| Item 1.01. | Entry into a Material Definitive Agreement |
Amendment to Amended and Restated Credit Agreement
On April 19, 2021 (the “Closing Date”), Tenet Healthcare Corporation, a Nevada corporation (the “Company”) entered into an Amendment No. 6 (the “ABL Amendment”) to its existing $1.9 billion Amended and Restated Credit Agreement dated as of October 19, 2010 (as amended, restated, supplemented or otherwise modified from time to time prior to the Closing Date, the “Existing Credit Agreement”; the Existing Credit Agreement, as amended by the ABL Amendment, the “New Credit Agreement”), by and among the Company, as the borrower, the lenders and issuers party thereto and Citicorp USA, Inc., as administrative agent (in such capacity, the “ABL Agent”).
The ABL Amendment has an effective date of April 19, 2021 and amends certain provisions under the Existing Credit Agreement to, among other things, (i) maintain the aggregate revolving credit commitments at $1.9 billion (the “Facility”), subject to borrowing availability, until April 22, 2022, on which date, the maximum aggregate revolving credit commitments will automatically be reduced to $1.5 billion, and (ii) reduce the interest rate margins.
The Facility provides for a $200 million sub-facility for letters of credit. The Company’s borrowing availability under the Facility is calculated by reference to a borrowing base which is determined by specified percentages of eligible accounts receivable, eligible inventory and Medicaid supplemental payments.
The Company’s obligations under the New Credit Agreement are guaranteed by certain domestic wholly-owned hospital subsidiaries of the Company (the “Subsidiary Guarantors”). The Company’s and the Subsidiary Guarantors’ obligations under the New Credit Agreement are secured by a first-priority lien on the accounts receivable and inventory owned by the Company and the Subsidiary Guarantors.
The Facility will terminate on the earlier of (i) September 12, 2024 (the “Scheduled Maturity Date”) or (ii) 45 business days prior to the maturity date of (x) any series of the Company’s senior notes due in 2023 or (y) any series of the Company’s senior secured notes due in 2024 (each, a “Springing Maturity Date”), unless (a) prior to each Springing Maturity Date, with respect to at least 80% of the aggregate principal amount of the applicable series of notes, the maturity date is extended to a date no earlier than one year after the Scheduled Maturity Date or such amount is repaid, defeased, discharged or refinanced or (b) on each such Springing Maturity Date, the Excess Availability Condition (as defined in the New Credit Agreement), determined on a pro forma basis, after giving effect to the full repayment of the applicable series of the notes, is satisfied.
Outstanding revolving loans under the Facility accrue interest during the period prior to the first delivery of a borrowing base certificate following the Closing Date at a rate equal to either (i) a base rate plus a margin of 0.25% per annum or (ii) LIBOR plus a margin of 1.25% per annum. Thereafter, outstanding revolving loans under the Facility accrue interest at either (a) a base rate plus an applicable margin ranging from 0.25% to 0.75% per annum or (b) LIBOR plus an applicable margin ranging from 1.25% to 1.75% per annum, in each case based upon available credit under the Facility. The undrawn portions of the commitments under the Facility are subject to a commitment fee at a rate ranging from 0.25% to 0.375% per annum, based upon available credit under the Facility.
The ABL Agent and certain lenders that are party to the New Credit Agreement, as well as certain of their affiliates, have performed, and may in the future perform, for the Company and its subsidiaries, various commercial banking, investment banking, underwriting and other financial advisory services, for which they have received and may in the future receive customary fees and expenses.
The foregoing description of the ABL Amendment and the New Credit Agreement is a summary and is qualified in its entirety by reference to the ABL Amendment and the New Credit Agreement, which are filed herewith as Exhibit 10.1 and are incorporated herein by reference.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information set forth above in Item 1.01 is incorporated by reference into this Item 2.03.
