HCA Plans $2B Payout for Buyout Group
NEW YORK (
) --
HCA Inc.
is planning to pay a $2 billion dividend to its existing shareholders, which include buyout firms
KKR & Co.
(KKR) - Get Report
and
Bain Capital
.
The massive hospital operator made the disclosure as part of its third-quarter report. It plans to fund part of the payout with a sale of $1.525 billion worth of senior unsecured notes, which was announced in a separate press release. The notes are to be issued by HCA Holdings, a new corporate entity to be formed as part of a corporate reorganization.
HCA Inc. filed an S-1 statement with the
Securities and Exchange Commission
on May 7 to sell $4.6 billion worth of common stock in an initial public offering.
The company went private in a deal worth more than $30 billion upon its completion in late 2006. The acquiring investor group included KKR and Bain along with Merrill Lynch's private equity operations, which are now owned by
Bank of America
(BAC) - Get Report
, as well as HCA Founder Dr. Thomas Frist Jr. and members of the company's management team.
Dividend recapitalizations have seen a resurgence of late in private equity circles. Examples that have come to light just this month include
North American Breweries, a portfolio company of KPS Capital Partners, making a $78 million distribution to shareholders on Nov. 5
; PETCO Animal Supplies, which is
reportedly looking to raise $1.7 billion for a payout to its shareholders
, including Leonard Green & Partners and TPG Capital; and Burlington Coat Factory, which is also
reportedly getting in on the act
with its own $1 billion debt sale to fund a payout for shareholders, primarily Bain Capital.
HCA Inc. said
, assuming its proposed reorganization is completed as contemplated.
The company said its leverage ratio -- defined as long-term debt to adjusted EBITDA -- stood at 4.52X as of Sept. 30, and that it estimates the payout would lift this ratio to 4.88X on a pro forma basis as of the same date.
For the three months ended Sept. 30, net income attributable to HCA Inc. totaled $243 million, the company said, with revenue rising 1.9% year-over-year to $7.65 billion.
--
Written by Michael Baron in New York.
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