Tenet Healthcare (THC) Approves $500M Buyback, Reverse Split; Announces Strategy Update

October 1, 2012 8:54 AM EDT Send to a Friend
Tenet Healthcare Corporation (NYSE: THC) announced a series of strategic and financial initiatives to accelerate growth and enhance shareholder value. The plan includes:
  • Near-term acquisitions, expected to total approximately $400 million, to enhance the Company’s primary business lines, including acute care hospitals, outpatient facilities, and business process services.

  • A new $500 million authorization to repurchase common stock in open market transactions. The timing and amount of repurchase transactions will be based on an evaluation of market conditions, share price and other factors.

  • $800 million of new debt. Proceeds will reduce the outstanding balance on the Company’s bank line, contribute to the funding of near-term acquisitions, retire $216 million of 7.375% debt that matures in February 2013 and other general corporate purposes.

  • A reverse stock split in which one new THC share will be issued in exchange for every four existing shares. This share exchange will be effective October 11, 2012.
“We have attractive opportunities to accelerate the growth of our core businesses and position our balance sheet to enhance shareholder value,” said Trevor Fetter, Tenet’s president and chief executive officer. “Historic low interest rates and a strong acquisition pipeline across our three major business lines provide the compelling catalysts for these aggressive actions. In addition, a substantial new authorization to repurchase our shares is designed to drive shareholder value. Upon completion of this latest phase of our share repurchase program no later than the end of 2013, we will have invested $1.2 billion in share repurchases in a little over two years.”

Fetter continued, “We are pleased with Conifer’s continued growth and our announcement earlier today that it is acquiring InforMed Health Care Solutions, which further enhances Conifer’s service offerings. In addition, we are in exclusive discussions to acquire the Emanuel Medical Center in Turlock, California as was disclosed by Emanuel last week. Our hospital, business process services, and outpatient acquisition pipelines are very active, with a total anticipated cash use of approximately $400 million in the near term. The capital we are raising is intended to fund those acquisitions and pre-fund a February 2013 debt maturity in addition to providing financial flexibility for share repurchases and other opportunities. In total, these actions demonstrate Tenet’s commitment to implementing aggressive strategies to grow our business and optimize our capital structure to accelerate shareholder value creation.”

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