Published on 9/9/2019 in the Prospect News High Yield Daily.
New Issue: Encompass Health prices upsized $1 billion of senior notes in two tranches
By Cristal Cody
Tupelo, Miss., Sept. 9 – Encompass Health Corp. priced an upsized $1 billion two-tranche registered offering of senior notes (B1/B+) on Monday, according to a market source.
The company sold $500 million of senior notes due Feb. 1, 2028 at par to yield 4½%, or 295 basis points over Treasuries.
Initial price talk was at the 4½% to 5% area.
Encompass Health priced $500 million of senior notes due Feb. 1, 2030 at par to yield 4¾%. The 2030 notes were initially talked to print at the 4¾% to 5% area. The spread was 313 bps over Treasuries.
The two-part deal was upsized from $800 million.
Citigroup Global Markets Inc. was the left bookrunner. Joint bookrunners were Barclays, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Regions Securities LLC, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC.
The issues are guaranteed by Encompass Health subsidiaries that guarantee borrowings under the company's credit agreement and other capital markets debt.
Encompass Health plans to use the proceeds to pay about $218 million to fund the purchase of equity from management investors of its home health and hospice segment, to refund $400 million of its 5¾% senior notes due 2024 and to repay borrowings under the company’s revolving credit facility. Remaining proceeds will be used for working capital and other general corporate purposes.
Encompass Health is a Birmingham, Ala.-based health care services company.
| Issuer: | Encompass Health Corp.
|
| Guarantors: | Company subsidiaries that guarantee borrowings under its credit agreement and other capital markets debt
|
| Amount: | $1 billion
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| Description: | Senior notes
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| Bookrunners: | Citigroup Global Markets Inc. (left), Barclays, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Regions Securities LLC, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC
|
| Trade date: | Sept. 9
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| Settlement date: | Sept. 18
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| Ratings: | Moody’s: B1
|
| S&P: B+
|
| Distribution: | SEC registered
|
|
|
| Notes due 2028
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| Amount: | $500 million
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| Maturity: | Feb. 1, 2028
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| Coupon: | 4½%
|
| Price: | Par
|
| Yield: | 4½%
|
| Spread: | Treasuries plus 295 bps
|
| Call features: | Make-whole call at Treasuries plus 50 bps before Feb. 1, 2023; on or after Feb. 1, 2023 at 102.25, Feb. 1, 2024 at 101.125 and Feb. 1, 2025 and thereafter at par
|
| Change-of-control put: | 101%
|
| Equity clawback: | Up to 35% of notes at 104.5 until Feb. 1, 2023
|
| Price guidance: | 4½% to 5% area
|
|
|
| Notes due 2030
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| Amount: | $500 million
|
| Maturity: | Feb. 1, 2030
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| Coupon: | 4¾%
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| Price: | Par
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| Yield: | 4¾%
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| Spread: | Treasuries plus 313 bps
|
| Call features: | Make-whole call at Treasuries plus 50 bps before Feb. 1, 2025; on or after Feb. 1, 2025 at 102.375, Feb. 1, 2026 at 101.583, Feb. 1, 2027 at 100.792 and Feb. 1, 2028 and thereafter at par
|
| Change-of-control put: | 101%
|
| Equity clawback: | Up to 35% of notes at 104.5 until Feb. 1, 2025
|
| Price guidance: | 4¾% to 5% area
|
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