HCP to Sell 7.8 Million Shares to Citigroup, Lead Investor on Note Issuance

HCP to Sell 7.8 Million Shares to Citigroup to Repay Debt, Possibly Make Acquisitions

HCP, Inc. (NYSE:HCP) announced on Monday that it will sell 7,800,000 shares of its common stock to Citigroup (NYSE:C), as sole underwriter, in an underwritten public offering. On June 18, the sales price of HCP’s common stock on the New York Stock Exchange was $43.62.

The healthcare industry REIT will use the net proceeds from the offering to pay off debt, including the $250 million aggregate principal amount of its 6.45% Senior Notes, which will mature on June 25 of this year. HCP also plans to use the remaining net proceeds for “general corporate purposes” that could include the funding of future acquisitions or investments.


Citigroup has the option of purchasing up to 1.17 million additional shares of common stock, exercisable within 30 days. The offering is expected to close on June 22, 2012. 


HCP the Lead Investor in Senior Unsecured Notes Financing Four Seasons Health Care Acquisition


In other news, HCP is the lead investor in £175 million of senior unsecured notes to be issued in connection with the acquisition of Four Seasons Health Care.

“We are pleased to have had the opportunity to participate in this financing,” said Jay Flaherty, HCP’s Chairman and Chief Executive Officer. “This accretive transaction represents the type of value-creating investment opportunities that HCP’s strong balance sheet and healthcare relationships make possible.”

The REIT will acquire the notes, which have an aggregate par value of £138.5 million, at a discount for £136.8 million (approximately $214 million). This represents a portion of the £825 million acquisition financing for Four Seasons.

The notes have a fixed coupon rate of 12.25% per year, with original issue discount resulting in a yield to maturity of 12.5%. European private equity firm Terra Firma will provide £345 million in equity financing, resulting in a loan-to-capitalization of 62% for the notes.

The purchase of the notes is scheduled to settle on June 28, 2012. The notes have an 8-year term and are non-callable for four years. The closing of the Four Seasons acquisition is expected to occur no later than Sept. 3, 2012. Elli Investments Limited is the issuer of the notes. 

Written by Alyssa Gerace


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