Nashville-based Healthtrust Inc. said Friday it plans to make tender offers for three series of its high-yield bonds.
The tender offers are part of the hospital management company's proposed recapitalization program. Merrill Lynch & Co. will act as dealer-manager for the deal.
Healthtrust filed a registration statement with the Securities and Exchange Commission for tender offers on all three series: 11 3/4% ESOP senior notes due 1997 at a cash purchase price of 105% of the principal amount; zero coupon senior subordinated debentures due 1999 at a cash purchase price of 114 3/4 of accreted value; and 15 1/4% senior subordinated debentures due 1999 at 112 1/2 of the principal amount.
Elsewhere in the high-yield market, Tosco Corp. last week retired $50 million of debth, the latest milestone on its trek toward investment grade status.
"We're moving up as opposed to most people who are moving down," a company representative said last week, adding that both Moody's Investors Service and Standard & Poor's Corp. recently upgraded the company.
Earlier this month, Moody's upgraded its senior debt to Ba1 from Ba3, and Standard & Poor's raised its rating to BB-plus from BB-minus.
"Our goal is to become an investment grade credit," the company source said.
On behalf of its subsidiary, Seminole Fertilizer Corp., Tosco retired $50 million of 14.60% subordinated debt due in April 1996 and 1997 at approximately a 3% net discount. The $50 million in privately placed debt stemmed from a leveraged buyout, pre-dating Tosco's 1989 purchase of Seminole.
To retire the debt, Tosco, an oil refining and marketing company, used proceeds from a highly successful preferred stock offering. The $115 million preferred offering, priced at about $4.37 a share, began as a $75 million offering but was increased due to strong demand.
According to Thomas C. Lewis, an analyst at Duff & Phelps Inc., Tosco refinanced about $374 million in debt last May, removing a significant amount of high-priced debt from its balance sheet.
The public high-yield securities market was up about a 1/4 point late Friday. With mutual funds looking to buy and companies continuing to refinance their higher priced debt, the market is craving new issues, according to John Shippee, a high-yield analyst at BT Securities Corp.
Mr. Shippee said that following deals by American Medical International and Dr. Pepper Co., he could see no new visible public market supply on the horizon. Buyers want good BB or B paper, he noted.
Also making news Friday was Wilmington, Del.-based Columbia Gas System. A federal bankruptcy court judge in that city approved a debtor-in-possession financing plan for the company and its principal subsidiary. The company filed for bankruptcy protection July 31.
Investment grades dropped about 7/8 point Friday after news that July durable goods jumped 10.7%, the largest surge in two decades. The market disliked that signal of economic health, fearing it would diminish the likelihood of an ease in interest rates, one trader said.
In the private placement market, a $75 million Rule 144A senior note deal by U.K.-based Capital & Counties plc is expected to close in the next week to 10 days, a source close to the deal said last week.
The deal, circled last June, contains three tranches: a 12-year piece, with a 10-year expected average life priced at 165 basis points over comparable Treasuries; a 13-year bullet priced at 180 basis points over; and a 15-year bullet price at 185 basis points over. Wertheim Schroder & Co. served as agent. Five buyers purchased the notes.
In ratings news, Standard & Poor's affirmed the AAA claims-paying ability of Canada Life Insurance Co. of America and Canada Life Insurance Co. New York at AAA. Both are wholly owned subsidiaries of Canada Life Assurance Co. The agency based its rating on the parent's support and financial strength.