By Paul A. Harris
Portland, Ore., Dec. 11 – Kindred Healthcare Inc. sold $1.35 billion of senior notes in a restructured two-part offering (B2/B-/) on Thursday, according to a syndicate source.
The final tranche sizes saw $50 million of proceeds shifted to the shorter-duration five-year notes from the eight-year notes.
The deal included an upsized $750 million tranche of non-callable five-year notes, which priced at par to yield 8%. The tranche was upsized from $700 million. The yield printed at the wide end of the 7¾% to 8% yield talk.
The five-year notes tranche was announced at the same time the company withdrew a proposed tranche of 10-year notes from the financing.
A downsized $600 million tranche of eight-year notes priced at par to yield 8¾%. The tranche was downsized from $650 million. The yield printed 12.5 basis points beyond the wide end of yield talk in the 8½% area. In a structural change the first call premium was increased to par plus 75% of the coupon, up from 50%; the notes become callable after Jan. 15, 2018 at 106.563.
Citigroup Global Markets Inc. was the left bookrunner. J.P. Morgan Securities LLC, Guggenheim Securities and Morgan Stanley & Co. LLC were the joint bookrunners.
The issuing entity is Kindred Healthcare Escrow Corp. II, which is to be merged with and into Kindred Healthcare, Inc.
Proceeds will be used to fund the cash consideration for the merger of Kindred with Gentiva and to repay Gentiva’s existing debt.
Kindred is a Louisville, Ky.-based health care services company.
Gentiva is an Atlanta-based provider of home health and hospice services.
| Issuer: | Kindred Escrow Corp. II, to be merged with and into Kindred Healthcare, Inc.
|
| Amount: | $1.35 billion
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| Securities: | Senior notes
|
| Left bookrunner: | Citigroup Global Markets Inc.
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| Joint bookrunners: | J.P. Morgan Securities LLC, Guggenheim Securities, Morgan Stanley & Co. LLC
|
| Co-manager: | BMO Capital Markets, Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc.
|
| Trade date: | Dec. 11
|
| Settlement date: | Dec. 18
|
| Ratings: | Moody's: B2
|
| Standard & Poor's: B-
|
| Distribution: | Rule 144A and Regulation S with registration rights
|
| Marketing: | Roadshow
|
|
|
| Five-year notes
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| Amount: | $750 million, increased from $700 million
|
| Maturity: | Jan. 15, 2020
|
| Coupon: | 8%
|
| Price: | Par
|
| Yield: | 8%
|
| Spread: | 640 bps
|
| Call protection: | Non-callable
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| Equity clawback: | 35% at 108 until Jan. 15, 2018
|
| Change-of-control put: | 101%
|
| Price talk: | 7¾% to 8%
|
|
|
| Eight-year notes
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| Amount: | $600 million, decreased from $650 million
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| Maturity: | Jan. 15, 2023
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| Coupon: | 8¾%
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| Price: | Par
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| Yield: | 8¾%
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| Spread: | 681 bps
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| First call: | Jan. 15, 2018 at 106.563
|
| Equity clawback: | 35% at 108.75 until Jan. 15, 2018
|
| Change-of-control put: | 101%
|
| Price talk: | 8½% area
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