HCA sets pricing in tender for 8.85%, 7%, 7¼%, 5¼%, 5½% notes

By Laura Lutz

Des Moines, Nov. 13 - HCA Inc. announced the pricing in its tender offer and consent solicitation for all of its outstanding 8.85% medium-term notes due 2007, 7% notes due 2007, 7¼% notes due 2008, 5¼% notes due 2008 and 5½% notes due 2009.

For each $1,000 principal amount of notes, the company will pay $1,003.35 for the 8.85% notes; $1,008.18 for the 7% notes; $1,027.18 for the 7¼% notes; $1,000 for the 5¼% notes; and $1,009.06 for the 5½% notes.

Pricing was based on the sum of the present value of the notes on the initial settlement date and the yield to maturity of a reference security as of 2 p.m. ET on Nov. 13 plus 50 basis points, less accrued interest.

The reference security for the 8.85% notes is the 3% U.S. Treasury due Dec. 31; for the 7% notes, the 3 5/8% U.S. Treasury due June 30, 2007; for the 7¼% notes, the 5 5/8% U.S. Treasury due May 15, 2008; for the 5¼% notes, the 4 3/8% U.S. Treasury due Nov. 15, 2008; and for the 5½% notes, the 3½% U.S. Treasury due Nov. 15.

The reference yields were 6.026% for the 8.85% notes, 5.629% for the 7% notes, 5.35% for the 7¼% notes, 5.28% for the 5¼% notes and 5.173% for the 5½% notes.

There was a $1,000 floor on the considerations for each $1,000 principal amount of the 5¼% and 5½% notes.

The payouts include a $30.00 consent payment for notes tendered before the consent deadline. Notes tendered after the deadline will not receive the consent payment.

As previously reported, the company had received tenders and consents from holders of a majority of the notes by the consent deadline at 5 p.m. ET on Oct. 20.

Specifically, HCA said it received tenders from holders of $105.9 million of the 8.85% notes, $190.5 million of the 7% notes, $180.2 million of the 7¼% notes, $346.7 million of the 5¼% notes and $495.5 million of the 5½% notes by the consent deadline.

The company said it expects to enter into a supplemental indenture.

The company was seeking consents to amend the notes to eliminate substantially all of the restrictive covenants and an event of default as well as to modify the covenant regarding mergers, consolidations and substantial property transfers.

The offer and consent solicitation is linked to HCA's merger with an entity controlled by Bain Capital Partners, LLC; Kohlberg Kravis Roberts & Co. LP; and ML Global Private Equity Fund, LP.

The tender offer expires at midnight ET on Nov. 27. It began on Oct. 6.

Holders who submit tenders must also provide consents, and vice versa.

Settlement of the tender offer and the merger were not conditional on the receipt of the needed consents.

Citigroup Global Markets Inc. (800 558-3745 or collect 212 723-6106), Banc of America Securities LLC (888 292-0070 or collect 704 388-4813), J.P. Morgan Securities Inc. (collect 212 270-7407) and Merrill Lynch, Pierce, Fenner & Smith Inc. (888 654-8637 or collect 212 449-4914) are the dealer managers.

Global Bondholder Service Corp. (866 924-2200 or collect 212 430-3744) is the information agent.

Nashville-based HCA is a holding company for hospitals and related health systems.

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