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HCA Inc.
$21B Management-Led Buyout
Closed
 Summary
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 $21B
buyout of largest US for-profit hospital chain
- $33B, including assumption of debt
- Largest LBO since RJR Nabisco
- By private equity consortium (Club deal)
- Thomas Frist (Co-founder)
- Bain Capital
- KKR
- Merrill Lynch Global Private Equity
Deal
terms
- $51 per share
- No financing condition
- 50 day window for HCA to solicit superior
proposals
- Senior managers, including founding Frist family,
will reinvest in the acquisition
- HCA stock chart
Announced
7.24.06
Developments
Closed
11.17.06
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Club Deal
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Consortium
buyout by
- Thomas Frist (Co-founder)
Roll-over equity commitment
- Bain Capital $1.5B
equity commitment
- KKR $1.5B equity
commitment
- Merrill Lynch Global Private Equity
$1.5B equity commitment
Sell-down
commitments from
- Citigroup $400mm equity
commitment
- Bank of America $200mm
equity commitment
- Additional sell-down commitments
reduce commitments of sponsors pro rata
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Advisors
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Financial
- HCA: Merrill Lynch
- Special committee: Credit
Suisse / Morgan Stanley
- Sponsors: Banc of America /
Citigroup / JPMorgan
Legal
- HCA: Bass Berry
- Special committee: Shearman
& Sterling
- Sponsors: Simpson Thacher
- Frist: Sullivan
& Cromwell
Financing
- Debt financing: Bank of
America, Citigroup, JPMorgan, and Merrill Lynch Capital
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Merger Agreement Hyperlinked
 General
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Article
I Definitions
- 1.1 Definitions
- 1.2 Terms Generally
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Article
II Merger
- 2.1 The Merger
- 2.2 Closing
- 2.3 Effective Time
- 2.4 Effects of the Merger
- 2.5 Organizational Documents
- 2.6 Directors and Officers of Surviving Corporation
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Article
III Effect of Merger
- 3.1 Conversion of Securities
- 3.2 Payment of Cash for Merger Shares
- 3.3 Treatment of Options and Other Awards
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Article
IV Company Representations
- 4.1 Corporate Existence and Power
- 4.2 Corporate Authorization
- 4.3 Governmental Authorization
- 4.4 Non-Contravention
- 4.5 Capitalization
- 4.6 Company Subsidiaries and Joint Ventures
- 4.7 Reports and Financial Statements
- 4.8 Undisclosed Liabilities
- 4.9 Disclosure Documents
- 4.10 Absence of Certain Changes or Events
- 4.11 Litigation
- 4.12 Taxes
- 4.13 ERISA
- 4.14 Compliance With Laws
- 4.15 Finders' Fees
- 4.16 Opinion of Financial Advisors
- 4.17 Affiliate Transactions
- 4.18 Rights Agreement; Anti-Takeover Provisions
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Article
V Parent - Merger Sub Representations
- 5.1 Corporate Existence and Power
- 5.2 Corporate Authorization
- 5.3 Governmental Authorization
- 5.4 Non-Contravention
- 5.5 Disclosure Documents
- 5.6 Finders' Fees
- 5.7 Financing
- 5.8 Equity Rollover Commitment
- 5.9 Guarantees
- 5.10 Operations of Parent and Merger Sub
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Article
VI Covenants
- 6.1 Conduct of the Company and Subsidiaries
- 6.2 Conduct of Parent and Merger Sub
- 6.3 No Control of Other Party's Business
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Article
VII Additional Agreements
- 7.1 Stockholder Meeting; Proxy Material
- 7.2 Reasonable Best Efforts
- 7.3 Access to Information
- 7.4 Solicitation
- 7.5 Director and Officer Liability
- 7.6 Takeover Statutes
- 7.7 Public Announcements
- 7.8 Notice of Current Events
- 7.9 Employee Matters
- 7.11 Actions re:Existing Debt
- 7.12 Actions re: Foundation Options and HTI Warrant
- 7.13 Insurance Matters
- 7.14 Section 16(b)
- 7.15 Resignation of Directors
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Article
VIII Closing Conditions
- 8.1 Each Party
- 8.2 Parent and Merger Sub
- 8.3 Company
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Article
IX Termination
- 9.1 Termination
- 9.2 Termination Fee
- 9.3 Effect of Termination
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Article
X Miscellaneous
- 10.1 Notices
- 10.2 Representations and Warranties
- 10.3 Expenses
- 10.7 Governing Law
- 10.8 Counterparts; Effectiveness; Third Party Beneficiaries
- 10.9 Severability
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Financing
SEC_CODE_REF_0090001192884
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Summary
- $21B to shareholders and other equity
interests
- $5B to refinance existing debt, pay fees
- $4.5B equity commitments from sponsor funds
- Frist family equity rollover (15.6 mm HCA
shares)
- $16.8B senior secured credit facilities
- $5.7B senior secured second lien financing
High yield debt or bridge financing
No
financing condition
- Backed by $500mm in guarantees
Equity
financing commitments Debt
financing commitments
- Bank of America entities
- JPMorgan entities
- Citigroup Global Markets
- Merrill Lynch entities
Equity
rollover commitment (Frist)
Guarantees
Other
High
yield financing
- $4.2B senior secured second lien notes
- $1.5B senior secured second lien toggle notes
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Schedule 13D Filings
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Family
Investors, the Merrill Group, Citigroup and the Bank of America
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Proxy Solicitation -
Schedule 13E-3 Filings
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Shareholder
meeting 11.16.06
- 72.9% of outstanding vote for
- HCA press release 11.16.06
Proxy
statement
Schedule
13e-3 filings
SEC
comment letters |
Deal Protection
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No
shop covenant
- Subject to 50
day go shop provision
- HCA can solicit competing proposals until 9.12.06
- HCA can continue to entertain superior proposals
received before this date
Break-up
fees
- $500mm after "go shop" period;
$300mm if a proposal is made during "go shop" period
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Fairness Opinions - Advisor Presentations
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Fairness
opinions 
Advisor
board presentations
Filed as Schedule 13e-3 exhibits
Statements
about fairness
Per going private rules
Sponsor
presentations to advisors
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Debt Tenders - Consent Solicitations
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Announced
10.06.06
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Post M&A Financing
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$14.8B
senior secured financing 11.17.06
Intent
to amend credit agreement 1.29.07
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Related Topics
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