HCA talks $5.7 billion three-part bond offering

By Paul A. Harris

St. Louis, Nov. 7 - Hercules Holding II, the equity consortium that plans to acquire Nashville, Tenn.-based health care services company HCA Inc., circulated price talk for its $5.7 billion three-part bond offering on Tuesday, according to an informed source.

The deal is comprised of $4.2 billion of senior secured second-lien notes in two tranches: eight-year notes talked at the 9¼% area and 10-year notes talked at 9 3/8% to 9½%.

In addition, a $1.5 billion tranche of 10-year senior second-lien "toggle" notes is talked 25 to 50 basis points behind the 10-year secured notes, with a 75 basis point PIK coupon step-up.

The books close on Wednesday. Pricing is set for Thursday.

Citigroup, Banc of America Securities LLC, JP Morgan, Merrill Lynch, Deutsche Bank Securities and Wachovia Securities are joint bookrunners for the notes, which are being marketed via Rule 144A with registration rights and via Regulation S.

The company will also put in place a $16.8 billion credit facility.

Proceeds will be used to help fund the leveraged buyout by Hercules, a consortium comprised of Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity and company founder Thomas F. Frist Jr.

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