HCA plans $2 billion dividend to owners

by Anne Zieger on November 10, 2010

HCA  has set plans to pay a $2 billion dividend to its owner, a group of private equity investors including KKR & Co., Bank of America and Bain Capital.  This comes four years after HCA went private in an extravagant $33 billion leveraged buyout.

The dividend might have been paid by proceeds from a $4.6 billion IPO of HCA had its druthers, but the U.S. IPO market hasn’t been kind of late. In fact, 55 U.S. companies have withdrawn or postponed  such offerings this year, including HCA itself.

Instead, HCA is turning to the bond market, funding the dividend with a $1.53 billion high-yield bond issue. 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

Execs had originally planned to raise $2.5 billion net of the total through the IPO, and use the the proceeds to repay its considerable debt load.

The dividend comes as HCA celebrates a strong third quarter. Q3 net income shot up 24 percent over the same quarter last year, hitting $243 million, the company reported recently.  Sales rose 1.5 percent to $7.67 billion.

 

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