Tenet Raises $1 Billion in Private Bond Sale
Officials for California-based Tenet Healthcare on Tuesday announced a $1 billion bond issue that will allow it to pay off some debts that will come due in the next two years, the Dallas Morning News reports. The announcement revises a statement made Monday that the company planned to raise $500 million in a privately placed bond issue. The new 10-year unsecured bond, which is priced at 9.875%, will mature in 2014. The company will use the bond issue to repay $450 million in outstanding debts and to cover other corporate expenses. Specifically, the deal will allow the company to reduce from $550 million to $290 million its debt due by the end of 2006 and to reduce its debt due in 2007 from $400 million to $210 million. The move "provides a significant increase in Tenet's financial flexibility by extending the maturity of approximately half the maturing debt the company faced over the next three years," Stephen Farber, Tenet's chief financial officer, said in a written statement (Yu, Dallas Morning News, 6/15). Tenet now has about $1.1 billion in cash available.
In March, the company said its "current capital structure was not meant to cover any major legal settlements," according to Reuters/Los Angeles Times (Reuters/Los Angeles Times, 6/16). Since October 2002, the Senate Finance Committee, the Securities and Exchange Commission, the HHS Office of Inspector General, the Department of Justice and the Federal Trade Commission have launched separate investigations into Tenet related to alleged Medicare fraud and other issues. The company also faces an investigation by the Florida Medicaid Fraud Control Unit. The U.S. attorney's office in Los Angeles has requested documents related to coronary procedures and billing practices at three Los Angeles-area hospitals. The California Department of Health Services announced it will audit billing practices at all 40 Tenet-owned hospitals in the state, after finding that Redding Medical Center overcharged state programs by nearly $12 million. Last Friday, the Times reported that an unnamed source had said that officials for Tenet were in preliminary talks to settle for a total of more than $1 billion most of the federal investigations into the company's business practices and hundreds of claims filed by individuals over allegedly unnecessary heart surgeries (California Healthline, 6/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.