.6 times based on latest 12 months EBITDA of $4.241 billion at June 30. EBITDA to cash interest expense would be 1.8 times and total debt to total capitalization would be 84.1%.

Under the LBO agreement, the consortium will acquire HCA for $51.00 in cash for each share. The transaction is valued at about $33 billion, including the assumption or repayment of $11.7 billion of debt.

The consortium is anticipated to contribute around $5.3 billion in equity for LBO financing as well.

HCA is a Nashville, Tenn., health care services company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.