By Paul Deckelman
New York, May 9 – Community Health Systems Inc. priced an upsized $900 million add-on offering (Ba3/BB-) to its existing 6¼% senior secured notes due March 31, 2023, high-yield syndicate sources said Tuesday.
The deal was enlarged from an originally announced $700 million.
The notes priced at 101.75 to yield 5.83%, right in the middle of price talk of 101.5 to 102.
The same-day quick-to-market offering was shopped to prospective buyers via a mid-morning ET investor call, with pricing several hours after that.
The Franklin, Tenn.-based hospital operator’s wholly owned CHS/Community Health Systems, Inc. subsidiary will be the official issuer of the bonds.
The SEC-registered offering came to market via a large syndicate of underwriters, consisting of book-runners Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc., and Wells Fargo Securities, LLC, as well as co-managers BBVA Securities Inc., Fifth Third Securities, Inc., Morgan Stanley & Co. LLC and Scotia Capital (USA) Inc.
The bonds will be immediately fungible with the existing $2.2 billion of such notes that the company sold earlier this year, in a quick-to-market offering that priced at par on March 31, after having been upsized from an originally announced $1.75 billion.
The add-on notes will have the same terms as the existing notes, including call protection until March 31, 2020, when they will first become callable at 103.125.
There is also an equity clawback provision allowing for up to 40% of the issue to be redeemed at 106.25 until March 31, 2020, and a change-of-control provision allowing holders to put the bonds back to the company at 101 plus accrued interest.
Community Health intends to use the net proceeds of the offering, plus available cash on hand, to prepay and extinguish its term loan A facility and to pay related fees and expenses.
It indicated that the additional $200 million of proceeds after the upsizing will be used for general corporate purposes, which may include the repayment of secured debt.
| Issuer: | CHS/Community Health Systems Inc.
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| Amount: | $900 million (upsized from originally announced $700 million)
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| Maturity: | March 31, 2023
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| Securities: | Add-on to existing senior secured notes
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| Bookrunners: | Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc., | Wells Fargo Securities, LLC
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| Co-managers: | BBVA Securities Inc., Fifth Third Securities, Inc., Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc.
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| Coupon: | 6¼%
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| Price | 101.75
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| Yield to worst: | 5.83%
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| Spread: | 389 bps
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| Call protection: | Non-call until March 31, 2020, then at 103.125
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| Equity clawback: Up to 40% of issue until March 31, 2020 at 106.25
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| Trade date: | May 8
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| Settlement date: | May 12
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| Ratings: Moody’s: Ba3
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| S&P: BB-
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| Distribution: | SEC-registered
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| Price talk: | 101.5 to 102
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| Marketing: | Quick-to-market
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