HCA Won't Sell Medical Hospitals To Finance Leveraged Buyout, Chairman Says
Mar. 15, 1989
NASHVILLE, Tenn. (AP) _ Hospital Corp. of America shareholders approved on Wednesday a $5 billion buyout of the nation's largest hospital management company by an investor group led by the firm's top executives.
Chairman Thomas Frist Jr. said after the vote that the company would keep most of its hospitals but sell subsidiary properties to help finance the deal.
The investor group, TF Investments Inc., will put HCA's psychiatric hospitals, management company and international division up for sale, Frist said, but ''We are not soliciting or accepting offers'' to sell HCA medical- surgical hospitals.
TF Investments, which changed its name to HCA-Hospital Corp. of America Wednesday, is paying $51 a share for more than 71 million outstanding shares of HCA stock for a $3.6 billion purchase price. The transaction also includes the assumption of HCA debt, and totals more than $5 billion, HCA spokesman Victor Campbell said.
The new HCA will concentrate on operating its 79 hospitals and plans no layoffs, Frist said.
''If you'd ask me what it'd look like one year from today ... we have approximately 80 today. I'd be quite surprised if we didn't have 80 then. Maybe add one and sell one,'' he said.
HCA already has an agreement to sell Allied Clinical Laboratories, its clinical reference library subsidiary, for $45 million in cash plus the assumption of certain liabilities, according to HCA's annual report to the Securities and Exchange Commission.
A standing-room-only gathering of about 400 shareholders crowded a company auditorium for the brief meeting. More than 41.6 million shares were voted for the buyout, and nearly 5 million share votes were cast against the transaction.
''This has been a fantastic 20-plus years,'' Frist, the son of one of the company's founders, told shareholders.
''It's exceeded many times over the founders' dreams for the company,'' he said.
Besides the 79 medical-surgical hospitals, HCA's U.S. holdings include 48 psychiatric hospitals and four residential treatment centers. More than 70 percent of the company's hospitals are in Florida, Georgia, Tennessee, Texas and Virginia.
At the end of 1988, HCA owned 25 other hospitals around the world, mainly in Australia, Brazil and the United Kingdom.