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Community Health Plans $4.58 Billion Bond Sale for Acquisition

Community Health Systems Inc., the hospital chain buying Health Management Associates Inc., is planning the biggest bond offering of 2014 with a $4.58 billion sale to help finance the takeover.

Community Health intends to issue $1.705 billion of secured notes due 2021 and $2.875 billion of unsecured debt maturing 2022, the Franklin, Tennessee-based company said today in a statement. The junk-rated offering will add to $32.5 billion of corporate debt sold in the U.S. this year through yesterday, according to data compiled by Bloomberg.

Proceeds from the sale, along with credit-facility borrowings, will be used to fund the $3.9 billion acquisition announced in July. The new debt will also fund general corporate purposes, Community Health said in the statement.

The deal may price next week, according to a person familiar with the offering who asked not to be identified, citing lack of authorization to speak publicly.

Standard & Poor’s affirmed its B+ corporate credit rating and maintained a negative outlook for the company, citing “the potential for continued negative operating trends, such as weak patient volume and declining profitability, and failure of the company to achieve expected acquisition-related benefits,” David Peknay, a New York-based analyst at the ratings firm, wrote in a Jan. 7 report.

Community Health’s sale would exceed a $3.65 billion offering from Icahn Enterprises LP, as well as issues this week from General Electric Co., Mondelez International Inc. and Hewlett-Packard Co., Bloomberg data show.

To contact the reporter on this story: Charles Mead in New York at cmead11@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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