Charter Medical Corp. this month is expected to file a registration statement to sell about $300 million in bonds to refinance "junk" bonds and pay for 47 psychiatric hospitals it's buying from National Medical Enterprises for $186 million.
Charter executives declined to comment on the bond offering last week. The company issued a statement saying that it intends to refinance $200 million in subordinated notes in conjunction with the NME psychiatric purchase. However, the statement didn't say how Charter executives intend to refinance the bonds and pay for the NME hospitals.
Last month, the Macon, Ga.-based chain of psychiatric hospitals agreed to buy 47 psych facilities from NME, which is divesting the financially and legally troubled operations. NME will receive cash of $186 million from Charter.
Charter is the nation's largest chain of psychiatric hospitals with 75 facilities. NME, which will have 17 remaining psychiatric hospitals, is the second-largest chain. However, NME plans to sell or close 12 of those facilities.
The Charter bonds, which carry a 7.5% interest rate and are due in 2003, have a $200 million principal amount. Charter executives said they plan to redeem them at 88.5% of the value plus accrued and unpaid interest.
The NME deal is expected to be completed in phases with most of the facilities transferring over to Charter by the end of May.