Item 1.01. Entry into a Material Definitive Agreement.
The information set forth below in Item 2.03 is incorporated by reference into this Item 1.01.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant.
On February 5, 2019, Tenet Healthcare Corporation (“Tenet”) issued $1,500,000,000 in aggregate principal amount of 6.250% senior secured second lien notes due 2027 (the “Notes”).
The Notes were issued pursuant to an indenture, dated November 6, 2001 (the “Base Indenture”), between Tenet and The Bank of New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York as trustee (in such capacity, the “Trustee”), as supplemented by a supplemental indenture (the “Supplemental Indenture” and, together with the Base Indenture, the “ Indenture”), among Tenet, the guarantors party thereto, and the Trustee, dated February 5, 2019.
Tenet intends to use the net proceeds of the sale of the Notes, after payment of fees and expenses, together with cash on hand and/or any borrowings under its revolving credit agreement, to fund (i) the redemption of all $300 million aggregate principal amount of its outstanding 6.750% Senior Unsecured Notes due February 1, 2020 (the “2020 Notes”) on February 22, 2019, (ii) the redemption of all $750 million aggregate principal amount of its outstanding 7.500% Senior Secured Second Lien Notes due January 1, 2022 (the “2022 Notes”) on February 22, 2019 and (iii) the repayment upon maturity of all $468 million aggregate principal amount of its outstanding 5.500% Senior Unsecured Notes due March 1, 2019.
The Indenture contains covenants that, among other things, restrict Tenet’s ability and the ability of its subsidiaries to: incur liens; provide subsidiary guarantees; consummate asset sales; enter into sale and lease-back transactions; or consolidate, merge or sell all or substantially all of their assets, other than in certain transactions between one or more of Tenet’s wholly owned subsidiaries and Tenet. These restrictions, however, are subject to a number of important exceptions and qualifications. In particular, there are no restrictions on Tenet’s ability or the ability of its subsidiaries to incur additional indebtedness, make restricted payments, pay dividends or make distributions in respect of capital stock, purchase or redeem capital stock, enter into transactions with affiliates or make advances to, or invest in, other entities (including unaffiliated entities).
The Indenture also provides that the Notes may become subject to redemption under certain circumstances, including a change of control (as defined in the Indenture) of Tenet. Prior to February 1, 2022, Tenet may, at its option, redeem the Notes in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus the applicable make-whole premium set forth in the Indenture, together with accrued and unpaid interest. On and after February 1, 2022, Tenet may, at its option, redeem the Notes in whole or in part, at certain redemption prices (expressed as percentages of the principal amount thereof) set forth in the Indenture, together with accrued and unpaid interest.
In connection with the issuance of the Notes, Tenet also entered into an Exchange and Registration Rights Agreement, dated as of February 5, 2019 (the “Registration Rights Agreement”), with Barclays Capital Inc. as representative of the other initial purchasers of the Notes named therein. Pursuant to the Registration Rights Agreement, in certain circumstances, Tenet has agreed to use commercially reasonable efforts to register the Notes with the Securities and Exchange Commission if the Notes have not become freely tradable (as defined in the Registration Rights Agreement) on or before the 380th day following the date hereof.
