Item 1.01 Entry into a Material Definitive Agreement.
Credit Agreement
On
If drawn, amounts outstanding under the Credit Agreement will bear interest at either (i) the LIBOR rate plus 2.50% or (ii) an alternate base rate, which is a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its "prime rate", (c) the LIBOR rate plus 1.00% and (d) 1.00%. The Borrower will pay certain fees to each lender under the Credit Agreement. The LIBOR rate is subject to a floor of 0.00% per annum.
The Credit Agreement contains certain customary representations and warranties, as well as certain customary affirmative and negative covenants. The Credit Agreement's negative covenants restrict the ability of the Borrower and its restricted subsidiaries to: (i) create liens on certain assets to secure debt, (ii) engage in certain sale and lease-back transactions, and (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of their assets. These covenants are subject to a number of important limitations and exceptions. The Credit Agreement's financial covenants require that the Borrower maintain a ratio of consolidated debt to consolidated EBITDA for any four consecutive fiscal quarter period of not more than 6.75 to 1.00.
The Credit Agreement also contains certain customary events of default, including, among others, defaults based on certain bankruptcy and insolvency events, nonpayment, cross-defaults to other debt, breach of specified covenants, ERISA events, material monetary judgments, change of control events, and inability to pay debts.
Guarantee
In connection with the Credit Agreement, certain subsidiary guarantors of the
Borrower (the "Subsidiary Guarantors") entered into a Guarantee (the
"Guarantee") dated the Closing Date, in favor of
Security
The Credit Agreement and related subsidiary guarantees are secured by
first-priority liens, subject to permitted liens, on certain of the assets of
the Borrower and the Subsidiary Guarantors that secure the Borrower's cash flow
credit facility and first lien notes on a pari passu basis, including:
(i) substantially all of the capital stock of substantially all wholly owned
first-tier subsidiaries of the Borrower (but limited to 65% of the stock of any
such wholly-owned first-tier subsidiary that is a foreign subsidiary) subject to
certain limited exceptions; and (ii) substantially all tangible and intangible
assets of the Borrower and each Subsidiary Guarantor, other than (1) other
properties that do not secure the Borrower's senior secured credit facilities,
(2) certain deposit accounts, other bank or securities accounts and cash,
(3) leaseholds and certain other exceptions; provided that, with respect to the
portion of the collateral comprised of real property, the Borrower will have up
to 90 days following the Closing Date to complete those actions required to
perfect the first-priority lien on such collateral and (4) certain receivables
collateral that only secures the Borrower's asset-based revolving credit
facility, in each case subject to exceptions, and except that the lien on
properties defined as "principal properties" under the Borrower's indenture
dated as of
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The Credit Agreement and the related subsidiary guarantees will be secured by second-priority liens, subject to permitted liens, on certain receivables of the Borrower and the Subsidiary Guarantors that secure the Borrower's asset-based revolving credit facility on a first-priority basis.
Intercreditor Arrangements
First Lien Intercreditor Agreement
Additional Receivables Intercreditor Agreement
In addition, the
The foregoing descriptions of the Credit Agreement, the Guarantee and the intercreditor arrangements do not purport to be complete and are qualified in their entirety by the terms of such agreements. Please refer to such agreements, which are incorporated herein by reference and attached hereto as Exhibits 4.1 through 4.4.
Item 7.01. Regulation FD Disclosure.
The following actions are intended to enhance the Company's financial flexibility in light of the current uncertainty resulting from the novel coronavirus pandemic ("COVID-19"). In addition to entering into the Credit Agreement as set forth above, the Company has suspended its share repurchase activities. Also, for the time being, the Company plans to defer certain capital expenditures, and to make certain other operational adjustments as deemed appropriate.
From an operational perspective, the Company is focused on providing the safest
possible environment for our employees, our affiliated physicians and other
caregivers, and for the care of our patients. The Company has added infectious
disease support for the enterprise and in each division to synthesize guidance
and answer clinical and operational questions. The Company initiated its
enterprise emergency operations centers at corporate, in each division, and in
each hospital. The Company changed certain of its practices for screening,
visitor control, and non-essential travel. The Company implemented tracking
systems intended to monitor COVID-19 activity across our organization and in the
communities we serve to identify trends to inform clinical practices, supply
chain, and staffing needs. Also, the Company is collaborating with the multiple
elements of the
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FORWARD LOOKING STATEMENTS
Information provided and statements contained in this Current Report on Form 8-K
that are not purely historical are forward-looking statements within the meaning
of Section 27A of the Securities Act, Section 21E of the Exchange Act and the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements only speak as of the date of this Current Report and the Company
assumes no obligation to update the information included in this Current Report.
Such forward-looking statements include statements relating to COVID-19 and the
Company's responses. These statements often include words such as "approximate,"
"believe," "expect," "anticipate," "intend," "plan," "estimate" or similar
expressions. These forward-looking statements are not historical facts, and are
based on current expectations, estimates and projections about the Company's
industry, management's beliefs and certain assumptions made by management, many
of which, by their nature, are inherently uncertain and beyond the Company's
control. Accordingly, readers are cautioned that any such forward-looking
statements are not guarantees of future performance or occurrence of events and
are subject to certain risks, uncertainties and assumptions that are difficult
to predict. The potential risks and uncertainties include, among others, the
duration, scope and severity of COVID-19 and the effects of COVID-19 on the
Company's operations and services, including the postponement or cancellation of
elective or nonemergency health care procedures (including delayed surgical
procedures), potential increases in the uninsured and underinsured populations,
a temporary or prolonged shutdown or diversion of patients, the disruption or
delay of production and delivery of materials and products in the supply chain
and staffing shortages in the Company's facilities. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable as of the date made, expectations may prove to have been materially
different from the results expressed or implied by such forward-looking
statements. More information about potential risks and uncertainties that could
affect the Company's business and results of operations is included in the "Risk
Factors" and "Forward-Looking Statements" sections in the Annual Report on Form
10-K filed by the Company with the
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits: Exhibit No. Description 4.1 Credit Agreement, dated as ofMarch 19, 2020 , by and amongHCA Inc. , as borrower,Bank of America, N.A ., as administrative agent and collateral agent, and the lenders party thereto. 4.2 Guarantee, dated as ofMarch 19, 2020 , by and among the subsidiary guarantors party thereto andBank of America, N.A ., as administrative agent. 4.3 Additional First Lien Secured Party Consent, dated as ofMarch 19, 2020 , by and amongBank of America, N.A ., as administrative agent,Bank of America, N.A ., as collateral agent,HCA Inc. , as borrower, and the subsidiary guarantors party thereto. 4.4 Additional Receivables Intercreditor Agreement, dated as ofMarch 19, 2020 , by and betweenBank of America, N.A ., asABL Collateral Agent andBank of America, N.A . as New First Lien Collateral Agent, and consented to byHCA Inc. , as borrower, and the subsidiary grantors party thereto. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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