Community Health Systems Inc. (CYH:US), the hospital chain buying Health Management Associates Inc., increased a term loan to support the purchase to $2.93 billion and reduced the rate on the debt, according to a person with knowledge of the transaction.
The loan, increased from $2.26 billion, may now pay interest at 3.25 percentage points more than the London interbank offered rate, down from 3.75 percentage points initially proposed, said the person, who asked not to be identified because terms are private. The minimum on the lending benchmark is unchanged at 1 percent.
Community Health, based in Franklin, Tennessee, is offering the seven-year loan to investors at 99.5 cents on the dollar, compared with 99 cents initially offered, the person said.
The company reduced the size of a bond sale to $4 billion from $4.58 billion, according to another person with knowledge of the deal. A $1.705 billion issue of secured notes due 2021 was reduced to $1 billion while $2.875 billion of unsecured bonds maturing 2022 was increased to $3 billion, the person said.
Proceeds from the note sale, along with the loan, will fund the $3.9 billion acquisition announced in July. The new debt will also fund general corporate purposes, Community Health said in a Jan. 10 statement.
Credit Suisse Group AG is arranging the loan and Bank of America Corp. is leading the bond sale, the people said.
The notes are expected to price tomorrow, while lenders to the loan must submit commitments by noon in New York on Jan. 16.
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