HCA has decided not to exercise its option to issue new bonds instead of making an interest payment due in November. The payment was due on $1.5 billion in 10-year-notes that helped to finance the company's record-setting $33 billion leveraged buyout in 2006.
This is a change of direction for HCA, which announced last November that it planned to exercise its option for an interest payment due this month, a step allowing it to keep hold of $144 million in cash. In giving up the option this time, however, it still keeps the ability to do so for every semiannual interest payment due until November 2011.
The back and forth stems from last month, when HCA issued $1.5 billion in new bonds to partly refinance term loans coming due in 2012 and 2013. The term loans continue to suck cash away from operations; for example, in February, $300 million raised in new bonds also went toward repaying them.
HCA has managed to pare them down substantially, however. The term loans totaled $11.55 billion when they initially were issued.
To learn more about HCA's debt issues:
- read this Modern Healthcare piece (reg. req.)