Genesis HealthCare $150 million convertible talked to yield 2.25%-2.75%, up 32.5%-37.5%

By Ronda Fears

Nashville, Feb. 23 - Genesis HealthCare Corp. launched $150 million of 20-year convertible notes Wednesday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 32.5% to 37.5%. The company said it may buy back up to $20 million of stock from short sellers.

Wachovia Securities is sole bookrunner of the Rule 144A deal, which is scheduled to price after the close Thursday. Jefferies & Co. and Citigroup Global Markets Inc. are co-managers.

The senior subordinated notes will be non-callable for five years, then for two more years with a provisional hurdle of 130%. There are cash puts in years seven, 10 and 15.

There also is a contingent conversion feature with a 130% stock trigger and 95% parity trigger.

Full dividend and takeover protection are included.

The notes will rank pari passu with a Genesis HealthCare subsidiary's 8% notes through March 20, 2012. Also Wednesday, the company announced that its board of directors had authorized the repurchase of a portion of those 8% senior subordinated notes due 2013 commencing in March.

In addition, the Genesis HealthCare board of directors also authorized the amendment and restatement of the company's existing senior credit facility, which provided for initial total borrowings of $260 million consisting of a $185 million term loan and a $75 million revolving credit facility. As of Feb. 23, about $119.7 million was outstanding under the existing senior credit facility, and the company plans to boost the revolver to $125 million.

A $30 million greenshoe is available.

The Kenneth Square, Pa.-based company focused on elderly care said $119.7 million of proceeds after the stock buybacks would be used to repay outstanding borrowings under the term loan portion of its senior credit facility and the balance for general corporate purposes, which may include repurchases of additional shares of common stock.

Genesis HealthCare shares closed Wednesday up 71 cents, or 2.27%, at $41.01, but on the offering news the stock was seen down by $1.71, or 4.17%, in after-hours trading.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.