HCA Inc., the hospital chain taken private five years ago in a $33 billion leveraged buyout, plans to start marketing shares next week for an initial public offering, said a person familiar with the company’s plans.
HCA will seek $27 to $30 a share when it starts its roadshow on Feb. 22, said the person, asking not to be named because the information is private. Existing owners are planning to sell shares, according to the person. The company, which is based in Nashville, Tennessee, said in December that it plans to sell as much as $4.6 billion in stock.
The hospital operator is trying to go public less than four months after taking on new debt to pay its owners, including KKR & Co., Bain Capital LLC and Bank of America Corp., a $2 billion dividend. Private-equity firms, taking advantage of a rally in leveraged loans and stocks, are stepping up dividend recapitalizations and initial public offerings to return money to their investors.
KKR is hoping an increase in distributions will encourage investors to commit capital to its 11th North American buyout fund.
Officials for HCA, Boston-based Bain, and KKR in New York declined to comment. A spokesman for Charlotte, North Carolina- based Bank of America didn’t immediately return a phone call seeking comment.
HCA first filed for a public offering in May, then refiled in December after selling $1.53 billion of 10.5-year notes to help pay for the dividend. In the May filing, the company said it plans to raise a net $2.5 billion of the total by selling new shares and would use the proceeds to repay debt.
HCA’s owners put up about $5.3 billion to buy the company, according to a regulatory filing, funding the rest with loans from banks including Bank of America, Merrill Lynch & Co., JPMorgan Chase and Citigroup. Including the November distribution, the owners paid themselves about $4.3 billion in dividends last year.
HCA operated 164 hospitals and 106 freestanding surgery centers as of Dec. 31, according to the company’s yearend regulatory filing.
The hospital chain’s purchase in 2006 shattered the record for the largest leveraged buyout, held since 1989 by KKR’s acquisition of RJR Nabisco Inc. HCA’s record was eclipsed by Blackstone’s acquisition of Equity Office Properties Trust and again by the 2007 takeover of Energy Future Holdings Corp., by KKR and TPG Inc., for $43 billion including debt.
HCA was founded in 1968, when Nashville physician Thomas Frist Sr., and his son, Thomas Frist Jr., and Jack Massey built a hospital there and formed Hospital Corp. of America, one of the nation’s first hospital companies. Thomas Frist Sr. is the father of Bill Frist, a physician and the former U.S. Senate majority leader.
HCA went private in a $5.1 billion leveraged buyout in 1989, and then went public again in 1992, according to the company Web site. Rick Scott, the governor of Florida and founder of Columbia Healthcare Corp., merged his Louisville, Kentucky-based company with HCA in 1994. He left in 1997 as the federal government investigated the company’s Medicare-billing practices.
In December 2000, HCA agreed to pay $840 million in criminal and civil penalties to settle U.S. claims that it overbilled states and the federal government for health-care costs. It was the largest government fraud settlement in U.S. history at the time, according to a U.S. Justice Department news release on Dec. 14, 2000.
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