The cash yield on the shares bought back is greater than the current cost of debt. So the buyback looks accretive to cashflow and Book Value per share.
Some analysts appear to be assuming a rent reduction but even then the cash yield on the current share price is still greater than the cost of debt.
In any event, it would seem crazy to me if a rent reduction is forced through as that would send a horrible message to the industry as it would kill any incentive to build new hospitals as an adequate return would neither be achievable or supported by Government.
Maybe the best outcome is if another hospital operator joins with HMC/HCW to buy Healthscope off an administrator and reorganise with a more sensible capital structure and government support.
And here's a thought experiment, what if (say) Medibank was part of the buying syndicate?
Hopefully a plan is being cooked up ....
HCW Price at posting:
98.5¢ Sentiment: Buy Disclosure: Held
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