WellPoint using $1 billion bond sale to repay debt

By J.K. Wall, The IBJ

jwall@ibj.com

WellPoint Inc. intends to use proceeds from a $1 billion bond sale to buy more of its own stock and repay short-term debt.

The Indianapolis-based health insurer sold $400 million of five-year bonds and $600 million in 10-year bonds, according to securities filings. The bonds pay interest of 6 percent and 7 percent, respectively.

The sale boosts WellPoint's total indebtedness by 11 percent, to $9.8 billion. About $1 billion of that amount is short-term debt and another $300 million is held in bonds that come due in December.

During 2008, WellPoint spent $3.3 billion to repurchase 56.4 million shares.

The sale of bonds comes a week after WellPoint reported 2008 profit of $2.5 billion. Excluding investment losses and one-time items, the company would have earned nearly $2.9 billion in profit, down 14 percent from its 2007 profit. Revenue for 2008 totaled $61.3 billion, up 2.2 percent over the previous year.

The company's stock lost 52 percent of its value in 2008 and has been flat so far this year. In early trading Tuesday, WellPoint's shares fell slightly.

The bonds contain a provision, in the case WellPoint is acquired, that would allow investors to sell the bonds back at 101 cents on the dollar. Such a provision is called a "poison put."