TENET HEALTHCARE CORP - 10-Q filing on 2018-04-30

LONG-TERM DEBT AND LEASE OBLIGATIONS

3 Months Ended

Mar. 31, 2018

Long-term Debt and Capital Lease Obligations [Abstract]

The table below shows our long-term debt at March 31, 2018 and December 31, 2017:



	March 31, 2018			December 31, 2017
Senior unsecured notes:
5.500% due 2019	$	500		$	500
6.750% due 2020	300			300
8.125% due 2022	2,800			2,800
6.750% due 2023	1,872			1,900
7.000% due 2025	478			500
6.875% due 2031	430			430
Senior secured first lien notes:
4.750% due 2020	500			500
6.000% due 2020	1,800			1,800
4.500% due 2021	850			850
4.375% due 2021	1,050			1,050
4.625% due 2024	1,870			1,870
Senior secured second lien notes:
7.500% due 2022	750			750
5.125% due 2025	1,410			1,410
Capital leases	417			431
Mortgage notes	80			77
Unamortized issue costs, note discounts and premiums	(218		)	(231		)
Total long-term debt	14,889			14,937
Less current portion	666			146
Long-term debt, net of current portion	$	14,223		$	14,791

Senior Secured and Senior Unsecured Notes

In March 2018, we purchased approximately $28 million aggregate principal amount of our 6.750% senior unsecured notes due 2023 and approximately $22 million aggregate principal amount of our 7.000% senior unsecured notes due 2025 for approximately $51 million, including approximately $1 million in accrued and unpaid interest through the dates of purchase. In connection with the purchase, we recorded a loss from early extinguishment of debt of approximately $1 million in the three months ended March 31, 2018, primarily related to the difference between the purchase price and the par value of the notes, as well as the write-off of associated unamortized issuance costs.

Credit Agreement

We have a senior secured revolving credit facility (as amended, the “Credit Agreement”) that provides, subject to borrowing availability, for revolving loans in an aggregate principal amount of up to $1 billion, with a $300 million subfacility for standby letters of credit. Obligations under the Credit Agreement, which has a scheduled maturity date of December 4, 2020, are guaranteed by substantially all of our domestic wholly owned hospital subsidiaries and are secured by a first-priority lien on the accounts receivable owned by us and the subsidiary guarantors. Outstanding revolving loans accrue interest at a base rate plus a margin ranging from 0.25% to 0.75% per annum or the London Interbank Offered Rate plus a margin ranging from 1.25% to 1.75% per annum, in each case based on available credit. An unused commitment fee payable on the undrawn portion of the revolving loans ranges from 0.25% to 0.375% per annum based on available credit. Our borrowing availability is based on a specified percentage of eligible accounts receivable, including self-pay accounts. At March 31, 2018, we had no cash borrowings outstanding under the Credit Agreement, and we had approximately $2 million of standby letters of credit outstanding. Based on our eligible receivables, approximately $998 million was available for borrowing under the Credit Agreement at March 31, 2018.

Letter of Credit Facility

We have a letter of credit facility (as amended, the “LC Facility”) that provides for the issuance of standby and documentary letters of credit, from time to time, in an aggregate principal amount of up to $180 million (subject to increase to up to $200 million). The maturity date of the LC Facility is March 7, 2021. Obligations under the LC Facility are guaranteed and secured by a first-priority pledge of the capital stock and other ownership interests of certain of our wholly owned domestic hospital subsidiaries on an equal ranking basis with our senior secured first lien notes.

Drawings under any letter of credit issued under the LC Facility that we have not reimbursed within three business days after notice thereof will accrue interest at a base rate plus a margin equal to 0.50% per annum. An unused commitment fee is payable at an initial rate of 0.25% per annum with a step up to 0.375% per annum should our secured-debt-to-EBITDA ratio equal or exceed 3.00 to 1.00 at the end of any fiscal quarter. A fee on the aggregate outstanding amount of issued but undrawn letters of credit will accrue at a rate of 1.50% per annum. An issuance fee equal to 0.125% per annum of the aggregate face amount of each outstanding letter of credit is payable to the account of the issuer of the related letter of credit. At March 31, 2018, we had approximately $100 million of standby letters of credit outstanding under the LC Facility.