Healthways seeks $100M financing from institutional market

Shares down on word of financial move typically used to lock down interest rates

Healthways announced plans Monday to market to institutional investors $100 million in convertible senior notes, a move one local expert says is typical of a company looking to lower its interest rate exposure.

According to a statement announcing the deal, the notes will be due for repayment in 2018 and are subject to “market conditions and other factors” which means purchasing terms won’t be known until an institutional buyer is located and negotiations finalized.

 “I’ve seen several companies over the last six months do this very thing,” said Richard Close, senior research analyst in the Nashville office of Avondale Partners.

Close is a health care analyst but doesn’t follow Healthways and isn’t involved in this transaction. He said it would make sense for the provider of wellness services to seek a lower interest rate that can be “locked in” using this financing technique.

Healthways officials decline to comment on today's news. In February, the company amended its financing relationship with a SunTrust-led group of lenders to extend the time it can take to lower its debt ratios. See our story on that move here.

Equity investors don’t seem to be happy about Healthways’ plans. On a generally up day in the market, shares of the Franklin-based company (Ticker: HWAY) were off more than 5 percent to about $16.50. So far this year, they’ve climbed more than 50 percent.