Molina Healthcare Inc. said it is in talks with a potential buyer for its Puerto Rico Medicaid business and expects to complete the sale in the third quarter.

The business generated premium revenues of $474 million in 2019. The company does not believe that the sale, if completed, will have a material impact on its results.

At the same time, Molina Healthcare announced plans to conduct a private offering of $800 million of senior notes due 2028, subject to market and customary closing conditions.

The interest rate, offering price and other terms of the notes will be determined by negotiations between the company and the representative of the initial purchasers. The securities will not be guaranteed by any of the company's subsidiaries at the time of issuance.

Molina Healthcare intends to use the net proceeds to fully repay indebtedness outstanding under its term loan facility and permanently reduce commitments.

The company may use a portion of the net proceeds to fund its pending acquisition of Magellan Complete Care. If not, it will use the remaining net proceeds for general corporate purposes, which may include repayment of indebtedness, funding for acquisitions, capital expenditures, additions to working capital and capital contributions to the company's health plan subsidiaries to meet statutory requirements in new or existing states.

Additionally, Molina Healthcare plans to amend its existing credit agreement to provide for a $1.0 billion senior unsecured revolving credit facility with a $15.0 million swing line sub-facility and a $100.0 million letter of credit sub-facility. Borrowings would be used for capital expenditures, to provide working capital and for other general corporate purposes.