NMC Health launches $450m senior bond offering

United Arab Emirates private healthcare operator NMC Health launched an offering of senior, unsecured, guaranteed convertible bonds due 2025 on Monday, with a principal amount of $450m, convertible into ordinary shares.

The FTSE 100 company said the bonds would be issued by NMC Health Jersey.

“The company and NMC Healthcare LLC shall … procure that certain other subsidiaries of the company which guarantee NMC Healthcare LLC's $2bn debt facility shall, jointly and severally guarantee on a senior unsecured basis the full and punctual payment of all of the sums payable under the bonds,” the board explained in its announcement.

NMC obtained its first public ratings of BB+, outlook stable, by Standard & Poors on 20 April, and Ba1, outlook stable, by Moody’s on 22 April.

The Bonds were not expected to be rated.

Delivery of the shares on conversion would be made by the company, the board added.

“The net proceeds of the offering will be used in totality to repay part of the current $1bn bridge facility put in place at the time of the recent $2bn capital structure refinancing at the beginning of 2018.

“NMC Health is in the process of putting in place a new permanent capital structure comprised of a mixture of unsecured bank and bond financing that provides the required funding to achieve its growth strategy, as well as align it to those consistent with a FTSE 100 company.

“These Bonds are part of that process.”

The Bonds would have a principal amount of $0.2m, and would be issued at 100% of their principal amount and, unless previously redeemed, converted or purchased and cancelled, would be redeemed at par on the 7th anniversary of the issue of the bonds in 2025.

They would be marketed with a fixed coupon of 1.875%, payable semi-annually in arrears and an expected initial exchange price at a premium of between 50% and 60% to the reference share price, being the volume weighted average price of a share on the London Stock Exchange between launch and pricing, converted to dollars at the prevailing USD-GBP spot rate at the time of pricing.

The exchange price would be subject to customary adjustment events, pursuant to the terms and conditions of the bonds.

“Settlement and delivery of the bonds is expected to take place on 30 April,” NMC confirmed.