HCA $5.7 billion second-lien notes backing 'history-making LBO' now seen as fourth-quarter business

By Paul A. Harris

St. Louis, Aug. 18 - HCA, Inc. is expected to bring up to $5.7 billion of senior secured second-lien notes to market sometime during the fourth quarter of 2006, according to informed sources.

The proceeds will be used to help fund the approximately $33 billion leveraged buyout of the company by Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

One source added that at $33 billion, the deal would be the largest LBO in history, topping the $31.3 billion buyout of RJR Nabisco in 1989.

An informed source said that the syndicate for the HCA bond deal will be comprised of the same banks leading the company's $16.8 billion of credit facilities: Bank of America, Citigroup, JPMorgan, Merrill Lynch, Deutsche Bank and Wachovia Securities. The source said that other syndicate names could emerge.

It remains to be determined whether the bonds will be sold in a public offering or as a Rule 144A private placement.

Backing the bonds are $5.70 billion of senior secured second-lien increasing-rate bridge loans.

HCA is a Nashville, Tenn., health care services company.

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