By Agency Reporter

Wednesday, 10 Nov 2010

HCA Incorporated the hospital chain acquired four years ago in a $33bn leveraged buyout, plans to issue a $2bn dividend to pay private-equity owners including KKR & Company and Bain Capital LLC.

The dividend will be partly funded with a $1.5bn high-yield bond issue, according to a statement on Tuesday, by the Nashville-based company.

According to Bloomberg, HCA Inc., the hospital chain acquired four years ago in a $33bn leveraged buyout, plans to pay a $2bn dividend to owners, including KKR & Co., Bain Capital LLC and Bank of America Corp.

The dividend will be partly funded with a $1.53bn high-yield bond issue.

A planned share sale is still pending, Chief Executive Officer Richard Bracken said at a conference on Tuesday.

HCA, which in May filed to sell shares worth as much as $4.6bn, is using the dividends to pay investors, after 55 companies in the United States withdrew or postponed initial public offerings this year. Buyout firms including Bain and Carlyle Group have bought publicly traded companies in recent months, as stocks are selling at the biggest discount to debt, when comparing cash flow and investment-grade bond yields.

“We will assess a timing of the launch, based on overall market conditions, sector performance and input from our underwriters,” Bracken said, declining to take questions on the conference call.

HCA, in the May filing, said it plans to raise a net $2.5bn of the total by selling new shares and will use the proceeds to repay debt.

The hospital operator may profit from the health-care legislation President Barack Obama signed into law on March 23, that provides for coverage for millions of uninsured patients, said Sheryl Skolnick, an analyst at CRT Capital Group LLC in Stamford, Connecticut.

HCA will use Citigroup Inc., Bank of America and JPMorgan Chase & Co. as underwriters, said a person briefed on the plans who asked not to be identified.

The bonds will be issued as senior unsecured notes due 2021 and will be used to fund the dividend and pay related fees and expenses, HCA said in the statement.

The company said it will also tap revolving credit agreements for the dividend.

HCA’s 7.25 per cent notes, due in September 2020, rose 19 cents on the dollar to 109.31 cents as at 9.22am, according to Trace, the bond price reporting system of the Financial Industry Regulatory Agency.

Source:Punch