GE completes US$8.5 billion offering to help finance GE HealthCare spinoff

USA —GE has announced that its GE HealthCare subsidiary closed an offering of senior notes worth US$8.5 billion.

The company earlier this month announced the offering in connection with the planned spinoff of GE HealthCare. It anticipates the spinoff to go through in the first week of January 2023.

According to a news release, GE’s offering includes US$1 billion in 5.55% senior notes due in 2024. It also offers US$1.5 billion in 5.6% senior notes due in 2025. The offering features US$1.75 billion in 5.65% senior notes due in 2027.

Additionally, GE is offering US$1.25 billion in 5.857% senior notes due in 2030 and US$1.75 billion in 5.905% senior notes due in 2032. Finally, GE offered US$1 billion in 6.377% senior notes due in 2052.

GE said the notes represent senior unsecured obligations of GE HealthCare. The company expects them to enable GE to pay down existing debt.

General Electric Co.’s healthcare business will retain about US$ 15.4 billion in debt and pension liabilities when it is spun off in the first week of January.

It’s common for companies spinning out of larger parents to start out with debt. For example, spine and dental tech company ZimVie started out with US$500 million in debt when it spun out of Zimmer Biomet early this year.

On Nov. 8, GE announced a tender offer to buy up to US$7 billion in its debt securities. After that, it anticipates the new GE HealthCare debt securities will pay down its outstanding debt over time.

The new stand-alone medtech giant intends to maintain a strong investment-grade credit rating. In a Form 10 registration statement filed with the SEC last month.

The balance for the new unit, which will be known as GE HealthCare, includes about US$10.2 billion in senior notes and term loans.

The company also expects to transfer US$5.2 billion in net pension and other postretirement plan liabilities to the spinoff.

GE HealthCare reported US$13.5 billion in revenue for the first nine months of 2022. That’s a 3% increase from the same period a year ago.

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