<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 2000
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TENET HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEVADA 8062 95-2557091
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
3820 STATE STREET
SANTA BARBARA, CALIFORNIA 93105
(805) 563-7000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
RICHARD B. SILVER
SENIOR VICE PRESIDENT, ASSISTANT GENERAL COUNSEL AND SECRETARY
TENET HEALTHCARE CORPORATION
3820 STATE STREET
SANTA BARBARA, CALIFORNIA 93105
(805) 563-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES OF ALL COMMUNICATIONS TO:
NICHOLAS P. SAGGESE
HENRY HAVRE
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE, SUITE 3400
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ____________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE(1)
<S> <C> <C> <C> <C>
9 1/4% Series B Senior Notes due
2010.......................... $400,000,000 100% $400,000,000 $105,600
</TABLE>
(1) Determined in accordance with Rule 457(f) promulgated under the Securities
Act of 1933, as amended.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS WILL BE AMENDED OR COMPLETED.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT A SOLICITATION OF AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
TENET HEALTHCARE CORPORATION
OFFER TO EXCHANGE
9 1/4% SENIOR NOTES DUE 2010
FOR 9 1/4% SERIES B SENIOR NOTES DUE 2010
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
The exchange offer will expire at 5:00 P.M., New York City time, on
, 2000, unless extended.
Terms of the exchange offer:
- We will issue up to $400,000,000 aggregate principal amount of new notes.
- We will exchange new notes for all outstanding old notes that are validly
tendered and not withdrawn prior to the expiration or termination of the
exchange offer.
- You may withdraw tenders of old notes at any time prior to the expiration
or termination of the exchange offer.
- The exchange of old notes for new notes will not be a taxable transaction
for U.S. federal income tax purposes, but you should see the discussion
under the caption "United States Federal Income Tax Consequences"
beginning on page 52 for more information.
- We will not receive any cash proceeds from the exchange offer.
- The terms of the new notes are substantially identical to those of the
outstanding old notes, except that the transfer restrictions and
registration rights relating to the old notes do not apply to the new
notes.
- The exchange offer is the initial public offering of the new notes.
- There is no established trading market for the new notes or the old notes.
However, we intend to apply for listing of the new notes on The New York
Stock Exchange.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF RISKS YOU SHOULD
CONSIDER.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is , 2000.
<PAGE>
WHERE YOU MAY FIND MORE INFORMATION
We file reports, proxy statements, registration statements and other
information with the Securities and Exchange Commission (the "SEC"). Our
reports, proxy statements, registration statements and other information filed
with the SEC may be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the SEC's Regional Offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies may be obtained from the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a
web site at http://www.sec.gov which contains our reports, proxy and information
statements and other information. Our common stock is listed on the New York
Stock Exchange and the Pacific Exchange under the symbol "THC." You also may
inspect our reports, proxy statements and other information at the offices of
the New York Stock Exchange at 20 Broad Street, New York, New York 10005 and at
the offices of the Pacific Exchange at 618 South Spring Street, Los Angeles,
California 90014 and 301 Pine Street, San Francisco, California 94104.
We have filed with the SEC a registration statement on Form S-4 (together
with all amendments and exhibits, the "Registration Statement") under the
Securities Act with respect to our offering of new notes. This prospectus does
not contain all of the information in the Registration Statement. You will find
additional information about us and the new notes in the Registration Statement.
Any statements made in this prospectus concerning the provisions of legal
documents are not necessarily complete and you should read the documents which
are filed as exhibits to the Registration Statement or otherwise filed with the
SEC.
In the event that we are not required to comply with the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), we will be required under the indenture for the new notes to continue to
file with the SEC, and to furnish the holders of the new notes with, the
information, documents and other reports specified in Sections 13 and 15(d) of
the Exchange Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents that we filed with the SEC are incorporated in this
prospectus by reference and are a part of this prospectus.
- Our Annual Report on Form 10-K for the fiscal year ended May 31, 2000,
filed on August 15, 2000.
- Current Report on Form 8-K, dated June 13, 2000, filed on June 16, 2000.
All documents that we file with the SEC, pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, after the date of this prospectus and before
the termination of the offering of the new notes will be incorporated by
reference in this prospectus and will be a part of this prospectus from the day
we file such documents. Any statement in this prospectus or in a document
incorporated or deemed to be incorporated in this prospectus by reference will
be modified or superseded for purposes of this prospectus if a statement
contained in this prospectus or in any other document we file after this
prospectus that also is incorporated or deemed to be incorporated by reference
in this prospectus modifies or supersedes such statement. Only the modified or
superseded statement will be a part of this prospectus.
This prospectus incorporates documents, including important business and
financial information, by reference that are not part of this prospectus or
delivered with this prospectus. We will provide without charge, if requested, a
copy of any or all of the documents incorporated by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Please direct your requests to Tenet Healthcare
Corporation, 3820 State Street, Santa Barbara, California 93105, Attention:
Richard B. Silver, Esq., Senior Vice President, Secretary and Assistant General
Counsel (telephone number (805) 563-7000). Please make your request by
, 2000 to insure a timely delivery of the documents.
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. THIS
PROSPECTUS INCLUDES SPECIFIC TERMS OF THE NEW NOTES, AS WELL AS INFORMATION
REGARDING OUR BUSINESS AND DETAILED FINANCIAL DATA. WE ENCOURAGE YOU TO READ
THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE DISCUSSION OF RISKS AND
UNCERTAINTIES AFFECTING OUR BUSINESS INCLUDED UNDER THE CAPTION "RISK FACTORS"
BEGINNING ON PAGE 8, AND THE DOCUMENTS TO WHICH WE REFER YOU.
TENET HEALTHCARE CORPORATION
We are the second-largest investor-owned healthcare services company in the
United States. At May 31, 2000, our subsidiaries and affiliates (collectively
"subsidiaries") owned or operated 110 general hospitals with 26,939 licensed
beds and related healthcare facilities serving urban and rural communities in 17
states, and held investments in other healthcare companies. The related
healthcare facilities included a small number of rehabilitation hospitals,
specialty hospitals, long-term care facilities and a psychiatric facility and
many medical office buildings located on the same campus as, or nearby, our
general hospitals, various ancillary healthcare businesses, including outpatient
surgery centers, home healthcare agencies, occupational and rural healthcare
clinics, health maintenance organizations, a preferred provider organization, a
managed care insurance company and physician practices.
Our general hospitals offer a wide array of medical services and serve as
the anchors for our regional healthcare delivery networks. These regional
delivery networks, designed to provide a full spectrum of care throughout a
community or region, may include a variety of types of ancillary services. We
operate fully integrated regional networks in selected communities across the
United States. We intend to continue our strategic acquisitions of and
partnerships with additional general hospitals and related healthcare businesses
in order to expand and enhance our integrated healthcare delivery systems.
Our principal executive offices are located at 3820 State Street, Santa
Barbara, California 93105, and our telephone number is (805) 563-7000. As of
May 31, 2000, we and our subsidiaries employed approximately 107,000 people
nationwide. We provide central support services to our hospitals from a
Dallas-based operations center.
THE EXCHANGE OFFER
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<S> <C> <C>
Old Notes................................. 9 1/4% Senior Notes due 2010, which we issued on June 16, 2000.
New Notes................................. 9 1/4% Series B Senior Notes due 2010, the issuance of which has
been registered under the Securities Act of 1933. The terms of the
new notes are substantially identical to those of the outstanding
old notes, except that the transfer restrictions and registration
rights relating to the old notes do not apply to the new notes.
Exchange Offer............................ We are offering to issue up to $400,000,000 aggregate principal
amount of the new notes in exchange for a like principal amount of
the old notes to satisfy our obligations under the registration
rights agreement that we entered into when the old notes were sold
in transactions under Rule 144A under the Securities Act.
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C>
Expiration Date; Tenders.................. The exchange offer will expire at 5:00 p.m., New York City time,
on , 2000, unless extended. By tendering your old
notes, you represent to us that:
- you are not our "affiliate," as defined in Rule 405
under the Securities Act,
- any new notes you receive in the exchange offer are
being acquired by you in the ordinary course of your
business,
- at the time of commencement of the exchange offer,
neither you nor, to your knowledge, anyone receiving
new notes from you, has any arrangement or
understanding with any person to participate in the
distribution, as defined in the Securities Act, of the
new notes in violation of the Securities Act,
- if you are not a participating broker-dealer, you are
not engaged in, and do not intend to engage in, the
distribution of the new notes, as defined in the
Securities Act and
- if you are a broker-dealer, you will receive the new
notes for your own account in exchange for old notes
that were acquired by you as a result of your
market-making or other trading activities and that you
will deliver a prospectus in connection with any
resale of the new notes you receive. For further
information regarding resales of the new notes by
participating broker-dealers, see the discussion below
under the caption "Plan of Distribution" on page 55.
Withdrawal; Non-Acceptance................ You may withdraw any old notes tendered in the exchange offer at
any time prior to 5:00 p.m., New York City time, on ,
2000. If we decide for any reason not to accept any old notes
tendered for exchange, the old notes will be returned to the
registered holder at our expense promptly after the expiration or
termination of the exchange offer. In the case of old notes
tendered by book-entry transfer into the exchange agent's account
at The Depository Trust Company ("DTC"), any withdrawn or
unaccepted old notes will be credited to the tendering holder's
account at DTC. For further information regarding the withdrawal
of tendered old notes, see "The Exchange Offer--Terms of the
Exchange Offer; Period for Tendering Old Notes" on page 21 and
"The Exchange Offer--Withdrawal Rights" beginning on page 24.
Conditions to the
Exchange Offer.......................... The exchange offer is subject to customary conditions, which we
may waive. See the discussion below under the caption "The
Exchange Offer--Conditions to the Exchange Offer" beginning on
page 25 for more information regarding the conditions to the
exchange offer.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Procedures for Tendering Old Notes........ Unless you comply with the procedures described below under the
caption "The Exchange Offer--Guaranteed Delivery Procedures" on
page 24, you must do one of the following on or prior to the
expiration or termination of the exchange offer to participate in
the exchange offer:
- tender your old notes by sending the certificates for
your old notes, in proper form for transfer, a
properly completed and duly executed letter of
transmittal, with any required signature guarantees,
and all other documents required by the letter of
transmittal, to The Bank of New York, as exchange
agent, at one of the addresses listed below under the
caption "The Exchange Offer--Exchange Agent" on
page 26, or
- tender your old notes by using the book-entry transfer
procedures described below and transmitting a properly
completed and duly executed letter of transmittal,
with any required signature guarantees, or an agent's
message instead of the letter of transmittal, to the
exchange agent. In order for a book-entry transfer to
constitute a valid tender of your old notes in the
exchange offer, The Bank of New York, as exchange
agent, must receive a confirmation of book-entry
transfer of your old notes into the exchange agent's
account at DTC prior to the expiration or termination
of the exchange offer. For more information regarding
the use of book-entry transfer procedures, including a
description of the required agent's message, see the
discussion below under the caption "The Exchange
Offer--Book Entry Transfers" beginning on page 23.
Guaranteed Delivery Procedures............ If you are a registered holder of the old notes and wish to tender
your old notes in the exchange offer, but
- the old notes are not immediately available,
- time will not permit your old notes or other required
documents to reach the exchange agent before the
expiration or termination of the exchange offer, or
- the procedure for book-entry transfer cannot be
completed prior to the expiration or termination of
the exchange offer,
then you may tender old notes by following the procedures
described below under the caption "The Exchange Offer--Guaranteed
Delivery Procedures" on page 24.
Special Procedures for Beneficial
Owners.................................. If you are a beneficial owner whose old notes are registered in
the name of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender your old notes in the
exchange offer, you should promptly contact the person in whose
name the old notes are registered and instruct that person to
tender on your behalf. If you wish to tender in the exchange offer
on your own behalf, prior to completing and executing the letter
of transmittal and delivering your old notes, you must either make
appropriate arrangements to register ownership of the old notes in
your name or obtain a properly completed bond power from the
person in whose name the old notes are registered.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
United States Federal Income Tax
Consequences............................ The exchange of old notes for new notes in the exchange offer will
not be a taxable transaction for United States federal income tax
purposes. See the discussion below under the caption "United
States Federal Income Tax Consequences" beginning on page 52 for
more information regarding the tax consequences to you of the
exchange offer.
Use of Proceeds........................... We will not receive any cash proceeds from the exchange offer.
Exchange Agent............................ The Bank of New York is the exchange agent for the exchange offer.
You can find the addresses and telephone number of the exchange
agent below under the caption "The Exchange Offer--Exchange Agent"
on page 26.
Resales................................... Based on interpretations by the staff of the SEC, as set forth in
no-action letters issued to third parties, we believe that the new
notes you receive in the exchange offer may be offered for resale,
resold or otherwise transferred without compliance with the
registration and prospectus delivery provisions of the Securities
Act. However, you will not be able to freely transfer the new
notes if:
- you are our "affiliate," as defined in Rule 405 under
the Securities Act,
- you are not acquiring the new notes in the exchange
offer in the ordinary course of your business,
- you have an arrangement or understanding with any
person to participate in the distribution, as defined
in the Securities Act, of the new notes, you will
receive in the exchange offer or
- you are a participating broker-dealer that receives
new notes for its own account in the exchange offer in
exchange for old notes that were acquired as a result
of market-making or other trading activities.
If you fall within one of the exceptions listed above, you must
comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction
involving the new notes.
</TABLE>
4
<PAGE>
CONSEQUENCES OF NOT EXCHANGING OLD NOTES
If you do not exchange your old notes in the exchange offer, your old notes
will continue to be subject to the restrictions on transfer described in the
legend on the certificate for your old notes. In general, you may offer or sell
your old notes only:
- if they are registered under the Securities Act and applicable state
securities laws,
- if they are offered or sold under an exemption from registration under the
Securities Act and applicable state securities laws or
- if they are offered or sold in a transaction not subject to the Securities
Act and applicable state securities laws.
We do not currently intend to register the old notes under the Securities
Act. Under some circumstances, however, holders of the old notes, including
holders who are not permitted to participate in the exchange offer or who may
not freely resell new notes received in the exchange offer, may require us to
file, and cause to become effective, a shelf registration statement covering
resales of old notes by these holders. For more information regarding the
consequences of not tendering your old notes and our obligation to file a shelf
registration statement, see "The Exchange Offer--Consequences of Exchanging or
Failing to Exchange Old Notes" on page 27 and "Description of
Notes--Registration Rights; Liquidated Damages" beginning on page 50.
SUMMARY DESCRIPTION OF THE NEW NOTES
THE TERMS OF THE NEW NOTES AND THOSE OF THE OUTSTANDING OLD NOTES ARE
SUBSTANTIALLY IDENTICAL, EXCEPT THAT THE TRANSFER RESTRICTIONS AND REGISTRATION
RIGHTS RELATING TO THE OLD NOTES DO NOT APPLY TO THE NEW NOTES. IN ADDITION, IF
WE DO NOT HAVE AN EFFECTIVE SHELF REGISTRATION STATEMENT ON FILE WITH THE SEC TO
REGISTER THE OLD NOTES ON OR PRIOR TO FEBRUARY 11, 2001 OR IF THE EXCHANGE OFFER
IS NOT COMPLETED ON OR BEFORE THE 30TH BUSINESS DAY AFTER THE REGISTRATION
STATEMENT BECOMES EFFECTIVE, WE WILL BE REQUIRED TO PAY LIQUIDATED DAMAGES TO
EACH HOLDER OF OLD NOTES UNTIL WE CURE THE REGISTRATION DEFAULT. SEE
"DESCRIPTION OF NOTES--REGISTRATION RIGHTS; LIQUIDATED DAMAGES" BEGINNING ON
PAGE 50.
<TABLE>
<S> <C>
Maturity Date........................ September 1, 2010.
Interest Payment Dates............... March 1 and September 1, commencing March 1, 2001.
Listing.............................. We intend to apply for listing of the new notes on The New
York Stock Exchange.
Mandatory Redemption................. None.
Optional Redemption.................. The new notes will be redeemable, in whole, at any time, or
in part, from time to time, at our option, at a redemption
price equal to the Make-Whole Price. See "Description of
Notes--Optional Redemption" beginning on page 29.
Change of Control.................... Upon a Change of Control Triggering Event, each holder of
new notes will have the right to require us to repurchase
such holder's new notes at 101% of the principal amount
thereof, plus accrued and unpaid interest to the date of
repurchase. However, the terms of outstanding indebtedness,
including our bank credit facility, will likely prevent us
from repurchasing the new notes upon the occurrence of a
Change of Control Triggering Event. See "Risk Factors--We
may be unable to raise the funds necessary to finance the
change of control offer required by the indenture relating
to the notes." on page 15 and "Description of
Notes--Repurchase at the
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Option of Holders Upon a Change of Control" beginning on
page 30.
Ranking.............................. The new notes will be general unsecured obligations ranking
senior to all our subordinated indebtedness and equal in
right of payment with all our other existing and future
unsubordinated indebtedness. On an as adjusted basis, as of
May 31, 2000, after giving effect to the offering of the old
notes, approximately $1.9 billion in principal amount of our
outstanding indebtedness by its terms would have been
subordinated to the notes. On an as adjusted basis, as of
May 31, 2000, after giving effect to the offering of the old
notes, our senior debt would have been approximately $3.7
billion. In addition, the new notes will be effectively
subordinated to all of the outstanding debt of our
subsidiaries which, as of May 31, 2000, was approximately
$100 million (excluding trade payables of approximately $700
million, intercompany debt and other obligations). See
"Capitalization" on page 19 and "Description of
Notes--General" on page 28.
Covenants............................ The indenture governing the new notes contains covenants
including, but not limited to, covenants limiting or
prohibiting:
- the incurrence by us and our subsidiaries of additional
indebtedness,
- the payment of dividends on and the redemption of capital
stock by us,
- the creation of liens securing indebtedness,
- restrictions on the ability of subsidiaries to pay
dividends,
- transactions with affiliates and
- our ability to consolidate or merge with or into, or to
transfer all or substantially all of our assets to,
another person.
See "Description of Notes--Covenants" beginning on page 31.
</TABLE>
RISK FACTORS
You should carefully consider all of the information contained in this
prospectus before deciding to tender your old notes in the exchange offer. In
particular, you should carefully review the specific factors described below
under the caption "Risk Factors" beginning on page 8, which contain important
information about us and the risks that may affect our business.
6
<PAGE>
SUMMARY FINANCIAL INFORMATION
Summary financial information for fiscal years ended May 31, 1998, 1999, and
2000 follows. The information for each fiscal year is from our consolidated
financial statements and underlying accounting records. You also should read
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the consolidated financial statements and related notes, the report
of our independent auditors and report of management included in our Annual
Report on Form 10-K for the fiscal year ended May 31, 2000, incorporated in this
prospectus by reference.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------
1998 1999 2000
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
OPERATING RESULTS:
Net operating revenues...................................... $9,895 $10,880 $11,414
Operating expenses:
Salaries and benefits..................................... 4,052 4,412 4,508
Supplies.................................................. 1,375 1,525 1,595
Provision for doubtful accounts........................... 588 743 851
Other operating expenses.................................. 2,071 2,342 2,525
Depreciation.............................................. 347 421 411
Amortization.............................................. 113 135 122
Impairment and other unusual charges(1)................... 221 363 355
------ ------- -------
Operating income............................................ 1,128 939 1,047
Interest expense............................................ (464) (485) (479)
Investment earnings......................................... 22 27 22
Minority interests in income of consolidated subsidiaries... (22) (7) (21)
Net gains (losses) on disposals of facilities and long-term
investments............................................... (17) -- 49
------ ------- -------
Income from continuing operations before income taxes....... 647 474 618
Income taxes................................................ (269) (225) (278)
------ ------- -------
Income from continuing operations........................... $ 378 $ 249 $ 340
====== ======= =======
Ratio of earnings to fixed charges(2)....................... 2.1x 1.8x 2.0x
</TABLE>
<TABLE>
<CAPTION>
AS OF MAY 31,
------------------------------
1998 1999 2000
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 1,182 $ 1,940 $ 1,682
Total assets................................................ $12,774 $13,771 $13,161
Long-term debt, excluding current portion................... $ 5,829 $ 6,391 $ 5,668
Shareholders' equity........................................ $ 3,558 $ 3,870 $ 4,066
</TABLE>
--------------------------
(1) In the fourth quarter of the year ended May 31, 1998, we recorded impairment
and other unusual charges of $221 million relating to: (1) the closure or
sale of five hospitals and several home health agencies; (2) write-offs of
goodwill and other assets; and (3) write-offs of carrying values of long
lived assets. In the fourth quarter of the year ended May 31, 1999, we
recorded impairment and other unusual charges of $363 million relating to:
(1) our plan to sell 20 general hospitals and close one general hospital and
one speciality hospital; (2) the impairment of the carrying values of
property, equipment and goodwill; and (3) the implementation of hospital
cost control programs and general overhead reduction plans. In the third and
fourth quarters of the year ended May 31, 2000, we recorded impairment and
other unusual charges of $355 million relating to: (1) our plan for
termination or expiration of certain employment and management contracts
with approximately 440 physicians and (2) the closure or sale of five
general hospitals and other property and equipment.
(2) We calculate our ratio of earnings to fixed charges by dividing income from
continuing operations before income taxes plus fixed charges by fixed
charges. Fixed charges consist of interest expense, including amortization
of financing costs, and that portion of rental expense representing the
interest component of rental expense. For the years ended May 31, 1998
through 2000, the interest component of rental expense was $89 million, $91
million and $90 million, respectively.
7
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS, AS WELL AS THE OTHER
INFORMATION SET FORTH OR INCORPORATED BY REFERENCE IN THE PROSPECTUS, BEFORE
TENDERING YOUR OLD NOTES IN THE EXCHANGE OFFER. WHEN WE USE THE TERM "NOTES" IN
THIS PROSPECTUS, THE TERM INCLUDES THE 9 1/4% OLD NOTES AND THE 9 1/4% NEW
NOTES.
HOLDERS WHO FAIL TO EXCHANGE THEIR OLD NOTES WILL CONTINUE TO BE SUBJECT TO
RESTRICTIONS ON TRANSFER.
If you do not exchange your old notes for new notes in the exchange offer,
you will continue to be subject to the restrictions on transfer of your old
notes described in the legend on the certificates for your old notes. The
restrictions on transfer of your old notes arise because we issued the old notes
under exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, you may only offer or sell the old notes if they are registered under
the Securities Act and applicable state securities laws, or offered and sold
under an exemption from these requirements. We do not plan to register the old
notes under the Securities Act. For further information regarding the
consequences of tendering your old notes in the exchange offer, see the
discussions below under the captions "The Exchange Offer--Consequences of
Exchanging or Failing to Exchange Old Notes" and "United States Federal Income
Tax Consequences."
We believe that new notes issued in exchange for old notes pursuant to the
exchange offer may be offered for resale, resold or otherwise transferred by you
without registering the new notes under the Securities Act or delivering a
prospectus so long as you (1) are not one of our "affiliates," which is defined
in Rule 405 of the Securities Act and (2) acquire the new notes in the ordinary
course of your business and, unless you are a broker dealer, you do not have any
arrangement or understanding with any person to participate in the distribution
of such new notes. Our belief is based on interpretations by the SEC's staff in
no-action letters issued to third parties. Please note that the SEC has not
considered our exchange offer in the context of a no-action letter and we cannot
assure you that the SEC's staff would make a similar determination with respect
to our exchange offer.
Unless you are a broker-dealer, you must acknowledge that you are not
engaged in, and do not intend to engage in, a distribution of the new notes and
that you have no arrangement or understanding to participate in a distribution
of the new notes. If you are one of our affiliates, or you are engaged in,
intend to engage in or have any arrangement or understanding with respect to,
the distribution of new notes acquired in the exchange offer, you (1) should not
rely on our interpretations of the position of the SEC's staff and (2) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
If you are a broker-dealer and receive new notes for your own account
pursuant to the exchange offer, you must acknowledge that you will deliver a
prospectus in connection with any resale of such new notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, you
will not be deemed to admit that you are an "underwriter" within the meaning of
the Securities Act. If you are a broker-dealer, you may use this prospectus, as
it may be amended or supplemented from time to time, in connection with the
resale of new notes received in exchange for old notes acquired by you as a
result of market-making or other trading activities. For a period of 90 days
after the expiration or termination of the exchange offer, we will make this
prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
In addition, you may offer or sell the new notes in certain jurisdictions
only if they have been registered or qualified for sale there, or an exemption
from registration or qualification is available and is complied with. Subject to
the limitations specified in the registration rights agreement, we will register
or qualify the new notes for offer or sale under the securities laws of any
jurisdictions that you reasonably request in writing. Unless you request that
the sale of the new notes be registered or qualified in a jurisdiction, we
currently do not intend to register or qualify the sale of the new notes in any
jurisdiction.
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OUR SUBSTANTIAL INDEBTEDNESS AND THE RESTRICTIVE COVENANTS IMPOSED BY OUR BANK
CREDIT FACILITY AND INDENTURES COULD RESTRICT OUR ABILITY TO FUND FUTURE
OPERATIONS, PURSUE BUSINESS OPPORTUNITIES AND FULFILL OUR OBLIGATIONS UNDER THE
NOTES.
AMOUNT OF LEVERAGE
As of May 31, 2000, we, including our subsidiaries, had approximately
$5.7 billion of outstanding indebtedness, including the current portion of
long-term debt and excluding obligations to trade creditors, and approximately
$4.1 billion of shareholders' equity. Outstanding indebtedness was approximately
58.2% of our total capitalization, which was approximately $9.7 billion. Because
we used the proceeds from the offering of the old notes to repay existing
indebtedness, on an as adjusted basis, as of May 31, 2000, after giving effect
to the offering of the old notes, our indebtedness was the same. See
"Capitalization."
RESTRICTIVE COVENANTS
Our bank credit facility contains various covenants that limit our ability
to engage in certain transactions. Those covenants:
- limit our and our subsidiaries' ability to borrow and to place liens on
our and their assets,
- limit our investments and the sale of all or substantially all of our
assets,
- limit our prepayment of subordinated debt,
- prohibit us from purchasing our stock or paying dividends unless our
senior long-term unsecured debt securities are rated BBB- or higher by
Standard and Poors' Rating Services and Baa3 or higher by Moody's
Investors Service, Inc.,
- require us to maintain a minimum consolidated net worth and
- require us to comply with coverage ratio tests.
The indentures governing our debt securities, including the notes, include
covenants of a similar nature. Our failure to comply with any of these covenants
could result in an event of default under our indebtedness, including the notes.
That in turn could cause an event of default to occur under all or substantially
all of our other outstanding indebtedness. See "Description of
Notes--Covenants."
EFFECT ON ABILITY TO FINANCE FUTURE OPERATIONS
Although we believe that cash generated from operations, amounts available
under our bank credit facility and our ability to access capital markets will be
sufficient to allow us to make future investments, we cannot assure you that we
will be able to obtain the funds necessary to make such investments. Our level
of indebtedness relative to our total capitalization and the covenants described
above may adversely affect the terms under which we would be able to finance our
future operations. Those factors also could limit our ability to pursue business
opportunities that may be in our interests. In particular, changes in medical
technology, existing, proposed and future legislation, regulations and the
interpretation thereof, and the increasing importance of entering into contracts
with health maintenance organizations, or HMOs, and other managed care companies
and being part of or creating integrated healthcare delivery systems may require
significant investments in facilities, equipment, personnel and services.
Furthermore, tax-exempt or government-owned competitors have certain financial
advantages such as endowments, charitable contributions, tax-exempt financing
and exemption from sales, property and income taxes not available to us,
providing those competitors with a potential competitive advantage in making
such investments.
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OUR INABILITY TO EXPAND OUR INTEGRATED HEALTHCARE SYSTEMS COULD ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS AND OVERALL BUSINESS.
OUR STRATEGY
An important part of our business strategy is expanding and enhancing our
integrated healthcare delivery systems and services through the acquisition of,
and partnerships and affiliations with, hospitals, groups of hospitals, other
healthcare businesses and ancillary healthcare providers, including attracting
and retaining physicians to practice at our hospitals.
We continue to evaluate our portfolio of hospitals. During the 2000 fiscal
year, we sold 17 general hospitals, closed three general hospitals and
terminated the lease of one general hospital. The hospitals' sales and closures
were part of our plan to sell or close non-strategic hospitals in order to
strengthen our organization by concentrating on markets in which we already have
a strong presence.
INDUSTRY-RELATED CONSIDERATIONS
Several factors have caused our pace for acquisitions of, and partnerships
and affiliations with, general hospitals to slow. First, many states have
enacted, and other states are considering enacting, legislation that requires
public hearings about or state approval of conversions of not-for-profit
hospitals to for-profit status and acquisitions of not-for-profit hospitals by
for-profit companies. These reviews and hearings have resulted in it taking
longer to acquire not-for-profit hospitals. Second, not-for-profit boards have
become more deliberative in the process of selling their hospitals and
increasingly are engaging investment bankers or other third parties to assist
with the sale process. Third, start-up companies and financially strong
not-for-profit bidders--alone or in consortiums--continue to compete with us for
acquisitions. As a result, we did not acquire as many hospitals as we otherwise
might have in fiscal 2000. Finally, a recent revenue ruling by the Internal
Revenue Service has had a negative effect on the formation of certain joint
ventures between not-for-profit and for-profit corporations. In the past,
relationships established through joint ventures with not-for-profit
corporations have led to acquisition opportunities.
EFFECT ON ABILITY TO CONSUMMATE AND INTEGRATE ADDITIONAL ACQUISITIONS,
PARTNERSHIPS OR AFFILIATIONS
We cannot assure you that suitable acquisitions, partnerships and/or
affiliations can be consummated on terms favorable to us or that we can obtain
financing for such acquisitions, if necessary. Furthermore, we cannot assure you
that even if we continue to acquire and/or enter into partnerships or
affiliations with additional facilities and related healthcare service providers
in the geographic areas in which we currently operate, federal and state
regulatory agencies would not constrain our ability to grow. Finally, we cannot
assure you that we will be able to operate profitably, or effectively integrate
the operations of or otherwise achieve the intended benefits from, any
hospitals, facilities, businesses or other assets we may acquire or with which
we may enter into partnerships or affiliations.
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN OUR INDUSTRY, WHICH COULD ADVERSELY
AFFECT OUR BUSINESS AND OUR ABILITY TO SATISFY OUR OBLIGATIONS UNDER THE NOTES.
The healthcare industry, including our company, in recent years has had to
contend with increased competition for patients and staff physicians, excess
capacity at general hospitals, a shift from inpatient to outpatient treatment
settings and increased consolidation. The increased competition as well as the
factors described below have led to increased emphasis on the use of alternative
healthcare delivery systems, such as home health services, outpatient surgery
and emergency and diagnostic centers. That in turn has resulted in certain
conditions being treated and certain procedures being performed outside of
general hospitals, which has reduced the number and the length of general
hospital stays, led to a higher acuity level for patients who are admitted to
general hospitals and resulted in higher costs. The
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principal factors contributing to these trends are advances in medical
technology and pharmaceuticals, cost-containment efforts by governmental payors,
managed care payors, employers and traditional healthcare insurers, changes in
regulations and reimbursement policies, increases in the number and type of
competing healthcare providers and changes in physician practice patterns. We
expect these trends and factors to continue to adversely impact our general
hospitals.
The revenues and operating results of most of our hospitals are
significantly affected by the hospitals' ability to negotiate favorable
contracts with HMOs and other managed care payors. Our future success will
depend, in part, on our hospitals' ability to continue to attract and retain
staff physicians, to enter into managed care contracts and to organize and
structure integrated healthcare delivery systems. We cannot assure you that our
hospitals will continue to be able to, on terms favorable to us, attract and
retain physicians to their staffs, enter into managed care contracts or organize
and structure integrated healthcare delivery systems, for which other healthcare
companies, including some with greater financial resources or a wider range of
services, may be competing. We expect pressures imposed by government and
private payors and the increasing percentage of business negotiated with
purchasers of group healthcare services to continue to affect our per-patient
revenues adversely.
INDUSTRY CHANGES AND TRENDS COULD MATERIALLY HARM OUR BUSINESS.
GOVERNMENT PROGRAMS
Payments from government programs, such as Medicare and Medicaid, accounted
for approximately 41% of our net operating revenues for the fiscal year ended
May 31, 2000. Legislative changes, including the Balanced Budget Act of 1997,
have resulted in limitations on and, in some cases, reductions in levels of
payments to, healthcare providers under government programs. The act is being
phased in over a period of five years beginning October 1, 1997. Pressures to
control healthcare costs and a shift from traditional Medicare managed care
plans after the act was enacted have resulted in an increase in the number of
patients whose healthcare coverage is provided under managed care plans. We
generally receive lower payments per patient from managed care payors than we do
from traditional insurers. We do not expect the aggregate effect of the reduced
payments, however, to have a material adverse effect on our business, financial
condition or results of operations.
PRIVATE PAYOR REVIEW PROCEDURES AND PAYMENT PRESSURES
Inpatient utilization, average lengths of stay and occupancy rates continue
to be negatively affected by payor-required pre-admission authorization and
utilization review and by payor pressure to maximize outpatient and alternative
healthcare delivery services for less acutely ill patients. Efforts to impose
reduced allowances, greater discounts and more stringent cost controls by
government and other payors also are expected to continue. Although we are
unable to predict the effect these changes will have on our operations,
significant limits on the scope of services reimbursed and on reimbursement
rates and fees could have a material adverse effect on our business, financial
condition or results of operations.
UTILIZATION REVIEW
Controls imposed by government and private payors designed to reduce
admissions and lengths of stay have affected and are expected to continue to
affect our facilities. For example, certain treatments and procedures are
performed less often due to such controls, including utilization review.
Utilization review entails the review of the admission and course of treatment
of a patient by a third party. Utilization review by third-party peer review
organizations, or PROs, is required in connection with providing care paid for
by Medicare and Medicaid. Utilization review by third parties also is a
requirement of many managed care arrangements.
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ENHANCED REGULATION OF THE HEALTHCARE INDUSTRY COULD HARM OUR FINANCIAL
CONDITION AND INHIBIT OUR ABILITY TO SATISFY OUR OBLIGATIONS UNDER THE NOTES.
Health care, as one of the largest industries in the United States,
continues to attract much legislative interest and public attention. Changes in
the Medicare, Medicaid and other programs, hospital cost-containment initiatives
by public and private payors, proposals to limit payments and healthcare
spending and industry-wide competitive factors are highly significant to the
healthcare industry. In addition, the healthcare industry is governed by a
framework of federal and state laws, rules and regulations that are extremely
complex and for which the industry has the benefit of little or no regulatory or
judicial interpretation. Although we believe we are in compliance in all
material respects with such laws, rules and regulations, if a determination is
made that we were in material violation of such laws, rules or regulations, our
operations and financial results could be materially adversely affected.
The Balanced Budget Act of 1997 has had the effect of reducing payments to
hospitals and other healthcare providers under the Medicare program. The
reductions in payments and other changes mandated by the Balanced Budget Act of
1997 have had a significant effect on our revenues under the Medicare program.
In addition, there continue to be federal and state proposals that would, and
actions that do, impose more limitations on payments to providers such as us and
proposals to increase copayments and deductibles from patients.
Our facilities are affected by controls imposed by government and private
payors designed to reduce admissions and lengths of stay. For all providers,
such controls, including utilization review, discussed above, have resulted in
fewer of certain treatments and procedures being performed.
Many states have enacted or are considering enacting measures that are
designed to reduce their Medicaid expenditures and to make certain changes to
private healthcare insurance. Various states have applied, or are considering
applying, for a federal waiver from current Medicaid regulations to allow them
to serve some of their Medicaid participants through managed care providers.
Texas was denied a waiver under Section 1115 of the Balanced Budget Act of 1997
but is in the process of implementing regional managed care programs under a
more limited waiver. Texas also has applied for federal funds for children's
health programs under the Balanced Budget Act of 1997. Louisiana is considering
wider use of managed care for its Medicaid population. California created a
voluntary health insurance purchasing cooperative that seeks to make healthcare
coverage more affordable for businesses with five to 50 employees and changed
the payment system for participants in its Medicaid program in certain counties
from fee-for-service arrangements to managed care plans. Florida also has
legislation, and other states are considering adopting legislation, imposing a
tax on net revenues of hospitals to help finance or expand the provision of
healthcare to uninsured and underinsured persons. A number of other states are
considering the enactment of managed care initiatives designed to provide
universal low-cost coverage. These proposals also may attempt to include
coverage for some people who currently are uninsured.
ANTIKICKBACK AND SELF-REFERRAL REGULATIONS
The healthcare industry is subject to extensive federal, state and local
regulation relating to licensure, conduct of operations, ownership of
facilities, addition of facilities and services and prices for services. In
particular, Medicare and Medicaid antikickback and antifraud and abuse
amendments codified under Section 1128B(b) of the Social Security Act (the
"Antikickback Amendments") prohibit certain business practices and relationships
that might affect the provision and cost of healthcare services payable under
Medicare, Medicaid and other government programs, including the payment or
receipt of remuneration for the referral of patients whose care will be paid for
by such programs. Sanctions for violating the Antikickback Amendments include
criminal penalties and civil sanctions, including fines and possible exclusion
from government programs such as the Medicare and Medicaid
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programs. Many states have statutes similar to the federal Antikickback
Amendments, except that the state statutes usually apply to referrals for
services reimbursed by all third-party payors, not just federal programs.
In addition, it is a violation of the Federal Civil Monetary Penalties Law
to offer or transfer anything of value to Medicare or Medicaid beneficiaries
that is likely to influence their decision to obtain covered goods or services
from one provider or service rather than another. Any person or entity that
files a false claim for payment or reimbursement from the federal government
also is subject to civil and criminal penalties under the False Claims Act.
In addition to addressing other matters, as discussed below, the Health
Insurance Portability and Accountability Act of 1996 amends Title XI
(42U.S.C. 1301 et seq.) to broaden the scope of current fraud and abuse laws to
include all health plans, whether or not payments under such health plans are
made pursuant to a federal program.
Section 1877 of the Social Security Act (commonly referred to as the "Stark"
laws) restricts referrals by physicians of Medicare, Medicaid and other
government-program patients to providers of a broad range of designated health
services with which they have ownership or certain other financial arrangements.
Section 1877 was amended effective January 1, 1995, to significantly broaden the
original scope of prohibited referrals. A violation of the Stark laws may result
in a denial of payment, required refunds to patients and to the Medicare
program, civil monetary penalties of up to $15,000 for each violation, civil
monetary penalties of up to $100,000 for "sham" arrangements, civil monetary
penalties of up to $10,000 for each day in which an entity fails to report
required information and exclusion from participation in the Medicare, Medicaid
and other federal programs. Violations of the Stark laws also may result in
violations of the False Claims Act. Many states have adopted or are considering
similar legislative proposals, some of which extend beyond the Medicaid program
to prohibit the payment or receipt of remuneration for the referral of patients
and physician self-referrals regardless of the source of the payment for the
care. Our participation in and development of joint ventures and other financial
relationships with physicians could be adversely affected by these amendments
and similar state enactments.
The federal government has issued regulations that describe some of the
conduct and business relationships that are permissible under the Antikickback
Amendments ("Safe Harbors"). The fact that certain conduct or a given business
arrangement does not fall within a Safe Harbor does not necessarily render the
conduct or business arrangement PER SE illegal under the Antikickback
Amendments. Such conduct and business arrangements, however, do risk increased
scrutiny by government enforcement authorities. We may be less willing than some
of our competitors to enter into conduct or business arrangements that do not
clearly satisfy the Safe Harbors. Passing up certain of those opportunities of
which our competitors are willing to take advantage may put us at a competitive
disadvantage. We have a voluntary regulatory compliance program and
systematically review all of our operations to ensure that they comply with the
Antikickback Amendments, the Stark laws and similar state statutes.
Both federal and state government agencies are continuing heightened and
coordinated civil and criminal enforcement efforts. As part of an announced work
plan, the government has begun to scrutinize, among other things, the terms of
acquisitions of physician practices by companies that own hospitals, coding
practices related to certain clinical laboratory procedures and coding practices
related to transfers to another facility. We believe that the healthcare
industry will continue to be subject to increased government scrutiny and
investigations.
Another trend impacting the healthcare industry today is the increased use
of the False Claims Act by individuals. Such qui tam or "whistleblower" actions
allow private individuals to bring actions on behalf of the government alleging
that the defendant has defrauded the federal government. If the government
intervenes in the action and prevails, the party filing the initial complaint
may share in a portion of any settlement or judgment. If the government does not
intervene in the action, the qui tam
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plaintiff may pursue the action independently. Although companies in the
healthcare industry in general and we in particular may be periodically subject
to qui tam actions, we are unable to predict the impact of such actions on our
business, financial condition or results of operations.
We are unable to predict the future course of federal, state and local
regulation or legislation, including Medicare and Medicaid statutes and
regulations. Further changes in the regulatory framework could have a material
adverse effect on our business, financial condition and results of operations.
HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996
The Health Insurance Portability and Accountability Act of 1996 ("HIPAA")
mandates the adoption of standards for the exchange of electronic health
information in an effort to encourage overall administrative simplification and
enhance the effectiveness and efficiency of the healthcare industry. Ensuring
privacy and security of patient information--"accountability"- is one of the key
factors driving the legislation. The other major factor--"portability"--refers
to Congress' intention to ensure that individuals may take their medical and
insurance records with them if they change employers.
HIPAA will bring about significant and costly changes in healthcare. It
mandates new security measures, sets standards for electronic signatures,
standardizes a method for identifying providers, employers, health plans and
patients, requires that the healthcare industry utilize the most efficient
method to codify data and significantly changes the manner in which hospitals
communicate with payors.
HIPAA's security and privacy regulations currently are scheduled to be
finalized by the United States Department of Health and Human Services in
September 2000. Once the regulations are finalized, we will have approximately
two years to be fully compliant. Sanctions for failing to comply with HIPAA
include criminal penalties and civil sanctions.
We are evaluating the effect of HIPAA and have initiated a plan designed to
allow us to comply with the HIPAA regulations as they have been adopted to date.
At this time, we anticipate that we will be able to fully comply with those
HIPAA requirements that have been adopted. However, we cannot at this time
estimate the cost of such compliance. Based on our current knowledge, we believe
that the cost of our compliance will not have a material adverse effect on our
business, financial condition or results of operations.
HEALTH CARE FACILITY LICENSING REQUIREMENTS
Our healthcare facilities are subject to extensive federal, state and local
legislation and regulation. In order to maintain their operating licenses,
healthcare facilities must comply with strict standards concerning medical care,
equipment and hygiene. Various licenses and permits also are required in order
to dispense narcotics, operate pharmacies, handle radioactive materials and
operate certain equipment. Our healthcare facilities hold all required
governmental approvals, licenses and permits. Except for one small hospital that
has not sought accreditation, each of our facilities that is eligible for
accreditation is fully accredited by the Joint Commission on Accreditation of
Healthcare Organizations, the Commission on Accreditation of Rehabilitation
Facilities (in the case of rehabilitation hospitals), the American Osteopathic
Association (in the case of osteopathic hospitals) or another appropriate
accreditation agency. With such accreditation, our hospitals are eligible to
participate in government-sponsored provider programs such as the Medicare and
Medicaid programs. The one hospital that is not accredited participates in the
Medicare program through a special waiver that must be renewed each year.
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We are unable to predict the future course of federal, state or local
healthcare legislation. Further changes in the law or regulatory framework that
reduce our revenues or increase our costs could have a material adverse effect
on our business, financial condition or results of operations.
OUR LIABILITY FOR DAMAGES DUE TO LEGAL PROCEEDINGS MAY BE SIGNIFICANT.
We have been involved in significant civil litigation of an unusual nature
related principally to our subsidiaries' discontinued psychiatric business. On
July 19, 2000, we entered into an agreement in principle to settle substantially
all of such civil litigation. As a result, we posted a $19 million after-tax
charge to discontinued operations in the fourth quarter of fiscal 2000 to
reflect this settlement.
In the normal course of business we also are subject to claims and lawsuits.
We believe that our liability for damages resulting from such claims and
lawsuits in the normal course of business is adequately covered by insurance or
is adequately provided for in our consolidated financial statements.
WE MAY BE UNABLE TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL
OFFER REQUIRED BY THE INDENTURE RELATING TO THE NOTES.
Upon the occurrence of a Change of Control Triggering Event, you may require
us to purchase your notes at 101% of their principal, plus accrued and unpaid
interest to the date of purchase. Please note, however, that events that would
constitute a Change of Control also would constitute an event of default under
our existing bank credit facility. The occurrence of an event of default under
our existing bank credit facility will constitute an event of default under the
indentures governing our outstanding debt securities. Accordingly, it is
unlikely that we would be able to fulfill our obligation to repurchase any notes
if a Change of Control Triggering Event occurs. Any of our future credit
agreements or other agreements relating to indebtedness may contain similar
restrictions and provisions. We cannot assure that we will have the financial
resources to purchase your notes in the event of a Change of Control Triggering
Event, particularly if such Change of Control Triggering Event requires us to
refinance, or results in the acceleration of, other indebtedness.
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES WILL BE EFFECTIVELY JUNIOR TO
OBLIGATIONS OF OUR SUBSIDIARIES. WE MUST RELY ON OUR SUBSIDIARIES FOR FUNDS
NECESSARY TO MEET OUR FINANCIAL OBLIGATIONS, INCLUDING THE NOTES.
SUBSIDIARY OPERATIONS
Our operations are and will be conducted by our subsidiaries. Similarly,
substantially all of our assets are and will be owned by our subsidiaries.
Accordingly, your notes will be effectively subordinated to all existing and
future obligations and other liabilities (including trade payables) of our
subsidiaries. Any right we have to the assets of each of our subsidiaries upon
the liquidation, reorganization or insolvency of such subsidiaries (and
consequently your right as a holder of notes to participate in those assets)
will be effectively subordinated to the claims of the creditors (including trade
creditors) and preferred stockholders, if any, of such subsidiaries, except to
the extent we have a claim against such subsidiaries as a creditor of such
subsidiaries.
As of May 31, 2000, we, including our subsidiaries, had total indebtedness
of approximately $5.7 billion. That figure includes (1) approximately
$100 million of our subsidiaries' indebtedness (excluding approximately
$700 million of obligations to trade creditors), all of which is structurally
senior to the notes, (2) approximately $1.9 billion of subordinated debt and
(3) approximately $3.7 billion of senior debt. Indebtedness of our subsidiaries
and obligations of our subsidiaries to trade creditors is structurally senior to
the notes since, in the event of our bankruptcy, liquidation, dissolution,
reorganization or other winding up, the assets of our subsidiaries will be
available to pay the notes only after our subsidiaries' indebtedness and
obligations to trade creditors are paid in full. Because we stand as an equity
holder, rather than a creditor, of our subsidiaries, creditors of our
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subsidiaries will have their debt satisfied out of our subsidiaries' assets
before our creditors, including the note holders.
If any claims we may have as a creditor of a subsidiary are recognized, such
claims would be subject to any security interest in the assets of such
subsidiary and subordinate to any indebtedness of such subsidiary senior to that
held by us.
OUR SUBSIDIARIES DO NOT GUARANTEE REPAYMENT OF THE NOTES.
Our ability to make required principal and interest payments on our
indebtedness, including the notes, depends on the earnings of our subsidiaries
and on our ability to receive dividends or other payments from such
subsidiaries. Please note that the notes are our obligations only. Our
subsidiaries are not obligated or required to pay any amounts due pursuant to
the notes or to make dividends or advances to us.
OUR FUTURE OPERATING RESULTS COULD DIFFER MATERIALLY FROM FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS PROSPECTUS.
Certain statements contained in this prospectus, and in the documents
incorporated herein by reference, including, without limitation, statements
containing the words "believes," "anticipates," "expects," "will," "may,"
"might," "should," "estimates," "intends," "appears" and words of similar
import, and statements regarding our business strategy and plans, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based on our
management's current expectations and involve known and unknown risks,
uncertainties and other factors, many of which we are unable to predict or
control, that may cause our actual results, performance or achievements or
industry results to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following:
- general economic and business conditions, both nationally and regionally,
- industry capacity,
- demographic changes,
- existing laws and government regulations and changes in, or the failure to
comply with, laws and governmental regulations,
- legislative proposals for healthcare reform,
- the ability to enter into managed care provider arrangements on acceptable
terms,
- a shift from fee-for-service payments to capitated and other risk-based
payment systems,
- a shift from traditional Medicare and Medicaid reimbursement to Medicare
and Medicaid managed care plans,
- changes in Medicare and Medicaid payment or reimbursement levels,
- liability and other claims asserted against us,
- competition,
- the loss of any significant customers,
- technological and pharmaceutical improvements that increase the cost of
providing, or reduce the demand for, healthcare,
- changes in business strategy or development plans,
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- the ability to attract and retain qualified personnel, including
physicians, nurses and other healthcare professionals,
- our significant indebtedness,
- the availability of suitable acquisition opportunities and the length of
time it takes to accomplish acquisitions,
- our ability to integrate new businesses with our existing operations,
- the availability and terms of capital to fund the expansion of our
business, including the acquisition of additional facilities and
- other factors referenced in this prospectus and in the documents
incorporated herein by reference.
GIVEN THESE UNCERTAINTIES, WE CAUTION YOU TO NOT PLACE UNDUE RELIANCE ON
SUCH FORWARD-LOOKING STATEMENTS. We disclaim any obligation to update any such
factors or to publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments.
YOU MAY FIND IT DIFFICULT TO SELL YOUR NOTES.
There is no established trading market for the new notes or the old notes.
Although Donaldson, Lufkin & Jenrette Securities Corporation, one of the initial
purchasers in the offering of the old notes, has informed us that it currently
intends to make a market in the new notes, it has no obligation to do so and may
discontinue making a market at any time without notice.
We intend to apply for listing of the new notes on The New York Stock
Exchange. The liquidity of any market for the new notes will depend upon the
number of holders of the new notes, our performance, the market for similar
securities, the interest of securities dealers in making a market in the new
notes and other factors relating to us. A liquid trading market may not develop
for the new notes. In addition, to the extent old notes are tendered and
accepted in the exchange offer, the trading market, if any, for the old notes
would be adversely affected.
SOME HOLDERS WHO EXCHANGE THEIR OLD NOTES MAY BE DEEMED TO BE UNDERWRITERS.
If you exchange your old notes in the exchange offer for the purpose of
participating in a distribution of the new notes, you may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
YOU MUST COMPLY WITH THE EXCHANGE OFFER PROCEDURES IN ORDER TO RECEIVE NEW,
FREELY TRADABLE NOTES.
Subject to the conditions set forth under "The Exchange Offer--Conditions to
the Exchange Offer," delivery of new notes in exchange for old notes tendered
and accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of the following:
- certificates for old notes or a book-entry confirmation of a book-entry
transfer of old notes into the Exchange Agent's account at DTC, New York,
New York as depository, including an Agent's Message (as defined) if the
tendering holder does not deliver a letter of transmittal,
- a completed and signed letter of transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message in lieu of the letter of transmittal, and
- any other documents required by the letter of transmittal.
17
<PAGE>
Therefore, holders of old notes who would like to tender old notes in
exchange for new notes should be sure to allow enough time for the old notes to
be delivered on time. We are not required to notify you of defects or
irregularities in tenders of old notes for exchange. Old notes that are not
tendered or that are tendered but we do not accept for exchange will, following
consummation of the exchange offer, continue to be subject to the existing
transfer restrictions under the Securities Act and, upon consummation of the
exchange offer, certain registration and other rights under the registration
rights agreement will terminate. See "The Exchange Offer--Procedures for
Tendering Old Notes and "The Exchange Offer--Consequences of Exchanging or
Failing to Exchange Old Notes."
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
18
<PAGE>
CAPITALIZATION
The following table sets forth, as of May 31, 2000, (a) our historical
capitalization and (b) our capitalization, on an as adjusted basis, to give
effect to the offering of the old notes.
<TABLE>
<CAPTION>
AS OF MAY 31, 2000
------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Current portion of long-term debt........................... $ 9 $ 9
------ ------
Long-term debt net of current portion:
Loans payable to banks, unsecured......................... 1,442 1,047
8 5/8% Senior Notes due 2003.............................. 500 500
7 7/8% Senior Notes due 2003.............................. 400 400
8% Senior Notes due 2005.................................. 900 900
7 5/8% Senior Notes due 2008.............................. 350 350
9 1/4% Senior Notes due 2010.............................. -- 400
8 5/8% Senior Subordinated Notes due 2007................. 700 700
8 1/8% Senior Subordinated Notes due 2008................. 1,005 1,005
6% Exchangeable Subordinated Notes due 2005............... 320 320
Other debt(1)............................................. 51 46
------ ------
Total long-term debt, net of current portion............ 5,668 5,668
====== ======
Shareholders' equity:
Tenet common stock, par value $0.075, authorized
700,000,000 shares; issued 317,214,748 shares(2)........ 24 24
Other shareholders' equity................................ 4,112 4,112
Less treasury stock, at cost, 3,754,708 shares............ (70) (70)
------ ------
Total shareholders' equity.............................. 4,066 4,066
------ ------
Total capitalization(3)................................. $9,743 $9,743
====== ======
</TABLE>
------------------------
(1) Includes other notes payable and capitalized lease obligations less $73
million of unamortized debt discounts related to several issues of debt,
including the 9 1/4% Senior Notes due 2010. See Note 6 of the notes to our
Consolidated Financial Statements incorporated herein by reference.
(2) Does not include 52,948,402 shares of our common stock reserved for issuance
upon exercise of options.
(3) Includes the current portion of long-term debt.
19
<PAGE>
SELECTED FINANCIAL INFORMATION
Set forth below is our selected financial information for each of the fiscal
years in the five-year period ended May 31, 2000. The selected financial
information for each of the fiscal years is from our consolidated financial
statements, which have been audited by KPMG LLP, our independent auditors, and
from our underlying accounting records.
All information included in the following tables should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the consolidated financial statements and related
notes and the report of our independent auditors and report of management
included in our Annual Report on Form 10-K for the fiscal year ended May 31,
2000, incorporated herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------------------------
1996 1997 1998 1999 2000
-------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net operating revenues...................................... $7,706 $8,691 $9,895 $10,880 $11,414
Operating expenses:
Salaries and benefits..................................... 3,139 3,595 4,052 4,412 4,508
Supplies.................................................. 1,056 1,197 1,375 1,525 1,595
Provision for doubtful accounts........................... 436 498 588 743 851
Other operating expenses.................................. 1,658 1,878 2,071 2,342 2,525
Depreciation.............................................. 319 335 347 421 411
Amortization.............................................. 100 108 113 135 122
Impairment and other unusual charges(1)................... 86 619 221 363 355
------ ------ ------ ------- -------
Operating income............................................ 912 461 1,128 939 1,047
Interest expense............................................ (425) (417) (464) (485) (479)
Investment earnings......................................... 27 27 22 27 22
Equity in earnings of unconsolidated affiliates............. 25 -- -- -- --
Minority interests in income of consolidated subsidiaries... (30) (27) (22) (7) (21)
Net gains (losses) on disposals of facilities and long-term
investments............................................... 346 (18) (17) -- 49
------ ------ ------ ------- -------
Income from continuing operations before income taxes....... 855 26 647 474 618
Income taxes................................................ (373) (89) (269) (225) (278)
------ ------ ------ ------- -------
Income (loss) from continuing operations.................... $ 482 $ (63) $ 378 $ 249 $ 340
====== ====== ====== ======= =======
Ratio of earnings to fixed charges(2)....................... 2.6x 1.0x 2.1x 1.8x 2.0x
Basic earnings (loss) per share from continuing
operations................................................ $ 1.71 $(0.21) $ 1.23 $ 0.80 $ 1.09
Diluted earnings (loss) per share from continuing
operations................................................ $ 1.65 $(0.21) $ 1.22 $ 0.79 $ 1.08
</TABLE>
<TABLE>
<CAPTION>
AS OF MAY 31,
----------------------------------------------------
1996 1997 1998 1999 2000
-------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 499 $ 621 $ 1,182 $ 1,940 $ 1,682
Total assets................................................ $10,768 $11,606 $12,774 $13,771 $13,161
Long-term debt, excluding current portion................... $ 4,421 $ 5,022 $ 5,829 $ 6,391 $ 5,668
Shareholders' equity........................................ $ 3,267 $ 3,224 $ 3,558 $ 3,870 $ 4,066
</TABLE>
------------------------------
(1) In the year ended May 31, 1996, we recorded impairment losses of $86
million. In the year ended May 31, 1997, we recorded merger, facility
consolidation and impairment charges totaling $619 million, primarily in
connection with the January 30, 1997 acquisition of OrNda HealthCorp, which
was accounted for as a pooling-of-interests. In the year ended May 31, 1998,
we recorded impairment and other unusual charges of $221 million relating
to: (1) the closure or sale of five hospitals and several home health
agencies; (2) write-offs of goodwill and other assets; and (3) write-offs of
carrying values of long lived assets. In the year ended May 31, 1999, we
recorded impairment and other unusual charges of $363 million relating to:
(1) our plan to sell 20 general hospitals and close one general hospital and
one specialty hospital; (2) the impairment of the carrying values of
property, equipment and goodwill; and (3) the implementation of hospital
cost control programs and general overhead reduction plans. In the year
ended May 31, 2000, we recorded impairment and other unusual charges of $355
million relating to: (1) our plan for termination or expiration of certain
employment and management contracts with approximately 440 physicians and
(2) the closure or sale of five general hospitals and other property and
equipment.
(2) We calculate our ratio of earnings to fixed charges by dividing income from
continuing operations before income taxes plus fixed charges by fixed
charges. Fixed charges consist of interest expense, including amortization
of financing costs, and that portion of rental expense representing the
interest component of rental expense. For the five years ended May 31, 1996
through 2000, the interest component of rental expense was $76 million, $79
million, $89 million, $91 million and $90 million, respectively.
20
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Subject to terms and conditions, we will accept for exchange old notes which
are properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 2000. We may, however, in our sole discretion,
extend the period of time during which the exchange offer is open. The term
"Expiration Date" means the latest time and date to which the exchange offer is
extended.
As of the date of this prospectus, $400,000,000 principal amount of old
notes are outstanding. This prospectus, together with the letter of transmittal,
is first being sent on or about the date hereof, to all holders of old notes
known to us. Our obligation to accept old notes for exchange pursuant to the
exchange offer is subject to certain obligations as set forth under
"--Conditions to the Exchange Offer."
We expressly reserve the right, at any time, to extend the period of time
during which the exchange offer is open, and delay acceptance for exchange of
any old notes, by giving oral or written notice of such extension to the holders
thereof as described below. During any such extension, all old notes previously
tendered will remain subject to the exchange offer and may be accepted for
exchange by us. Any old notes not accepted for exchange for any reason will be
returned without expense to the tendering holder as promptly as practicable
after the expiration or termination of the exchange offer.
Old notes tendered in the exchange offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof.
We expressly reserve the right to amend or terminate the exchange offer, and
not to accept for exchange any old notes, upon the occurrence of any of the
conditions of the exchange offer specified under "--Conditions to the Exchange
Offer." We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the old notes as promptly as
practicable. Such notice, in the case of any extension, will be issued by means
of a press release or other public announcement no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to us of old notes by you as set forth below and our acceptance
of the old notes will constitute a binding agreement between us and you upon the
terms and subject to the conditions set forth in this prospectus and in the
accompanying letter of transmittal. Except as set forth below, to tender old
notes for exchange pursuant to the exchange offer, you must transmit a properly
completed and duly executed letter of transmittal, including all other documents
required by such letter of transmittal or, in the case of a book-entry transfer,
an agent's message in lieu of such letter of transmittal, to The Bank of New
York, as exchange agent, at the address set forth below under "Exchange Agent"
on or prior to the Expiration Date. In addition, either:
- certificates for such old notes must be received by the exchange agent
along with the letter of transmittal,
- a timely confirmation of a book-entry transfer (a "book-entry
confirmation") of such old notes, if such procedure is available, into the
exchange agent's account at DTC pursuant to the procedure for book-entry
transfer described beginning on page 23 must be received by the exchange
agent, prior to the Expiration Date, with the letter of transmittal or an
agent's message in lieu of such letter of transmittal, or
- the holder must comply with the guaranteed delivery procedures described
below.
The term "agent's message" means a message, transmitted by DTC to and received
by the exchange agent and forming a part of a book-entry confirmation, which
states that DTC has received an express acknowledgment from the tendering
participant stating that such participant has received and agrees to
21
<PAGE>
be bound by the letter of transmittal and that we may enforce such letter of
transmittal against such participant.
The method of delivery of old notes, letters of transmittal and all other
required documents is at your election and risk. If such delivery is by mail, it
is recommended that you use registered mail, properly insured, with return
receipt requested. In all cases, you should allow sufficient time to assure
timely delivery. No letter of transmittal or old notes should be sent to us.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the old notes surrendered for exchange are
tendered:
- by a holder of the old notes who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
letter of transmittal or
- for the account of an Eligible Institution (as defined below).
In the event that signatures on a letter of transmittal or a notice of
withdrawal are required to be guaranteed, such guarantees must be by a firm
which is a member of the Securities Transfer Agent Medallion Program, the Stock
Exchanges Medallion Program or the New York Stock Exchange Medallion Program
(each such entity being hereinafter referred to as an "Eligible Institution").
If old notes are registered in the name of a person other than the signer of the
letter of transmittal, the old notes surrendered for exchange must be endorsed
by, or be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as we or the exchange agent determine in our sole
discretion, duly executed by the registered holders with the signature thereon
guaranteed by an Eligible Institution.
We or the exchange agent in our sole discretion will make a final and
binding determination on all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of old notes tendered for exchange.
We reserve the absolute right to reject any and all tenders of any particular
old note not properly tendered or to not accept any particular old note which
acceptance might, in our judgment or our counsel's, be unlawful. We also reserve
the absolute right to waive any defects or irregularities or conditions of the
exchange offer as to any particular old note either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender old notes in the exchange offer). Our or the exchange
agent's interpretation of the terms and conditions of the exchange offer as to
any particular old note either before or after the Expiration Date (including
the letter of transmittal and the instructions thereto) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of old notes for exchange must be cured within a
reasonable period of time, as we determine. We are not, nor is the exchange
agent or any other person, under any duty to notify you of any defect or
irregularity with respect to your tender of old notes for exchange, and no one
will be liable for failing to provide such notification.
If the letter of transmittal is signed by a person or persons other than the
registered holder or holders of old notes, such old notes must be endorsed or
accompanied by powers of attorney signed exactly as the name(s) of the
registered holder(s) that appear on the old notes.
If the letter of transmittal or any old notes or powers of attorneys are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing. Unless waived by us or
the exchange agent, proper evidence satisfactory to us of their authority to so
act must be submitted with the letter of transmittal.
By tendering old notes, you represent to us that the new notes acquired
pursuant to the exchange offer are being obtained in the ordinary course of
business of the person receiving such new notes, whether or not such person is
the holder and that neither the holder nor such other person has any arrangement
or understanding with any person, to participate in the distribution of the new
notes. If you are our "affiliate," as defined under Rule 405 under the
Securities Act, and engage in or intend to
22
<PAGE>
engage in or have an arrangement or understanding with any person to participate
in a distribution of such new notes to be acquired pursuant to the exchange
offer, you or any such other person:
- could not rely on the applicable interpretations of the staff of the SEC
and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction.
Each broker-dealer that receives new notes for its own account in exchange for
old notes, where such old notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such new notes.
See "Plan of Distribution." The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the Expiration Date, all old notes properly
tendered and will issue the new notes promptly after acceptance of the old
notes. See "--Conditions to the Exchange Offer." For purposes of the exchange
offer, we shall be deemed to have accepted properly tendered old notes for
exchange if and when we give oral (confirmed in writing) or written notice to
the exchange agent.
The holder of each old note accepted for exchange will receive a new note in
the amount equal to the surrendered old note. Accordingly, registered holders of
new notes on the relevant record date for the first interest payment date
following the consummation of the exchange offer will receive interest accruing
from the most recent date to which interest has been paid on the old notes.
Holders of new notes will not receive any payment in respect of accrued interest
on old notes otherwise payable on any interest payment date, the record date for
which occurs on or after the consummation of the exchange offer.
In all cases, issuance of new notes for old notes that are accepted for
exchange will be made only after timely receipt by the exchange agent of:
- certificates for such old notes or a timely book-entry confirmation of
such old notes into the exchange agent's account at DTC,
- a properly completed and duly executed letter of transmittal or an agent's
message in lieu thereof and
- all other required documents.
lf any tendered old notes are not accepted for any reason set forth in the terms
and conditions of the exchange offer or if old notes are submitted for a greater
principal amount than the holder desires to exchange, such unaccepted or
non-exchanged old notes will be returned without expense to the tendering holder
(or, in the case of old notes tendered by book-entry transfer into the exchange
agent's account at DTC pursuant to the book-entry procedures described below,
such non-exchanged old notes will be credited to an account maintained with DTC)
as promptly as practicable after the expiration or termination of the exchange
offer.
BOOK-ENTRY TRANSFERS
For purposes of the exchange offer, the exchange agent will request that an
account be established with respect to the old notes at DTC within two business
days after the date of this prospectus, unless the exchange agent already has
established an account with DTC suitable for the exchange offer. Any financial
institution that is a participant in DTC may make book-entry delivery of old
notes by causing DTC to transfer such old notes into the exchange agent's
account at DTC in accordance with DTC's procedures for transfer. Although
delivery of old notes may be effected through book-entry transfer at DTC, the
letter of transmittal or facsimile thereof or an agent's message in lieu
thereof, with any required signature guarantees and any other required
documents, must, in any case, be transmitted to
23
<PAGE>
and received by the exchange agent at the address set forth under "--Exchange
Agent" on or prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your old notes and your old notes are not
immediately available, or time will not permit your old notes or other required
documents to reach the exchange agent before the Expiration Date, a tender may
be effected if:
- the tender is made through an Eligible Institution,
- prior to the Expiration Date, the exchange agent received from such
Eligible Institution a notice of guaranteed delivery, substantially in the
form we provide (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth your name and address, the amount of old notes
tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange ("NYSE") trading days after the
date of execution of the notice of guaranteed delivery, the certificates
for all physically tendered old notes, in proper form for transfer, or a
book-entry confirmation, as the case may be, together with a properly
completed and duly executed appropriate letter of transmittal or facsimile
thereof or agent's message in lieu thereof, with any required signature
guarantees and any other documents required by the letter of transmittal
will be deposited by such Eligible Institution with the exchange agent,
and
- the certificates for all physically tendered old notes, in proper form for
transfer, or a book-entry confirmation, as the case may be, together with
a properly completed and duly executed appropriate letter of transmittal
or facsimile thereof or agent's message in lieu thereof, with any required
signature guarantees and all other documents required by the letter of
transmittal, are received by the exchange agent within three NYSE trading
days after the date of execution of the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
You may withdraw your tender of old notes at any time prior to the
Expiration Date. To be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses set forth under
"--Exchange Agent." This notice must specify:
- the name of the person having tendered the old notes to be withdrawn,
- the old notes to be withdrawn (including the principal amount of such old
notes), and
- where certificates for old notes have been transmitted, the name in which
such old notes are registered, if different from that of the withdrawing
holder.
If certificates for old notes have been delivered or otherwise identified to the
exchange agent, then, prior to the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution, unless such holder is an Eligible Institution. If old
notes have been tendered pursuant to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of
the account at DTC to be credited with the withdrawn old notes and otherwise
comply with the procedures of DTC.
We or the exchange agent will make a final and binding determination on all
questions as to the validity, form and eligibility (including time of receipt)
of such notices. Any old notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the exchange offer. Any old notes
tendered for exchange but not exchanged for any reason will be returned to the
holder without cost to such holder (or, in the case of old notes tendered by
book-entry transfer into the exchange agent's account at DTC pursuant to the
book-entry transfer procedures described above, such old notes will be credited
to an account maintained with DTC for the old notes) as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn old notes may
24
<PAGE>
be retendered by following one of the procedures described under "--Procedures
for Tendering Old Notes" above at any time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we are not
required to accept for exchange, or to issue new notes in exchange for, any old
notes and may terminate or amend the exchange offer, if any of the following
events occur prior to acceptance of such old notes:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been issued
by, any court or governmental agency or other governmental regulatory or
administrative agency or commission,
(1) seeking to restrain or prohibit the making or consummation of the
exchange offer or any other transaction contemplated by the exchange
offer, or assessing or seeking any damages as a result thereof, or
(2) resulting in a material delay in our ability to accept for
exchange or exchange some or all of the old notes pursuant to the
exchange offer;
or any statute, rule, regulation, order or injunction shall be sought,
proposed, introduced, enacted, promulgated or deemed applicable to the
exchange offer or any of the transactions contemplated by the exchange offer
by any government or governmental authority, domestic or foreign, or any
action shall have been taken, proposed or threatened, by any government,
governmental authority, agency or court, domestic or foreign, that in our
sole judgment might, directly or indirectly, result in any of the
consequences referred to in clauses (1) or (2) above or, in our reasonable
judgment, might result in the holders of new notes having obligations with
respect to resales and transfers of new notes which are greater than those
described in the interpretation of the SEC referred to on the cover page of
this prospectus, or would otherwise make it inadvisable to proceed with the
exchange offer; or
(b) there shall have occurred:
(1) any general suspension of or general limitation on prices for, or
trading in, securities on any national securities exchange or in the
over-the-counter market,
(2) any limitation by a governmental agency or authority which may
adversely affect our ability to complete the transactions contemplated by
the exchange offer,
(3) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation by
any governmental agency or authority which adversely affects the
extension of credit or
(4) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United
States, or, in the case of any of the foregoing existing at the time of
the commencement of the exchange offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change) shall
have occurred or be threatened in our business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects and our subsidiaries taken as a whole that, in our reasonable
judgment, is or may be adverse to us, or we have become aware of facts that,
in our reasonable judgment, have or may have adverse significance with
respect to the value of the old notes or the new notes;
which in our reasonable judgment in any case, and regardless of the
circumstances (including any action by us) giving rise to any such condition,
makes it inadvisable to proceed with the exchange offer and/or with such
acceptance for exchange or with such exchange.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any condition or may be waived by
us in whole or in part at any time in our reasonable discretion. Our failure at
any time to exercise any of the foregoing rights shall not be
25
<PAGE>
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time.
In addition, we will not accept for exchange any old notes tendered, and no
new notes will be issued in exchange for any such old notes, if at such time any
stop order shall be threatened or in effect with respect to the Registration
Statement, of which this prospectus constitutes a part, or the qualification of
the indenture under the Trust Indenture Act.
EXCHANGE AGENT
The Bank of New York has been appointed as the exchange agent for the
exchange offer. All executed letters of transmittal should be directed to the
exchange agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this prospectus or of the letter
of transmittal and requests for notices of guaranteed delivery should be
directed to the exchange agent addressed as follows:
THE BANK OF NEW YORK
AS EXCHANGE AGENT
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND AND OVERNIGHT COURIER:
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street, Corporate Trust Services Window
New York, New York 10286 New York, New York 10286
Attention: Kin Lau Attention: Kin Lau
Reorganization Department Reorganization Department
BY FACSIMILE: CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) 815-6339 (212) 815-3750
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF
TRANSMITTAL.
FEES AND EXPENSES
The principal solicitation is being made by mail by The Bank of New York, as
exchange agent. We will pay the exchange agent customary fees for its services,
reimburse the exchange agent for its reasonable out-of-pocket expenses incurred
in connection with the provision of these services and pay other registration
expenses, including fees and expenses of the trustee under the indenture
relating to the notes, filing fees, blue sky fees and printing and distribution
expenses. We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer.
Additional solicitation may be made by telephone, facsimile or in person by
our and our affiliates' officers and regular employees and by persons so engaged
by the exchange agent.
ACCOUNTING TREATMENT
We will record the new notes at the same carrying value as the old notes, as
reflected in our accounting records on the date of the exchange. Accordingly, we
will not recognize any gain or loss for accounting purposes. The expenses of the
exchange offer will be amortized over the term of the new notes.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection with the
tender of old notes in the exchange offer unless you instruct us to register new
notes in the name of, or request that old notes not tendered or not accepted in
the exchange offer be returned to, a person other than the registered tendering
holder. In those cases, you will be responsible for the payment of any
applicable transfer tax.
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CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE OLD NOTES
If you do not exchange your old notes for new notes in the exchange offer,
your old notes will continue to be subject to the provisions of the indenture
relating to the notes regarding transfer and exchange of the old notes and the
restrictions on transfer of the old notes described in the legend on your
certificates. These transfer restrictions are required because the old notes
were issued under an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the old notes may not be offered or sold unless registered
under the Securities Act, except under an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. We do
not plan to register the old notes under the Securities Act. Based on
interpretations by the staff of the SEC, as set forth in no-action letters
issued to third parties, we believe that the new notes you receive in the
exchange offer may be offered for resale, resold or otherwise transferred
without compliance with the registration and prospectus delivery provisions of
the Securities Act. However, you will not be able to freely transfer the new
notes if:
- you are our "affiliate," as defined in Rule 405 under the Securities Act;
- you are not acquiring the new notes in the exchange offer in the ordinary
course of your business,
- you have an arrangement or understanding with any person to participate in
the distribution, as defined in the Securities Act, of the new notes you
will receive in the exchange offer or
- you are a participating broker-dealer.
We do not intend to request the SEC to consider, and the SEC has not
considered, the exchange offer in the context of a similar no-action letter. As
a result, we cannot guarantee that the staff of the SEC would make a similar
determination with respect to the exchange offer as in the circumstances
described in the no-action letters discussed above. Each holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of new notes and has no arrangement or
understanding to participate in a distribution of new notes. If you are our
affiliate, are engaged in or intend to engage in a distribution of the new notes
or have any arrangement or understanding with respect to the distribution of the
new notes you will receive in the exchange offer, you may not rely on the
applicable interpretations of the staff of the SEC and you must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction involving the new notes. If you are a
participating broker-dealer, you must acknowledge that you will deliver a
prospectus in connection with any resale of the new notes. In addition, to
comply with state securities laws, you may not offer or sell the new notes in
any state unless they have been registered or qualified for sale in that state
or an exemption from registration or qualification is available and is complied
with. The offer and sale of the new notes to "qualified institutional
buyers"--as defined in Rule 144A of the Securities Act--is generally exempt from
registration or qualification under state securities laws. We do not plan to
register or qualify the sale of the new notes in any state where an exemption
from registration or qualification is required and not available.
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DESCRIPTION OF NOTES
GENERAL
The old notes were issued and the new notes will be issued under the
indenture, dated June 16, 2000, by and among Tenet and The Bank of New York, as
trustee. The terms of the notes include those stated in the indenture and those
made part of the indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The indenture is an exhibit to the
registration statement of which this prospectus forms a part and is incorporated
by reference in this prospectus in its entirety. The notes are subject to all
such terms, and we refer you to the indenture and the Trust Indenture Act for a
statement thereof. Because this is a summary, it does not contain all the
information that may be important to you. You should read the entire indenture,
including the definitions included in that document. Please refer to the section
below captioned "--Definitions" for the definitions of capitalized terms used in
this section of the prospectus and not otherwise defined. Review of the defined
terms found in that section is necessary to an understanding of the restrictions
and limitations imposed on us by the notes and the indenture. Capitalized terms
used in this section and not defined herein shall have the meanings set forth in
the indenture. For purposes of this description, references to "Tenet," "we,"
"us" and "our" include only Tenet Healthcare Corporation and its successors
under the indenture and do not include its subsidiaries.
The old notes are, and the new notes will be, our general unsecured
obligations, senior to all our subordinated Indebtedness, including our 8 1/8%
Senior Subordinated Notes due 2008, our 10 1/8% Senior Subordinated Notes due
2005, our 8 5/8% Senior Subordinated Notes due 2007 (the "8 5/8% Subordinated
Notes") and our 6% Exchangeable Subordinated Notes due 2005 (the "6%
Exchangeable Subordinated Notes"), and PARI PASSU in right of payment with all
our other existing and future unsubordinated Indebtedness, including our 7 5/8%
Senior Notes due 2008 (the "7 5/8 Notes"), our 9 5/8% Notes due 2002 (the
"9 5/8% Notes"), our 8% Senior Notes due 2005 (the "8% Notes"), our 7 7/8%
Senior Notes due 2003 (the "7 7/8% Notes") and our 8 5/8% Senior Notes due 2003
(the "8 5/8% Senior Notes" and, together with the 7 5/8 Notes, the 9 5/8% Notes,
the 8% Notes, and the 7 7/8% Notes, the "Existing Senior Notes") and all
Obligations under the Existing Credit Facility. On an as adjusted basis, as of
May 31, 2000, after giving effect to the offering of the old notes,
approximately $1.9 billion in principal amount of our outstanding indebtedness
would have been by its terms subordinated to the notes.
Our operations are conducted through our Subsidiaries and, therefore, we are
dependent upon the cash flow of our Subsidiaries to meet our obligations,
including our obligations under the notes. The notes will be effectively
subordinated to all outstanding Indebtedness and other liabilities and
commitments (including trade payables and lease obligations) of our
Subsidiaries. Any right that we have to receive assets of any of our
Subsidiaries upon their liquidation or reorganization or insolvency (and the
consequent right of the holders of notes to participate in those assets) will be
effectively subordinated to the claims of that Subsidiary's creditors and
preferred stockholders, except to the extent that we are recognized as a
creditor of such Subsidiary, in which case our claims would still be subject to
any security interest in the assets of such Subsidiary and subordinate to any
Indebtedness of such Subsidiary senior to that held by us. As of May 31, 2000,
the outstanding debt of our Subsidiaries was approximately $100 million
(excluding trade payables of $700 million, intercompany debt and other
obligations). See "Risk Factors--Your right to receive payments on the notes
will be effectively junior to obligations of our subsidiaries. We must rely on
our subsidiaries for funds necessary to meet our financial obligations,
including the notes."
PRINCIPAL, MATURITY AND INTEREST
The old notes are, and the new notes will be, our unsecured, senior
obligations limited in aggregate principal amount to $400 million and will
mature on September 1, 2010. Interest on the old notes accrues, and interest on
the new notes will accrue, at the rate per annum set forth on the cover page of
this prospectus and will be payable semi-annually in arrears on March 1 and
September 1 of
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each year, commencing on March 1, 2001, to holders of record on the immediately
preceding February 15 and August 15, respectively. Interest on the notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Old notes accepted
for exchange will not accrue any interest from and after the date of
consummation of the exchange offer.
Interest on the old notes is, and interest on the new notes will be,
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal, premium, if any, and interest on the notes will be payable at our
office or agency maintained for such purpose within the City and State of New
York or, at our option, payment of interest may be made by check mailed to the
holders of the notes at their respective addresses set forth in the register of
holders of notes; PROVIDED that all payments with respect to notes, the holders
of which have given wire transfer instructions, on or prior to the relevant
record date, to the paying agent, will be required to be made by wire transfer
of immediately available funds to the accounts specified by such holders. Until
we otherwise designate, our office or agency in New York will be the office of
the Trustee maintained for such purpose. The old notes were and the new notes
will be, issued in denominations of $1,000 and integral multiples thereof.
The indenture contains a waiver by us of the protections of usury laws.
These waivers may, or may not, be enforceable, and counsel is not able to
express an opinion as to whether such waivers would be enforceable.
OPTIONAL REDEMPTION
The old notes are, and the new notes will be, redeemable, in whole, at any
time, or in part, from time to time, at our option upon not less than 30 nor
more than 60 days' notice at a redemption price equal to the Make-Whole Price.
"Make-Whole Price" means an amount equal to the greater of (a) 100% of the
principal amount of the notes and (b) as determined by an Independent Investment
Banker (as defined herein), the sum of the present values of the remaining
scheduled payments of principal and interest thereon (excluding accrued and
unpaid interest to the date of redemption) discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined herein), PLUS, in each case,
accrued and unpaid interest to the date of redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue (as defined), assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price (as defined) for such redemption date, plus 0.5%.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on
the third Business Day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or
(2) if such release (or any successor release) is not published or does
not contain such prices on such Business Day, (A) the average of the
Reference Treasury Dealer Quotations for such
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redemption date, after excluding the highest and lowest of such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such
quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Treasury Reference Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Independent Investment Banker" means one of the Reference Treasury Dealers
(as defined) appointed by us.
"Reference Treasury Dealer" means DLJ and its successors; PROVIDED, HOWEVER,
that if the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), we shall substitute
therefor another Primary Treasury Dealer.
GENERAL
If less than all of the notes are to be redeemed at any time, selection of
notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
notes to be redeemed are then listed, or, if the notes are not so listed, on a
PRO RATA basis, by lot or by such method as such Trustee shall deem fair and
appropriate; PROVIDED that notes with a principal amount of $1,000 shall not be
redeemed in part. Notices of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each holder of
notes to be redeemed at its registered address. If any notes are to be redeemed
in part only, the notice of redemption that relates to such notes shall state
the portion of the principal amount thereof to be redeemed. A new note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original note. On and after
the redemption date, interest will cease to accrue on notes or portions thereof
called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders Upon
a Change of Control," we will not be required to make any mandatory redemption
or sinking fund payments with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control Triggering Event, each holder of
notes will have the right to require us to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such holder's notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, thereon to the date of purchase (the "Change of Control
Payment") on a date that is not more than 90 days after the occurrence of such
Change of Control Triggering Event (the "Change of Control Payment Date").
Within 30 days following any Change of Control Triggering Event, we will mail,
or at our request the Trustee will mail, a notice to each holder offering to
repurchase the notes held by such holder pursuant to the procedures specified in
such notice. We will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the notes as a result of a Change of Control Triggering Event.
On the Change of Control Payment Date, we will, to the extent lawful,
(1) accept for payment all notes or portions thereof properly tendered and not
withdrawn pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect
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of all notes or portions thereof so tendered and (3) deliver or cause to be
delivered to the Trustee the notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of notes or portions thereof
being purchased by us. The Paying Agent will promptly mail to each holder of
notes so tendered the Change of Control Payment for such notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each holder a new note equal in principal amount to any unpurchased portion
of the notes surrendered, if any; PROVIDED that each such new note will be in a
principal amount of $1,000 or an integral multiple thereof. We will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
Our failure to comply with the provisions of the two preceding paragraphs
will constitute an Event of Default under the indenture. Except as described
above with respect to a Change of Control, the indenture will not contain
provisions that permit the holders of the notes to require that we purchase or
redeem the notes in the event of a takeover, recapitalization or similar
transaction. See "--Events of Default and Remedies."
Please note, however, that events that would constitute a Change of Control
also would constitute an event of default under our Existing Credit Facility.
The occurrence of an event of default under our Existing Credit Facility will
constitute an event of default under the indentures governing our outstanding
debt securities. Accordingly, it is unlikely that we would be able to fulfill
our obligation to repurchase any notes if a Change of Control Triggering Event
occurs. See "Risk Factors--We may be unable to raise the funds necessary to
finance the change of control offer required by the indenture relating to the
notes."
COVENANTS
RESTRICTED PAYMENTS
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly:
(1) declare or pay any dividend or make any distribution on account of
our or any of our Subsidiaries' Equity Interests (other than (w) Physician
Joint Venture Distributions, (x) dividends or distributions payable in our
Qualified Equity Interests, (y) dividends or distributions payable to us or
any of our Subsidiaries, and (z) dividends or distributions by any of our
Subsidiaries payable to all holders of a class of Equity Interests of such
Subsidiary on a PRO RATA basis);
(2) purchase, redeem or otherwise acquire or retire for value any of our
Equity Interests; or
(3) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated
to the notes, except at the original final maturity date thereof or pursuant
to a Specified Exchange (all such payments and other actions set forth in
clauses (1) through (3) above being collectively referred to as "Restricted
Payments"),
unless, at the time of and after giving effect to such Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall be the fair
market value (as conclusively evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee within
60 days prior to the date of such Restricted Payment) of the asset(s) proposed
to be transferred by us or such Subsidiary, as the case may be, pursuant to such
Restricted Payment):
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) we would, at the time of such Restricted Payment and after giving
PRO FORMA effect thereto as if such Restricted Payment had been made at the
beginning of the most recently ended four full fiscal quarter period for
which internal financial statements are available immediately preceding the
date of such Restricted Payment, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test
set forth in the first
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paragraph of the covenant described below under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by us and our Subsidiaries after March 1, 1995
(excluding Restricted Payments permitted by clauses (v), (w) and (x) of the
next succeeding paragraph), is less than the sum of:
(1) 50% of our Consolidated Net Income for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after March 1, 1995, to the end of our most recently ended
fiscal quarter for which internal financial statements are available at
the time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), PLUS
(2) 100% of the aggregate net cash proceeds received by us from the
issue or sale (other than to any of our Subsidiaries) since March 1, 1995
of our Qualified Equity Interests or of our debt securities or of debt
securities of any of our Subsidiaries, that have been converted into or
exchanged for our Qualified Equity Interests, PLUS
(3) $50.0 million.
If no Default or Event of Default has occurred and is continuing, or would
occur as a consequence thereof, the foregoing provisions will not prohibit the
following Restricted Payments:
(u) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the indenture;
(v) the payment of cash dividends on any series of Disqualified Stock
issued after the date of the indenture in an aggregate amount not to exceed
the cash received by us since the date of the indenture upon issuance of
such Disqualified Stock;
(w) the redemption, repurchase, retirement or other acquisition of any
of our Equity Interests or any Equity Interests of any of our Subsidiaries
in exchange for, or out of the net cash proceeds of, the substantially
concurrent sale (other than to any of our Subsidiaries) of our Qualified
Equity Interests; PROVIDED, that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(2) of the preceding paragraph;
(x) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or in exchange for or out of the net cash proceeds
from the substantially concurrent sale (other than to any of our
Subsidiaries) of our Qualified Equity Interests; PROVIDED that the amount of
any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from
clause (c)(2) of the preceding paragraph;
(y) the repurchase, redemption or other acquisition or retirement for
value of:
(1) any of our Equity Interests or any Equity Interests of any of our
Subsidiaries held by any member of our (or any of our Subsidiaries')
management pursuant to any management equity subscription agreement or
stock option agreement or
(2) any of our Equity Interests which are or are intended to be used
to satisfy issuances of Equity Interests upon exercise of employee stock
options or upon exercise or satisfaction of other similar instruments
outstanding under any of our employee benefit plans or any employee
benefit plans of any of our Subsidiaries;
PROVIDED that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $25.0 million in any
twelve-month period; and
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(z) the making and consummation of senior subordinated asset sale offer
with respect to the 10 1/8 Senior Subordinated notes due 2005 or a change of
control offer with respect to any of the 8 1/8% Senior Subordinated notes
due 2008, 10 1/8% Senior Subordinated notes due 2005, 8 5/8% Senior
Subordinated notes due 2007 and 6% Exchangeable Subordinated notes due 2005,
in each case, in accordance with the provisions of the respective indenture
governing such notes.
Not later than the date of making any Restricted Payment, we shall deliver
to the Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant described under the caption "--Restricted Payments" were computed.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, create, incur, issue, assume, Guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") after the date of the indenture any Indebtedness (including Acquired
Debt), and we will not issue any Disqualified Stock and will not permit any of
our Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that
we may incur Indebtedness (including Acquired Debt) and we may issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for our most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have been at least 2.5 to
1, determined on a PRO FORMA basis (including a PRO FORMA application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period. Indebtedness consisting of reimbursement obligations in
respect of a letter of credit will be deemed to be incurred when the letter of
credit is first issued.
The foregoing provisions will not apply to:
(1) the incurrence by us of Indebtedness pursuant to the Existing Credit
Facility in an aggregate principal amount at any time outstanding not to
exceed an amount equal to $2.8 billion less the aggregate amount of all
mandatory repayments applied to permanently reduce the commitments with
respect to such Indebtedness;
(2) the incurrence by us of Indebtedness represented by the notes;
(3) the incurrence by us and our Subsidiaries of the Existing
Indebtedness;
(4) the incurrence by us or any of our Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund, Indebtedness
that was permitted by the indenture to be incurred (including, without
limitation, Existing Indebtedness);
(5) the incurrence by us or any of our Subsidiaries of intercompany
Indebtedness between or among us and any of our Subsidiaries;
(6) the incurrence by us of Hedging Obligations that are incurred for
the purpose of fixing or hedging interest rate or currency risk with respect
to any fixed or floating rate Indebtedness that is permitted by the
indenture to be outstanding or any receivable or liability the payment of
which is determined by reference to a foreign currency; PROVIDED that the
notional principal amount of any such Hedging Obligation does not exceed the
principal amount of the Indebtedness to which such Hedging Obligation
relates;
(7) the incurrence by us or any of our Subsidiaries of Physician Support
Obligations;
(8) the incurrence by us or any of our Subsidiaries of Indebtedness
represented by tender, bid, performance, government contract, surety or
appeal bonds, standby letters of credit or
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warranty or contractual service obligations of like nature, in each case to
the extent incurred in the ordinary course of our business or in the
ordinary course of the business of such Subsidiary;
(9) the incurrence by any of our Subsidiaries of Indebtedness, the
aggregate principal amount of which, together with all other Indebtedness of
our Subsidiaries at the time outstanding (excluding the Existing
Indebtedness until repaid or refinanced and excluding Physician Support
Obligations), does not exceed the greater of:
(A) 10% of our Stockholders' Equity as of the date of incurrence or
(B) $10.0 million; PROVIDED that, in the case of this clause (B)
only, the Fixed Charge Coverage Ratio for our most recently ended four
full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such Indebtedness is
incurred would have been at least 2.5 to 1, determined on a PRO FORMA
basis (including a PRO FORMA application of the net proceeds therefrom),
as if such Indebtedness had been incurred at the beginning of such
four-quarter period; and
(10) the incurrence by us of Indebtedness (in addition to Indebtedness
permitted by any other clause of this covenant) in an aggregate principal
amount at any time outstanding not to exceed $400 million.
LIENS
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, create, incur, assume or suffer to exist any Lien (except Permitted
Liens) on any asset now owned or hereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, unless all
payments due under the indenture and the notes are secured on an equal and
ratable basis with the Obligations so secured until such time as such
Obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Subsidiary to:
(1) (a) pay dividends or make any other distributions to us or any of
our Subsidiaries (x) on our Capital Stock or (y) with respect to any other
interest or participation in, or measured by, its profits, or (b) pay any
Indebtedness owed to us or any of our Subsidiaries,
(2) make loans or advances to us or any of our Subsidiaries or
(3) transfer any of its properties or assets to us or any of our
Subsidiaries.
Notwithstanding the foregoing, the indenture shall not prevent any such
encumbrances or restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the date of the indenture,
(b) the indenture,
(c) applicable law,
(d) any instrument governing Indebtedness or Capital Stock of a Person
acquired by us or any of our Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition, unless such
Indebtedness was incurred in connection with or in contemplation of such
acquisition for the purpose of refinancing Indebtedness which was
tax-exempt, or in violation of the covenant described above under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"),
which encumbrance or restriction is not applicable to any Person, or the
properties or
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assets of any Person, other than the Person, or the property or assets of
the Person, so acquired, PROVIDED that the Consolidated Cash Flow of such
Person is not taken into account in determining whether such acquisition was
permitted by the terms of the indenture except to the extent that such
Consolidated Cash Flow would be permitted to be dividends to us without the
prior consent or approval of any third party,
(e) customary non-assignment provisions in leases entered into in the
ordinary course of business,
(f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (3) above on the property so acquired,
(g) Permitted Refinancing Indebtedness, PROVIDED that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced, or
(h) the Existing Credit Facility and related documentation as the same
is in effect on the date of the indenture and as amended, modified,
extended, renewed, refunded, refinanced, restated or replaced from time to
time, provided that no such amendment or replacement is more restrictive as
to the matters enumerated above than the Existing Credit Facility and
related documentation as in effect on the date of the indenture.
LINE OF BUSINESS
We will not, and will not permit any of our Subsidiaries to, engage in any
material extent in any business other than the ownership, operation and
management of Hospitals and Related Businesses.
MERGER, CONSOLIDATION OR SALE OF ASSETS
We may not consolidate or merge with or into (whether or not we are the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of our properties or assets in one or more
related transactions, to another corporation, Person or entity unless:
(1) we are the surviving corporation or the entity or the Person formed
by or surviving any such consolidation or merger (if other than us) or to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(2) the entity or Person formed by or surviving any such consolidation
or merger (if other than us) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all our Obligations under the notes and the indenture pursuant
to a supplemental indenture in a form reasonably satisfactory to the
Trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) we or the entity or Person formed by or surviving any such
consolidation or merger (if other than us), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made:
(A) will have a Consolidated Net Worth immediately after the
transaction equal to or greater than our Consolidated Net Worth
immediately preceding the transaction and
(B) will, at the time of such transaction and after giving PRO FORMA
effect thereto as if such transaction had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant in the indenture
described above under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock."
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TRANSACTIONS WITH AFFILIATES
We will not, and will not permit any of our Subsidiaries to, sell, lease,
transfer or otherwise dispose of any of our or its properties or assets to, or
purchase any property or assets from, or enter into or make any contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
us or the relevant Subsidiary than those that could have been obtained in a
comparable transaction by us or such Subsidiary with an unrelated Person and
(2) we deliver to the Trustee:
(a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (1) above and that such
Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and
(b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $15.0 million, an opinion as to the fairness
to us or such Subsidiary of such Affiliate Transaction from a financial
point of view issued by an investment banking firm of national standing.
Notwithstanding the foregoing, the following shall not be deemed to be
Affiliate Transactions:
(x) transactions or payments pursuant to any employment arrangements or
employee or director benefit plans entered into by us or any of our
Subsidiaries in the ordinary course of business and consistent with our past
practice or such Subsidiary's past practice,
(y) transactions between or among us and/or our Subsidiaries and
(z) transactions permitted by the provisions of the indenture described
above under the caption "--Restricted Payments."
LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES
We will not permit any of our Subsidiaries, directly or indirectly, to
Guarantee or secure the payment of any other Indebtedness of us or any of our
Subsidiaries (except Indebtedness of a Subsidiary of such Subsidiary or
Physician Support Obligations) unless such Subsidiary simultaneously executes
and delivers a supplemental indenture to the indenture providing for the
Guarantee of the payment of the notes by such Subsidiary, which Guarantee shall
be senior to or PARI PASSU with such Subsidiary's Guarantee of or pledge to
secure such other Indebtedness. Notwithstanding the foregoing, any such
Guarantee by a Subsidiary of the notes shall provide by its terms that it shall
be automatically and unconditionally released and discharged upon the sale or
other disposition, by way of merger or otherwise, to any Person not an Affiliate
of ours, of all of our stock in, or all or substantially all the assets of, such
Subsidiary. The forms of such supplemental indenture will be attached as
exhibits to the indenture. The foregoing provisions will not be applicable to
any one or more Guarantees that otherwise would be prohibited of up to
$25.0 million in aggregate principal amount of Indebtedness of us or our
Subsidiaries at any time outstanding.
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NO AMENDMENT TO SUBORDINATION PROVISIONS
We will not amend, modify or alter the indentures relating to our 8 1/8%
Senior Subordinated notes due 2008, 10 1/8% Senior Subordinated notes due 2005,
8 5/8% Senior Subordinated notes due 2007 or 6% Exchangeable Subordinated notes
due 2005, in any way that would (1) increase the principal of, advance the final
maturity date of or shorten the Weighted Average Life to Maturity of our 8 1/8%
Senior Subordinated notes due 2008, 10 1/8% Senior Subordinated notes due 2005,
8 5/8% Senior Subordinated notes due 2007 or 6% Exchangeable Subordinated notes
due 2005, or (2) amend the subordination provisions of the indentures relating
to any such debt securities or any of the defined terms used therein in a manner
that would be adverse to the holders of the notes.
REPORTS
Regardless of whether required by the rules and regulations of the SEC, so
long as any notes are outstanding, we will furnish to the holders of notes
(1) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if we were required to
file such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual information
only, a report thereon by our certified independent accountants and (2) all
current reports that would be required to be filed with the SEC on Form 8-K if
we were required to file such reports. In addition, whether or not required by
the rules and regulations of the SEC, we will file a copy of all such
information and reports with the SEC for public availability and make such
information available to securities analysts and prospective investors upon
request.
EVENTS OF DEFAULT AND REMEDIES
Each of the following constitutes an Event of Default:
(1) default for 30 days in the payment when due of interest on the
notes;
(2) default in payment when due of the principal of or premium, if any,
on the notes, at maturity or otherwise;
(3) failure by us to comply with the provisions described under the
captions "--Repurchase at the Option of Holders Upon a Change of Control,"
"--Covenants--Restricted Payments" or "--Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock;"
(4) failure by us for 60 days after notice to comply with any of our
other agreements in the indenture or the notes;
(5) any default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by us or any of our Significant Subsidiaries
(or the payment of which is Guaranteed by us or any of our Significant
Subsidiaries), whether such Indebtedness or Guarantee exists on the date of
the indenture or is thereafter created, which default (a) constitutes a
Payment Default or (b) results in the acceleration of such Indebtedness
prior to its expressed maturity and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or that has been
so accelerated, aggregates $25.0 million or more;
(6) failure by us or any of our Significant Subsidiaries to pay a final
judgment or final judgments aggregating in excess of $25.0 million, which
judgment or judgments are not paid, discharged or stayed for a period of
60 days; and
(7) events of bankruptcy or insolvency specified in the indenture with
respect to us or any of our Significant Subsidiaries.
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If any Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the then outstanding notes, by written
notice to us and the Trustee may declare all the notes or to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from specified events of bankruptcy or insolvency with respect to us or
any of our Significant Subsidiaries, all outstanding notes will become due and
payable without further action or notice. Holders of the notes may not enforce
the indenture or the notes except as provided in the indenture. Subject to
specified limitations, holders of a majority in principal amount of the then
outstanding notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from holders of the notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of us with the
intention of avoiding payment of the premium that we would have had to pay if we
then had elected to redeem the notes pursuant to the optional redemption
provisions of the indenture, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the notes.
The holders of not less than a majority in aggregate principal amount of the
notes then outstanding by written notice to the Trustee on behalf of the holders
of all of the notes may waive any existing Default or Event of Default and its
consequences under the indenture, except a continuing Default or Event of
Default in the payment of the principal of, premium, if any, or interest on any
of the notes.
We are required to deliver to the Trustee annually a statement regarding
compliance with the indenture, and we are required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
None of our directors, officers, employees, incorporators or shareholders,
as such, shall have any liability for any of our obligations under the notes,
the indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the notes. Such waiver may not be effective to
waive liabilities under the Federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding notes ("Legal Defeasance") except
for:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, premium, if any, and interest on such notes
when such payments are due from the trust referred to below,
(2) our obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or stolen
notes and the maintenance of an office or agency for payment and money for
security payments held in trust,
(3) the rights, powers, trusts, duties and immunities of the Trustee,
and our obligations in connection therewith and
(4) the Legal Defeasance provisions of the indenture.
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In addition, we may, at our option and at any time, elect to have our
obligations released with respect to some of the covenants that are described in
the indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the applicable notes. In the event Covenant Defeasance occurs, certain events
(not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described under "--Events of Default and Remedies" will no
longer constitute an Event of Default with respect to the notes.
We may exercise a Legal or Covenant Defeasance by making an irrevocable
deposit with the Trustee (a "Tenet Deposit"), in trust, for the benefit of the
holders of the notes, consisting of cash in United States currency, non-callable
Government Securities, or a combination thereof in amounts that will be
sufficient, in the opinion of a nationally-recognized firm of independent public
accountants, to pay the principal of and premium (if any), interest, and
liquidated damages (if any) on the outstanding notes at maturity or on the
applicable redemption date, as the case may be. An entity other than Tenet (a
"New Lender") may also make such a deposit (a "New Lender Deposit" and, together
with Tenet Deposit, the "Deposits").
Simultaneously with any Deposit, we must deliver to the Trustee:
(1) a notice specifying whether we are exercising Legal or Covenant
Defeasance (or both) and whether the notes are being defeased to maturity or
to a particular redemption date;
(2) an opinion of counsel, reasonably acceptable to the Trustee,
confirming that:
(a) the holders of outstanding notes will not recognize income, gain,
or loss for federal income tax purposes as a result of the proposed
defeasance and will be subject to federal income tax on the same amounts,
in the same manner, and at the same times as would have been the case if
the defeasance had not occurred, except that, in the case of Legal
Defeasance, the opinion of counsel must recite that it is based upon a
ruling to that effect received by us from or published by the Internal
Revenue Service, or upon a change in applicable Federal income tax law;
(b) on and after the date of the New Lender Deposit, or after the
90th day after Tenet Deposit, as the case may be, the cash or securities
so deposited will not be subject to avoidance and repayment under
sections 547 and 550 of the United States Bankruptcy Code (the
"Bankruptcy Code"); and
(c) all conditions precedent to the defeasance set forth in the
indenture have been satisfied; and
(3) an Officer's Certificate to the effect that:
(a) the Deposit was not made with actual intent to hinder, delay, or
defraud our creditors,
(b) all conditions precedent to the defeasance set forth in the
indenture have been satisfied, and
(c) in the case of a New Lender Deposit, (w) the New Lender made the
New Lender Deposit under an agreement (the "New Loan Agreement") with us;
(x) under the New Loan Agreement, the New Lender Deposit constitutes an
unsecured loan (the "New Loan") by the New Lender to us; (y) the maturity
date of the New Loan is later than the 90th date after the date of the
New Lender Deposit; and (z) the New Loan Agreement prohibits prepayment
of the New Loan on or before the 90th day after the date of the New
Lender Deposit, except in the event of a default thereunder, and the
remaining terms of the New Loan Agreement (including the interest rate on
the New Loan) are consistent with ordinary business practice.
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The Legal or Covenant Defeasance will occur on the date of a New Lender
Deposit or on the 91st day after the date of a Tenet Deposit, as the case may
be, unless in either case:
(1) on and as of the date of the Deposit, a Default or Event of Default
has occurred and is continuing (other than one resulting from the borrowing
of funds used to make the Deposit);
(2) the defeasance will result in or constitute a breach or default
under any material agreement or indenture to which we or any of our
Subsidiaries are bound; or
(3) in the case of a Tenet Deposit, an Event of Default relating to
bankruptcy occurs within 90 days after the date of the Deposit.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and we may require a
holder to pay any taxes and fees required by law or permitted by the indenture.
The registered holder of a note will be treated as the owner of it for all
purposes. See "--Global Notes."
GLOBAL NOTES
The old notes were and the new notes will be issued in the form of one or
more registered notes in book-entry form (each, a "Global Note") that will be
deposited with, or on behalf of, DTC and registered in the name of DTC's
nominee. Except as set forth below, a Global Note may not be transferred except
as a whole by DTC to a nominee of DTC or any such nominee to a successor of DTC
or a nominee of such successor.
So long as DTC or its nominee is the registered holder of a Global Note, DTC
or its nominee, as the case may be, will be treated as the sole owner of it for
all purposes under the indenture and the beneficial owners of notes will be
entitled only to those rights and benefits afforded to them in accordance with
DTC's regular operating procedures. Upon specified written instructions of a
Participant (defined below), DTC will have its nominee assist Participants in
the exercise of certain holders' rights, such as a demand for acceleration or an
instruction to the Trustee. Except as provided below, owners of beneficial
interests in a Global Note will not be entitled to have notes represented by a
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of notes in certificated form and will not be
considered the registered holders thereof under the indenture.
If (1) DTC is at any time unwilling or unable to continue as depository or
if at any time DTC ceases to be a clearing agency registered under the Exchange
Act, and a successor depository is not appointed by us within 90 days, (2) an
Event of Default under the indenture with respect to the notes has occurred and
is continuing and the beneficial owners representing a majority in principal
amount of the notes advise DTC to cease acting as depository or (3) we, in our
sole discretion, determine at any time that the notes shall no longer be
represented by a Global Note, we will issue individual notes of the applicable
amount and in certificated form in exchange for a Global Note. In any such
instance, an owner of a beneficial interest in the Global Note will be entitled
to physical delivery of individual notes in certificated form of like tenor,
equal in principal amount to such beneficial interest and to have such notes in
certificated form registered in its name.
DTC has advised us that it is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform
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Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC holds certificates that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for the physical movement
of securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the SEC.
We, the Trustee and the exchange agent will not have any responsibility for
any aspect of the records relating to or payments made on account of beneficial
interests in a Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for such
notes), and any existing default or compliance with any provision of the
indenture or the notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding notes (including consents
obtained in connection with a tender offer or exchange offer for the notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to
an amendment, supplement or waiver,
(2) reduce the principal of or change the fixed maturity of any note,
(3) reduce the rate of or change the time for payment of interest on any
note,
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the notes (except a rescission of
acceleration of the applicable notes by the holders of at least a majority
in aggregate principal amount thereof and a waiver of the payment default
that resulted from such acceleration),
(5) make any note payable in money other than that stated in the notes,
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of notes to receive
payments of principal of or premium, if any, or interest on the notes or
(7) make any change in the foregoing amendment and waiver provisions.
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Notwithstanding the foregoing, without the consent of any holder of notes,
we and the Trustee may amend or supplement the indenture or the notes to cure
any ambiguity, defect or inconsistency, to provide for uncertificated notes in
addition to or in place of certificated notes, to provide for any supplemental
indenture described above under the caption "--Covenants--Limitation on
Issuances of Guarantees of Indebtedness by Subsidiaries," to provide for the
assumption of our obligations to holders of notes in the case of a merger,
consolidation or sale of assets pursuant to the covenant described under the
caption "--Covenants--Merger, Consolidation or Sale of Assets," to make any
change that would provide any additional rights or benefits to the holders of
notes or that does not adversely affect the legal rights under the indenture of
any such holder, or to comply with requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The indenture will contain limitations on the rights of the Trustee, should
the Trustee become our creditor, to obtain payment of claims in some cases, or
to realize on certain property received in respect of any such claim as security
or otherwise. The Trustee will be permitted to engage in other transactions;
however, if the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
exceptions. The indenture provides that in case an Event of Default shall occur
(which shall not be cured), the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
DEFINITIONS
Set forth below are some of the defined terms used in the indenture.
Reference is made to the indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"ACQUIRED DEBT" means, with respect to any specified Person,
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness incurred in connection
with, or in contemplation of, such other Person merging with or into or
becoming a Subsidiary of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
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"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any assets
(including, without limitation, by way of a sale and leaseback) other than
in the ordinary course of business consistent with past practices and
(2) the issuance or sale by Tenet or any of its Subsidiaries of Equity
Interests of any of Tenet's Subsidiaries,
in the case of either clause (1) or (2) above, whether in a single transaction
or a series of related transactions (a) that have a fair market value in excess
of $25.0 million or (b) for net proceeds in excess of $25.0 million.
Notwithstanding the foregoing:
(a) a transfer of assets by Tenet to a Subsidiary or by a Subsidiary to
Tenet or to another Subsidiary,
(b) an issuance of Equity Interests by a Subsidiary to Tenet or to
another Subsidiary,
(c) a Restricted Payment that is permitted by the covenant described
above under the caption "--Covenants--Restricted Payments" and
(d) a Hospital Swap will not be deemed to be an Asset Sale.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a Capital Lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock,
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock,
(3) in the case of a partnership, partnership interests (whether general
or limited) and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition, in one
or a series of related transactions, of all or substantially all of the
assets of Tenet and its Subsidiaries taken as a whole to any Person or group
(as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
other than to a Person or group who, prior to such transaction, held a
majority of the voting power of the voting stock of Tenet,
(2) the acquisition by any Person or group (as defined above) of a
direct or indirect interest in more than 50% of the voting power of the
voting stock of Tenet, by way of merger or consolidation or otherwise, or
(3) the first day on which a majority of the members of the Board of
Directors of Tenet are not Continuing Directors.
The phrase "all or substantially all" of the assets of Tenet will likely be
interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or transfer of "all or substantially all" of the
assets of Tenet has occurred, in which case a holder's ability to obtain the
benefit of a Change of
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Control Offer may be impaired. In addition, no assurances can be given that
Tenet will be able to acquire Notes tendered upon the occurrence of a Change of
Control Triggering Event.
"CHANGE OF CONTROL TRIGGERING EVENT" means the occurrence of both a Change
of Control and a Rating Decline.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period PLUS in each case,
without duplication:
(1) an amount equal to any extraordinary loss plus any net loss realized
in connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income),
(2) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, to the extent that such provision for
taxes was included in computing such Consolidated Net Income,
(3) the Fixed Charges of such Person and its Subsidiaries for such
period, to the extent that such Fixed Charges were deducted in computing
such Consolidated Net Income,
(4) depreciation and amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) of such Person and its Subsidiaries for
such period to the extent that such depreciation and amortization were
deducted in computing such Consolidated Net Income, in each case, on a
consolidated basis and determined in accordance with GAAP,
(5) the amount of any restructuring charges deducted in such period in
computing Consolidated Net Income for such period,
(6) the amount of all losses related to discontinued operations deducted
in such period in computing Consolidated Net Income for such period,
(7) the amount of all non-recurring charges and expenses related to
acquisitions and mergers deducted in such period in computing Consolidated
Net Income for such period and
(8) any non-cash charges reducing Consolidated Net Income for such
period (excluding any portion of such charge requiring an accrual of a cash
reserve for anticipated cash charges for any future period).
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to Tenet by such Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Subsidiary or its
stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; PROVIDED
that:
(1) the Net Income of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Wholly Owned Subsidiary thereof,
(2) the Net Income of any Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by
that Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been
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obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary or its
stockholders,
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded and
(4) the cumulative effect of a change in accounting principles shall be
excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of:
(a) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date PLUS
(b) the respective amounts reported on such Person's balance sheet as of
such date with respect to any series of preferred stock (other than
Disqualified Stock), less all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of tangible assets of a going
concern business made in accordance with GAAP as a result of the acquisition
of such business) subsequent to the date of the Indenture in the book value
of any asset owned by such Person or a consolidated Subsidiary of such
Person, and excluding the cumulative effect of a change in accounting
principles, all as determined in accordance with GAAP.
"CONTINUING DIRECTORS" means, as of any date of determination, any member of
the Board of Directors of Tenet who (a) was a member of such Board of Directors
on the date of the Indenture or (b) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Notes mature.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING CREDIT FACILITY" means the Credit Agreement by and among Tenet and
Morgan Guaranty Trust Company of New York and the other banks that are party
thereto, providing for $2.8 billion in aggregate principal amount of
Indebtedness, including any related notes, instruments, and agreements executed
in connection therewith, as amended, modified, extended, renewed, refunded,
replaced or refinanced, in whole or in part, from time to time.
"EXISTING INDEBTEDNESS" means Indebtedness of Tenet and its Subsidiaries
(other than Indebtedness under Tenet's Existing Credit Facility) in existence on
the date of the Indenture, until such amounts are repaid, including all
reimbursement obligations with respect to letters of credit outstanding as of
the date of the Indenture.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that Tenet or
any of its Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness
(other than revolving credit borrowings) or issues preferred stock subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving PRO FORMA
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effect to such incurrence, assumption, Guarantee or redemption of Indebtedness,
or such issuance or redemption of preferred stock, as if the same had occurred
at the beginning of the applicable four-quarter reference period. In addition,
for purposes of making the computation referred to above, (a) acquisitions that
have been made by Tenet or any of its Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period, and (b) the Consolidated Cash Flow and
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded.
"FIXED CHARGES" means, with respect to any Person for any period, the sum
of:
(1) the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letters of credit or bankers' acceptance financings, and net
payments or receipts (if any) pursuant to Hedging Obligations), and
(2) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, and
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries (whether or not such
Guarantee or Lien is called upon), and
(4) the product of (a) all cash dividend payments (and non-cash dividend
payments in the case of a Person that is a Subsidiary) on any series of
preferred stock of such Person, TIMES (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"GAAP" means accounting principles generally accepted in the United States
of America as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, as in effect from time to
time.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements,
(2) forward foreign exchange contracts or currency swap agreements and
(3) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency values.
"HOSPITAL" means a hospital, outpatient clinic, long-term care facility or
other facility or business that is used or useful in or related to the provision
of healthcare services.
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"HOSPITAL SWAP" means an exchange of assets by Tenet or a Subsidiary of
Tenet for one or more Hospitals and/or one or more Related Businesses or for the
Capital Stock of any Person owning one or more Hospitals and/or one or more
Related Businesses.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
"INVESTMENT GRADE" means a rating of BBB- or higher by S&P or Baa3 or higher
by Moody's or the equivalent of such ratings by S&P or Moody's. In the event
that Tenet shall select any other Rating Agency, the equivalent of such ratings
by such Rating Agency shall be used.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset given to
secure Indebtedness, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction with respect to any such lien, pledge, charge or security
interest).
"MOODY'S" means Moody's Investors Service, Inc. and its successors.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (1) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (2) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PAYMENT DEFAULT" means any failure to pay any scheduled installment of
interest or principal on any Indebtedness within the grace period provided for
such payment in the documentation governing such Indebtedness.
"PERMITTED LIENS" means:
(1) Liens in favor of Tenet;
(2) Liens on property of a Person existing at the time such Person is
merged into or consolidated with Tenet or any Subsidiary of Tenet or becomes
a Subsidiary of Tenet; PROVIDED that such Liens were in existence prior to
the contemplation of such merger, consolidation or acquisition (unless such
Liens secure Indebtedness that was incurred in connection with or in
contemplation of such acquisition and is used to refinance tax-exempt
Indebtedness) and do not
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extend to any assets or Tenet or its Subsidiaries other than those of the
Person merged into or consolidated with Tenet or that becomes a Subsidiary
of Tenet;
(3) Liens on property existing at the time of acquisition thereof by
Tenet or any Subsidiary of Tenet; PROVIDED that such Liens were in existence
prior to the contemplation of such acquisition (unless such Liens secure
Indebtedness that was incurred in connection with or in contemplation of
such acquisition and is used to refinance tax-exempt Indebtedness);
(4) Liens to secure the performance of statutory obligations, tender,
bid, performance, government contract, surety or appeal bonds or other
obligations of a like nature incurred in the ordinary course of business;
(5) Liens existing on the date of the Indenture;
(6) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded;
PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(7) other Liens on assets of Tenet or any Subsidiary of Tenet securing
Indebtedness that is permitted by the terms of the Indenture to be
outstanding having an aggregate principal amount at any one time outstanding
not to exceed 10% of the Stockholders' Equity of Tenet; and
(8) Liens to secure Permitted Refinancing Indebtedness incurred to
refinance Indebtedness that was secured by a Lien permitted under the
Indenture and that was incurred in accordance with the provisions of the
Indenture; PROVIDED that such Liens do not extend to or cover any property
or assets of Tenet or any Subsidiary other than assets or property securing
the Indebtedness so refinanced.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Tenet or any
of its Subsidiaries issued in exchange for, or the net proceeds of which are
used solely to extend, refinance, renew, replace, defease or refund, other
Indebtedness of Tenet or any of its Subsidiaries; PROVIDED that, except in the
case of Indebtedness of Tenet issued in exchange for, or the net proceeds of
which are used solely to extend, refinance, renew, replace, defease or refund,
Indebtedness of a Subsidiary of Tenet:
(1) the principal amount of such Permitted Refinancing Indebtedness (or
if such Permitted Refinancing Indebtedness is issued at a discount, the
initial issuance price of such Permitted Refinancing Indebtedness) does not
exceed the principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of any premiums
paid and reasonable expenses incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a Stated Maturity date
later than the Stated Maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness has a Stated Maturity date later than the
Stated Maturity date of, and is subordinated in right of payment to, the
Notes on subordination terms at least as favorable to the holders of Notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
(4) such Indebtedness is incurred by Tenet if Tenet is the obligor on
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
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(5) such Indebtedness is incurred by Tenet or a Subsidiary if a
Subsidiary is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"PHYSICIAN JOINT VENTURE DISTRIBUTIONS" means distributions made by Tenet or
any of its Subsidiaries to any physician, pharmacist or other allied healthcare
professional in connection with the unwinding, liquidation or other termination
of any joint venture or similar arrangement between any such Person and Tenet or
any of its Subsidiaries.
"PHYSICIAN SUPPORT OBLIGATIONS" means any obligation or Guarantee incurred
in the ordinary course of business by Tenet or a Subsidiary of Tenet in
connection with any advance, loan or payment to, or on behalf of or for the
benefit of any physician, pharmacist or other allied healthcare professional for
the purpose of recruiting, redirecting or retaining the physician, pharmacist or
other allied healthcare professional to provide service to patients in the
service area of any Hospital or Related Business owned or operated by Tenet or
any of its Subsidiaries; EXCLUDING, HOWEVER, compensation for services provided
by physicians, pharmacists or other allied healthcare professionals to any
Hospital or Related Business owned or operated by Tenet or any of its
Subsidiaries.
"QUALIFIED EQUITY INTERESTS" shall mean all Equity Interests of Tenet other
than Disqualified Stock of Tenet.
"RATING AGENCIES" means (1) S&P and (2) Moody's or (3) if neither S&P nor
Moody's shall make a rating of the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
Tenet, which shall be substituted for S&P or Moody's or both, as the case may
be.
"RATING CATEGORY" means:
(1) with respect to S&P, any of the following categories: BB, B, CCC,
CC, C and D (or equivalent successor categories);
(2) with respect to Moody's, any of the following categories: Ba, B,
Caa, Ca, C and D (or equivalent successor categories); and
(3) the equivalent of any such category of S&P or Moody's used by
another Rating Agency.
In determining whether the rating of the Notes has decreased by one or more
gradations, gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for
Moody's; or the equivalent gradations for another Rating Agency) shall be taken
into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB,
as well as from BB- to B+, will constitute a decrease of one gradation).
"RATING DATE" means the date which is 90 days prior to the earlier of (1) a
Change of Control and (2) the first public notice of the occurrence of a Change
of Control or of the intention by Tenet to effect a Change of Control.
"RATING DECLINE" means the occurrence on or within 90 days after the date of
the first public notice of the occurrence of a Change of Control or of the
intention by Tenet to effect a Change of Control (which period shall be extended
so long as the rating of the Notes is under publicly announced consideration for
possible downgrade by any of the Rating Agencies) of: (a) in the event the Notes
are rated by either Moody's or S&P on the Rating Date as Investment Grade, a
decrease in the rating of the Notes by both Rating Agencies to a rating that is
below Investment Grade, or (b) in the event the Notes are rated below Investment
Grade by both Rating Agencies on the Rating Date, a decrease in the rating of
the Notes by either Rating Agency by one or more gradations (including
gradations within Rating Categories as well as between Rating Categories).
"RELATED BUSINESS" means a healthcare business affiliated or associated with
a Hospital or any business related or ancillary to the provision of healthcare
services or information or the investment in, management, leasing or operation
of a Hospital.
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"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date of the
Indenture.
"S&P" means Standard & Poor's Corporation and its successors.
"SPECIFIED EXCHANGE" means any retirement of Indebtedness upon the exercise
by a holder of such Indebtedness, pursuant to the terms thereof, of any right to
exchange such Indebtedness for shares of common stock of Ventas, Inc. or any
successor thereto or any other equity securities, other than Equity Interests of
a Subsidiary, owned by Tenet as of October 11, 1995, or for any securities or
other property received with respect to such common stock or equity securities
or cash in lieu thereof, whether or not such right is subject to Tenet's ability
to pay an amount in cash in lieu thereof.
"STOCKHOLDERS' EQUITY" means, with respect to any Person as of any date, the
stockholders' equity of such Person determined in accordance with GAAP as of the
date of the most recent available internal financial statements of such Person,
and calculated on a PRO FORMA basis to give effect to any acquisition or
disposition by such Person consummated or to be consummated since the date of
such financial statements and on or prior to the date of such calculation.
"SUBSIDIARY" means, with respect to any Person, (1) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
We and the initial purchasers of the old notes entered into a Registration
Rights Agreement on June 16, 2000. In the Registration Rights Agreement, we
agreed to file the exchange offer Registration Statement with the SEC within
30 days after the date (the "Filing Date") of filing of our Annual Report on
Form 10-K for the year ended May 31, 2000 and use our commercially reasonable
efforts to have it declared effective within 180 days after the Filing Date. We
also agreed to use our commercially reasonable efforts to cause the exchange
offer Registration Statement to be effective continuously, to keep the exchange
offer open for a period of not less than 20 business days and cause the exchange
offer to be consummated no later than the 30th business day after it is declared
effective by the SEC. Pursuant to the exchange offer, certain holders of notes
which constitute Transfer Restricted Securities (as defined below) may exchange
their Transfer Restricted Securities for registered new notes. To
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participate in the exchange offer, each holder must represent that it is not an
affiliate of Tenet, it is not engaged in, and does not intend to engage in, and
has no arrangement or understanding with any person to participate in, a
distribution of the new notes that are issued in the exchange offer, and that it
is acquiring the new notes in the exchange offer in its ordinary course of
business.
If (1) the exchange offer is not permitted by applicable law or SEC policy
or (2) any holder of notes which are Transfer Restricted Securities notifies us
prior to the 20th business day following the consummation of the exchange offer
that (a) it is prohibited by law or SEC policy from participating in the
exchange offer, (b) it may not resell the new notes acquired by it in the
exchange offer to the public without delivering a prospectus, and the prospectus
contained in the exchange offer Registration Statement is not appropriate or
available for such resales by it, or (c) it is a broker-dealer and holds notes
acquired directly from us or any of our affiliates, we will file with the SEC a
shelf registration statement (the "Shelf Registration Statement") to register
for public resale the Transfer Restricted Securities held by any such holder who
provides us with certain information for inclusion in the Shelf Registration
Statement.
"Transfer Restricted Securities" means each note until the earliest of the
date on which:
(1) such note is exchanged in the exchange offer and entitled to be
resold to the public by the holder thereof without complying with the
prospectus delivery requirements of the Securities Act,
(2) such note has been disposed of in accordance with the Shelf
Registration Statement,
(3) such note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the exchange offer Registration Statement
(including delivery of the prospectus contained therein) or
(4) such note may be resold to the public pursuant to Rule 144(k) under
the Securities Act.
The following events would constitute a "Registration Default:"
(1) our failure to file an exchange offer Registration Statement with
the SEC on or prior to the 30th day after the Filing Date,
(2) the exchange offer Registration Statement not being declared
effective by the SEC on or prior to the 180th day after the Filing Date,
(3) the exchange offer not being consummated on or before the 30th
business day after the exchange offer Registration Statement is declared
effective,
(4) if we are obligated to file the Shelf Registration Statement, our
failure to file the Shelf Registration Statement with the SEC on or prior to
the 30th day after such filing obligation arises,
(5) if we are obligated to file a Shelf Registration Statement, the
Shelf Registration Statement not being declared effective on or prior to the
60th day after the obligation to file a Shelf Registration Statement arises,
or
(6) if the exchange offer Registration Statement or the Shelf
Registration Statement, as the case may be, is declared effective, the later
cessation of such registration statement being effective or useable in
connection with resales of the Transfer Restricted Securities, for such time
of non-effectiveness or non-usability.
If a Registration Default occurs, we will pay to each holder of Transfer
Restricted Securities affected thereby liquidated damages in an amount equal to
$0.05 per week per $1,000 in principal amount of Transfer Restricted Securities
held by such holder for each week or portion thereof that the Registration
Default continues for the first 90 day period immediately following the
occurrence of such Registration Default.
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The amount of liquidated damages shall increase by an additional $0.05 per
week per $1,000 in principal amount of Transfer Restricted Securities with
respect to each subsequent 90 day period until all Registration Defaults have
been cured, up to a maximum amount of liquidated damages of $0.35 per week per
$1,000 in principal amount of Transfer Restricted Securities. We will not be
required to pay liquidated damages for more than one Registration Default at any
given time. Following the cure of all Registration Defaults, the accrual of
liquidated damages will cease.
All accrued liquidated damages shall be paid by us to holders entitled
thereto by wire transfer to the accounts specified by them or by mailing checks
to their registered address if no such accounts have been specified.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences to investors who exchange old notes for new notes, pursuant to the
exchange offer, and of the disposition of the new notes. This summary is based
upon existing United States federal income tax law, which is subject to change,
possibly retroactively. This summary does not discuss all aspects of United
States federal income taxation that may be important to particular holders of
notes in light of their individual investment circumstances, such as new notes
held by investors subject to special tax rules (E.G., financial institutions,
insurance companies, broker-dealers, tax-exempt organizations, and, except to
the extent described below, Non-U.S. Holders (as defined below)) or to persons
that hold the old notes or will hold the new notes as a part of a straddle,
hedge, or synthetic security transaction for United States federal income tax
purposes or that have a functional currency other than the United States dollar,
all of whom may be subject to tax rules that differ significantly from those
summarized below. In addition, this summary does not discuss any foreign, state,
or local tax considerations. This summary addresses tax consequences only to
current holders of notes and assumes that such holders have held their old
notes, and will hold their new notes, as "capital assets" (generally, property
held for investment) under the United States Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"). We urge each holder to consult his or her
tax advisor regarding the United States federal, state, local, and foreign
income and other tax considerations associated with the exchange of old notes
for new notes and the disposition of the new notes.
For purposes of this summary, a "U.S. Holder" is a beneficial owner of an
old note or a new note who is:
- an individual who is a citizen or resident of the United States,
- a corporation, partnership, or other entity created or organized under the
law of the United States or any State or political subdivision thereof,
- an estate that is subject to United States federal income taxation without
regard to the source of its income, or
- a trust (a) the administration of which is subject to the primary
supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial decisions
of the trust or (b) that was in existence on August 20, 1996, was treated
as a United States person under the Internal Revenue Code, and elected to
continue to be so treated.
A "Non-U.S. Holder" is a beneficial owner of an old note or a new note who does
not satisfy the definition of "U.S. Holder" set forth above.
U.S. HOLDERS AND NON-U.S. HOLDERS
The exchange of old notes for new notes pursuant to the exchange offer will
not be a taxable event for United States federal income tax purposes. A U.S.
Holder or a Non-U.S. Holder who exchanges an
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old note for a new note pursuant to the exchange offer will have the same
adjusted tax basis and holding period in the new note as it had in the old note
immediately before the exchange.
U.S. HOLDERS
DISPOSITION OF NEW NOTES. In general, subject to the market discount rules
discussed below, a U.S. Holder of a new note will recognize capital gain or loss
upon the sale, redemption, retirement, or other disposition of the new note in
an amount equal to the difference between the amount realized (except to the
extent attributable to accrued but unpaid interest) upon such disposition and
the holder's adjusted tax basis in the new note. Such capital gain or loss will
be long-term if the holder's holding period in the new note exceeds one year. A
claim for a deduction in respect of any capital loss recognized in such
disposition may be subject to limitations.
MARKET DISCOUNT. U.S. Holders of notes, other than a purchaser of old notes
in the original offering, should be aware that the resale of the new notes may
be affected by the market discount provisions of the Internal Revenue Code. A
Note will have "market discount" if its stated redemption price at maturity
exceeds its tax basis in the hands of the holder immediately after its
acquisition by more than a statutorily-defined DE MINIMIS amount. Under the
market discount rules, gain recognized upon the sale or other disposition
(including a partial redemption) of new notes received in exchange for old notes
with market discount will generally be treated as ordinary income to the extent
of the market discount accrued during your period of ownership of the old notes
and new notes. In addition, a U.S. Holder of notes who acquired a note at a
market discount may be required to defer a portion of any interest expense that
may otherwise be deductible on any indebtedness incurred or maintained to
purchase or carry such note until the holder disposes of such note in a taxable
transaction. If a holder of such note elects to include market discount in
income currently, both of the foregoing rules would not apply.
NON-U.S. HOLDERS
PAYMENTS OF INTEREST. Interest that we pay to Non-U.S. Holders will not be
subject to United States federal income or withholding tax provided that:
- such holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of our stock entitled to vote,
- such holder is not a controlled foreign corporation related to us through
stock ownership, a foreign tax-exempt organization or foreign private
foundation for United States federal income tax purposes, and
- the requirements of section 871(h) or 881(c) of the Internal Revenue Code
are satisfied as described below under the heading "Owner's Statement
Requirement."
Notwithstanding the above, unless the holder qualifies for an exemption from
such tax or a lower tax rate under an applicable treaty, a Non-U.S. Holder that
is engaged in the conduct of a United States trade or business will be subject
to (a) United States federal income tax on interest that is effectively
connected with the conduct of such trade or business and (b) if the Non-U.S.
Holder is a corporation, a United States branch profits tax equal to 30% of its
"effectively connected earnings and profits" as adjusted for the taxable year.
GAIN ON DISPOSITION. A Non-U.S. Holder will generally not be subject to
United States federal income tax on gain recognized on a sale, redemption, or
other disposition of a new note unless (a) the gain is effectively connected
with the conduct of a trade or business within the United States by the Non-U.S.
Holder or (b) in the case of a Non-U.S. Holder who is a nonresident alien
individual, such holder is present in the United States for 183 or more days
during the taxable year and other specified requirements are met. Any such gain
that is effectively connected with the conduct of a United States
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trade or business by a Non-U.S. Holder will be subject to United States federal
income tax on a net income basis in the same manner as if such holder were a
United States person and, if such holder is a corporation, such gain may also be
subject to the 30% United States branch profits tax described above.
FEDERAL ESTATE TAXES. A new note held by an individual who at the time of
death is not a citizen or resident of the United States will not be subject to
United States Federal estate tax as a result of such individual's death,
provided that (a) the individual does not actually or constructively own 10% or
more of the total combined voting power of all classes of our stock entitled to
vote and (b) the interest accrued on the new note was not effectively connected
with a United States trade or business of the individual at time of the
individual's death.
OWNER'S STATEMENT REQUIREMENT. Sections 871(h) and 881(c) of the Internal
Revenue Code require that either the beneficial owner of the new note or a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"Financial Institution") and that holds the new note on behalf of such owner
file a statement with us or our agent to the effect that the beneficial owner is
not a United States person in order to avoid withholding of United States
federal income tax. Under current regulations, this requirement will be
satisfied if we or our agent receives (a) a statement (an "Owner's Statement")
from the beneficial owner of a new note certifying under penalties of perjury
that such owner is not a United States person and that provides such owner's
name and address or (b) a statement from the Financial Institution holding the
new note on behalf of the beneficial owner in which the Financial Institution
certifies, under penalties of perjury, that it has received the Owner's
Statement together with a copy of the Owner's Statement. The beneficial owner
must inform us or our agent (or, in the case of a statement described in
clause (b) of the immediately preceding sentence, the Financial Institution)
within 30 days of any change in information on the Owner's Statement.
BACKUP WITHHOLDING AND INFORMATION REPORTING. Current United States federal
income tax law provides that in the case of payments of interest to Non-U.S.
holders, the 31% backup withholding tax will not apply to payments made outside
the United States by us or a paying agent on a new note if an Owner's Statement
is received or an exemption has otherwise been established, provided in each
case that we or the paying agent, as the case may be, does not have actual
knowledge that the payee is a United States person.
Under current Treasury regulations, payments of the proceeds of the sale of
a new note to or through a foreign office of a "broker" will not be subject to
backup withholding but will be subject to information reporting if the broker is
a United States person, a controlled foreign corporation for United States
federal income tax purposes, a foreign person 50% or more of whose gross income
is from a United States trade or business for a specific three-year period, or,
with respect to payments made after December 31, 2000, a foreign partnership, if
at any time during its tax year, one or more of its partners are U.S. persons
(as defined in United States Treasury regulations) who, in the aggregate, hold
more than 50% of the income or capital interest in the partnership or if, at any
time during its tax year, such foreign partnership is engaged in a United States
trade or business unless the broker has in its records documentary evidence that
the holder is not a United States person and specified conditions are met or the
holder otherwise establishes an exemption. Payment of the proceeds of a sale to
or through the United States office of a broker is subject to backup withholding
and information reporting unless the holder certifies its non-United States
status under penalties of perjury or otherwise establishes an exemption.
The United States Treasury Department has promulgated final regulations (the
"Final Regulations") regarding the withholding and information reporting rules
discussed above. In general, the Final Regulations do not significantly alter
the substantive withholding and information reporting requirements but unify
current certification procedures and forms and clarify reliance standards. Under
the Final Regulations, special rules apply which permit the shifting of primary
responsibility for
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withholding to specified financial intermediaries acting on behalf of beneficial
owners and would alter the rules applicable to certain partnerships by requiring
partners, rather than the partnership, to provide the Owner's Statement. The
Final Regulations are generally effective for payments made after December 31,
2000, subject to transition rules.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of ninety days after the
Expiration Date, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 2000, all dealers effecting transactions in the
new notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market or in negotiated transactions or a
combination of such methods of resale, at market prices or negotiated prices.
Any such resale may be made directly to the purchaser or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such new notes.
Any broker-dealer that resells new notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of new notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of ninety days after the Expiration Date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the new notes) other
than commissions or concessions of any brokers or dealers and will indemnify the
holders of the new notes (including any broker-dealer) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
In connection with the exchange offer, Woodburn & Wedge, Reno, Nevada, is
acting as our special counsel, as to matters of Nevada law, and Skadden, Arps,
Slate, Meagher & Flom LLP, Los Angeles, California, is acting as our special
counsel as to matters of New York law.
EXPERTS
Our consolidated financial statements and the related financial statement
schedule, as of May 31, 1999 and 2000, and for each of the years in the
three-year period ended May 31, 2000, have been incorporated by reference herein
and in the Registration Statement in reliance upon the reports of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
reports of KPMG LLP refer to a change in the method of accounting for start-up
costs in fiscal 2000.
55
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES TO ANY PERSON OR BY ANYONE IN
ANY JURISDICTION WHERE IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE USING THE PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE
REFERRED YOU TO IS CORRECT AFTER THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
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Where You May Find More
Information......................... ii
Incorporation of Documents
by Reference........................ ii
Prospectus Summary.................... 1
Risk Factors.......................... 8
Use of Proceeds....................... 18
Capitalization........................ 19
Selected Financial Information........ 20
The Exchange Offer.................... 21
Description of Notes.................. 28
United States Federal Income Tax
Consequences........................ 52
Plan of Distribution.................. 55
Legal Matters......................... 55
Experts............................... 55
</TABLE>
TENET HEALTHCARE
CORPORATION
9 1/4% SERIES B SENIOR NOTES
DUE 2010
---------------------
PROSPECTUS
---------------------
, 2000
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada Revised Statutes Annotated ("Nevada RSA")
provides generally, and in pertinent part, that a Nevada corporation may
indemnify its directors and officers against expenses, judgments, fines, and
settlements actually and reasonably incurred by them in connection with any
civil suit or action, except actions by or in the right of the corporation, or
any administrative or investigative proceeding if, in connection with the
matters in issue, they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
in connection with any criminal suit or proceeding, if in connection with the
matters in issue, they had no reasonable cause to believe their conduct was
unlawful. Section 78.751 of the Nevada RSA further provides that, in connection
with the defense or settlement of any action by or in the right of a Nevada
corporation, a Nevada corporation may indemnify its directors and officers
against expenses actually and reasonably incurred by them if, in connection with
the matters in issue, they acted in good faith, in a manner they reasonably
believed to be in, or not opposed to, the best interest of the corporation.
Section 78.751 of the Nevada RSA further permits a Nevada corporation to grant
its directors and officers additional rights of indemnification through by-law
provisions and otherwise.
Article IX of the our Restated By-Laws, as amended, provides that we will
indemnify our directors and officers to the fullest extent permitted by Nevada
law. We have entered into indemnification agreements with each of our directors
and executive officers. Such indemnification agreements are intended to provide
a contractual right to indemnification, to the maximum extent permitted by law,
for expenses (including attorneys' fees), judgments, penalties, fines, and
amounts paid in settlement actually and reasonably incurred by the person to be
indemnified in connection with any proceeding (including, to the extent
permitted by applicable law, any derivative action) to which they are, or are
threatened to be made, a party by reason of their status in such positions. Such
indemnification agreements do not change the basic legal standards for
indemnification set forth under Nevada law or our Restated Articles of
Incorporation, as amended (the "Articles"). Such agreements are intended to be
in furtherance, and not in limitation of, the general right to indemnification
provided in the Articles.
Section 78.037 of the Nevada RSA provides that the articles of incorporation
of a Nevada corporation may contain a provision eliminating or limiting the
personal liability of a director or officer to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director
provided that such provisions shall not eliminate or limit the liability of a
director or officer (1) for acts or omissions which involve intentional
misconduct or a knowing violation of law, or (2) under Section 78.300 of the
Nevada RSA (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock). Article X of the Articles contains a
provision eliminating the liability of directors and officers to the extent
permitted under Section 78.037 of the Nevada RSA.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us pursuant to
the foregoing provisions, we have been informed that in the opinion of the SEC
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
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*1.1 Purchase Agreement, dated June 13, 2000, among the
Registrant and Donaldson, Lufkin & Jenrette Securities
Corporation, J.P. Morgan Securities Inc., Banc of America
Securities LLC and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
3.1 Restated Articles of Incorporation of Registrant, as amended
October 13, 1987 and June 22, 1995 (Incorporated by
reference to Exhibit 3(a) to Registrant's Annual Report on
Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
3.2 Restated Bylaws of Registrant, as amended October 6, 1999
(Incorporated by reference to Exhibit 3(b) to Registrant's
Annual Report on Form 10-K, dated August 15, 2000, for the
fiscal year ended May 31, 1999)
4.1 Indenture, dated as of March 1, 1995, between Registrant and
The Bank of New York, as Trustee, relating to 9 5/8%
Senior Notes due 2002 (Incorporated by reference to
Exhibit 4(a) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
4.2 First Supplemental Indenture, dated as of October 30, 1995,
between Registrant and The Bank of New York, as Trustee,
relating to 9 5/8% Senior Notes due 2002 (Incorporated by
reference to Exhibit 4(c) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.3 Second Supplemental Indenture, dated as of August 21, 1997,
between Registrant and The Bank of New York, as Trustee,
relating to 9 5/8% Senior Notes due 2002 (Incorporated by
reference to Exhibit 4(d) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.4 Third Supplemental Indenture, dated as of May 7, 1998,
between Registrant and The Bank of New York, as Trustee,
relating to the 9 5/8% Senior Notes due 2002 (Incorporated
by reference to Exhibit 4.9 to Registration Statement on
Form S-4 (Registration No. 333-64157), as filed with the
SEC on September 24, 1998)
4.5 Indenture, dated as of March 1, 1995, between Registrant and
The Bank of New York, as Trustee, relating to 10 1/8%
Senior Subordinated Notes due 2005 (Incorporated by
reference to Exhibit 4(d) to Registrant's Annual Report on
Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
4.6 First Supplemental Indenture, dated as of October 27, 1995,
between Registrant and The Bank of New York, as Trustee,
relating to 10 1/8% Senior Subordinated Notes due 2005
(Incorporated by reference to Exhibit 4(f) to Registrant's
Annual Report on Form 10-K, dated August 27, 1997, for
the fiscal year ended May 31, 1997)
4.7 Second Supplemental Indenture, dated as of August 21, 1997,
between Registrant and The Bank of New York, as Trustee,
relating to 10 1/8% Senior Subordinated Notes due 2005
(Incorporated by reference to Exhibit 4(g) to Registrant's
Annual Report on Form 10-K, dated August 27, 1997, for
the fiscal year ended May 31, 1997)
4.8 Third Supplemental Indenture, dated as of May 7, 1998,
between Registrant and The Bank of New York, as Trustee,
relating to 10 1/8% Senior Subordinated Notes due 2005
(Incorporated by reference to Exhibit 4.13 to Registration
Statement on Form S-4 (Registration No. 333-64157), as
filed with the SEC on September 24, 1998)
4.9 Indenture, dated as of October 16, 1995, between Registrant
and The Bank of New York, as Trustee, relating to 8 5/8%
Senior Notes due 2003 (Incorporated by reference to
Exhibit 4(d) to Registrant's Annual Report on Form 10-K,
dated August 26, 1996, for the fiscal year ended May 31,
1996)
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4.10 First Supplemental Indenture, dated as of October 30, 1995,
between Registrant and The Bank of New York, as Trustee,
relating to 8 5/8% Senior Notes due 2003 (Incorporated by
reference to Exhibit 4(i) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.11 Second Supplemental Indenture, dated as of August 21, 1997,
between Registrant and The Bank of New York, as Trustee,
relating to 8 5/8% Senior Notes due 2003 (Incorporated by
reference to Exhibit 4(j) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.12 Indenture, dated as of January 10, 1996, between Registrant
and The Bank of New York, as Trustee, relating to 6%
Exchangeable Subordinated Notes due 2005 (Incorporated by
reference to Exhibit 4(a) to Registrant's Quarterly Report
on Form 10-Q, dated January 15, 1996, for the fiscal
quarter ended November 30, 1995)
4.13 Escrow Agreement, dated as of January 10, 1996, among
Registrant, NME Properties, Inc., NME Property
Holding Co., Inc. and The Bank of New York, as Escrow
Agent (Incorporated by reference to Exhibit 4(b)to
Registrant's Quarterly Report on Form 10-Q, dated as of
January 15, 1996, for the fiscal quarter ended
November 30, 1995)
4.14 Indenture, dated January 15, 1997, between Registrant and
The Bank of New York, as Trustee, relating to 7 7/8%
Senior Notes due 2003 (Incorporated by reference to
Exhibit 4(m) to Registrant's Annual Report on Form 10-K,
dated August 27, 1997, for the fiscal year ended May 31,
1997)
4.15 Indenture, dated January 15, 1997, between Registrant and
The Bank of New York, as Trustee, relating to 8% Senior
Notes due 2005 (Incorporated by reference to Exhibit 4(n)
to Registrant's Annual Report on Form 10-K, dated
August 27, 1997, for the fiscal year ended May 31, 1997)
4.16 Indenture, dated January 15, 1997, between Registrant and
The Bank of New York, as Trustee, relating to 8 5/8%
Senior Subordinated Notes due 2007 (Incorporated by
reference to Exhibit 4(o) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.17 Indenture, dated May 21, 1998, between Registrant and The
Bank of New York, as Trustee, relating to 7 5/8% Senior
Notes due 2008 (Incorporated by reference to Exhibit 4(o)
to Registrant's Annual Report on Form 10-K, dated
August 27, 1998, for the fiscal year ended May 31, 1998)
4.18 Indenture, dated May 21, 1998, between Registrant and The
Bank of New York, as Trustee, relating to 8 1/8% Senior
Subordinated Notes due 2008 (Incorporated by reference to
Exhibit 4(p) to Registrant's Annual Report on Form 10-K,
dated August 27, 1998, for the fiscal year ended May 31,
1998)
4.19 Indenture, dated June 16, 2000, between Registrant and The
Bank of New York, as Trustee, relating to 9 1/4% Senior
Notes due 2010 (the "9 1/4% Note") (Incorporated by
reference to Exhibit 4(q) to Registrant's Annual Report on
Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
*4.20 Registration Rights Agreement, dated as of June 16, 2000,
among Registrant and the Initial Purchasers named therein
4.21 Form of 9 1/4% Note (included in Exhibit 4.19)
**5.1 Opinion of Woodburn & Wedge ("Woodburn")
**5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
("Skadden Arps")
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10.1 $91,350,000 Amended and Restated Letter of Credit and
Reimbursement Agreement, dated as of February 28, 1995,
among the Registrant, as Account Party, and Bank of
America National Trust and Savings Association, The Bank
of New York, Bankers Trust Company and Morgan Guaranty
Trust Company of New York, as Banks, and The Bank of New
York, as Issuing Bank (Incorporated by reference to
Exhibit 10(a) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
10.2 Amendment to Reimbursement Agreement, dated as of March 1,
1996, among the Registrant, as Account Party, Bank of
America National Trust and Savings Association, The Bank
of New York, Bankers Trust Company and Morgan Guaranty
Trust Company of New York, as Banks, and The Bank of New
York, as the Issuing Bank (Incorporated by reference to
Exhibit 10(b) to Registrant's Quarterly Report on
Form 10-Q, dated as of April 12, 1996, for the fiscal
quarter ended February 29, 1996)
10.3 Amendment No. 2 to Reimbursement Agreement, dated
January 30, 1997, among the Registrant, as Account Party,
Bank of America National Trust and Savings Corporation,
The Bank of New York and Morgan Guaranty Trust Company of
New York, as Banks, and The Bank of New York, as Issuing
Bank (Incorporated by reference to Exhibit 10(c) to
Registrant's Annual Report on Form 10-K, dated August 27,
1997, for the fiscal year ended May 31, 1997)
10.4 $2,800,000,000 Credit Agreement, dated as of January 30,
1997, as amended by Amendment No. 1, dated as of July 25,
1997, Amendment No. 2, dated as of March 16, 1999 and
Amendment No. 3, dated as of October 1, 1999, among the
Registrant, as Borrower, the Lenders, Managing Agents and
Co-Agents party thereto, the Swingline Bank party thereto,
The Bank of New York and the Bank of Nova Scotia, as
Documentation Agents, Bank of America National Trust and
Savings Association, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administrative
Agent (Incorporated by reference to Exhibit 10(jj) to
Registrant's Quarterly Report on Form 10-Q, dated as of
January 13, 2000, for the fiscal quarter ended
November 30, 1999)
10.5 Letter from the Registrant to Jeffrey C. Barbakow, dated
May 26, 1993 (Incorporated by reference to Exhibit 10(h)
to Registrant's Annual Report on Form 10-K, dated
August 26, 1999, for the fiscal year ended May 31, 1999)
10.6 Letter from the Registrant to Jeffrey C. Barbakow, dated
June 1, 1993 (Incorporated by reference to Exhibit 10(i)
to Registrant's Annual Report on Form 10-K, dated
August 26, 1999, for the fiscal year ended May 31, 1999)
10.7 Memorandum from the Registrant to Jeffrey C. Barbakow, dated
June 14, 1993 (Incorporated by reference to Exhibit 10(j)
to Registrant's Annual Report on Form 10-K, dated
August 26, 1999, for the fiscal year ended May 31, 1999)
10.8 Memorandum of Understanding, dated May 21, 1996, from
Jeffrey C. Barbakow to the Registrant (Incorporated by
reference to Exhibit 10(t) to Registrant's Annual Report
on Form 10-K, dated as of August 26, 1996, for the fiscal
year ended May 31, 1996)
10.9 Deferred Compensation Agreement, dated May 31, 1997, between
Jeffrey C. Barbakow and the Registrant (Incorporated by
reference to Exhibit 10(l) to Registrant's Annual Report
on Form 10-K, dated August 28, 1998, for the fiscal year
ended May 31, 1998)
10.10 Letter from the Registrant to David L. Dennis, dated
February 18, 2000 (Incorporated by reference to
Exhibit 10(j) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
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10.11 Consulting and Non-Compete Agreement between Michael H.
Focht, Sr. and the Registrant, dated as of January 12,
1999 (Incorporated by reference to Exhibit 10(n) to
Registrant's Annual Report on Form 10-K, dated as of
August 26, 1999, for the fiscal year ended May 31, 1999)
10.12 Letter from the Registrant to Trevor Fetter, dated
January 13, 1999 (Incorporated by reference to
Exhibit 10(o) to Registrant's Annual Report on Form 10-K,
dated as of August 26, 1999, for the fiscal year ended
May 31, 1999)
10.13 Letter from the Registrant to Thomas B. Mackey, dated
January 13, 1999 (Incorporated by reference to
Exhibit 10(p) to Registrant's Annual Report on Form 10-K,
dated as of August 26, 1999, for the fiscal year ended
May 31, 1999)
10.14 Letter from the Registrant to Barry P. Schochet, dated
February 23, 1999 (Incorporated by reference to
Exhibit 10(q) to Registrant's Annual Report on Form 10-K,
dated as of August 26, 1999, for the fiscal year ended
May 31, 1999)
10.15 Separation and Continuing Employment Agreement between
Trevor Fetter and the Registrant, dated as of March 1,
2000 (Incorporated by reference to Exhibit 10(o) to
Registrant's Annual Report on Form 10-K, dated August 15,
2000, for the fiscal year ended May 31, 1999)
10.16 Executive Officers Relocation Protection Agreement
(Incorporated by reference to Exhibit 10(v) to
Registrant's Annual Report on Form 10-K, dated as of
August 26, 1996, for the fiscal year ended May 31, 1996)
10.17 Executive Officers Severance Protection Plan (Incorporated
by reference to Exhibit 10(w) to Registrant's Annual
Report on Form 10-K, dated as of August 26, 1996, for the
fiscal year ended May 31, 1996)
10.18 Board of Directors Retirement Plan, effective January 1,
1985, as amended August 18, 1993, April 25, 1994 and
July 30, 1997 (Incorporated by reference to Exhibit 10(p)
to Registrant's Annual Report on Form 10-K, dated
August 28, 1998, for the fiscal year ended May 31, 1998)
10.19 Supplemental Executive Retirement Plan, dated as of
November 1, 1984, as amended May 21, 1986, April 25, 1994,
July 25, 1994 and January 28, 1997 (Incorporated by
reference to Exhibit 10(q) to Registrant's Annual Report
on Form 10-K, dated August 28, 1998, for the fiscal year
ended May 31, 1998)
10.20 1997 Annual Incentive Plan (Incorporated by reference to
Exhibit B to the Definitive Proxy Statement, dated as of
August 26, 1997, for the Registrant's 1997 Annual Meeting
of Shareholders)
10.21 Tenet Executive Deferred Compensation and Supplemental
Savings Plan, as amended April 13, 2000 (Incorporated by
reference to Exhibit 10(n) to Registrant's Annual Report
on Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
10.22 Tenet Executive Deferred Compensation Plan Trust, as amended
and restated effective November 10, 1995 (Incorporated by
reference to Exhibit 10(v) to Registrant's Annual Report
on Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
10.23 Agreement, dated October 30, 1996, between Registrant and
United States Trust Company of New York, as Trustee,
Regarding the First Amendment to the Tenet Deferred
Compensation Plan Trust (Incorporated by reference to
Exhibit 10(d) to Registration Statement on Form S-3
(Registration No. 333-26621) dated May 7, 1997, filed with
the Commission on May 7, 1997)
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10.24 First Amended and Restated 1994 Directors Stock Option Plan
(Incorporated by reference to Exhibit A to the Definitive
Proxy Statement, dated as of August 26, 1997, for the
Registrant's 1997 Annual Meeting of Shareholders)
10.25 Second Amendment to the First Amended and Restated 1994
Directors Stock Option Plan (Incorporated by reference to
Exhibit 10(y) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
10.26 1991 Stock Incentive Plan (Incorporated by reference to
Exhibit 10(kk) to Registrant's Annual Report on
Form 10-K, dated as of August 26, 1996, for the fiscal
year ended May 31, 1996)
10.27 Amended and Restated 1995 Stock Incentive Plan (Incorporated
by reference to Annex D to the Proxy Statement/Prospectus,
dated as of December 18, 1997, for the Registrant's
Special Meeting of Shareholders held on January 28, 1997)
10.28 Fourth Amended and Restated 1995 Employee Stock Purchase
Plan (Incorporated by reference to Exhibit 4 to
Registrant's Registration Statement on Form S-8, dated
July 14, 2000)
10.29 Tendex Inc. 2000 Senior Executive Stock Purchase Plan
(Incorporated by reference to Exhibit 10(cc) to
Registrant's Annual Report on Form 10-K, dated August 15,
2000, for the fiscal year ended May 31, 1999)
10.30 First Amended and Restated Broadlane, Inc. 2000 Senior
Executive Stock Incentive Plan
*12.1 Statement regarding the computation of ratio of earnings to
fixed charges for the Registrant
*23.1 Consent of KPMG LLP
**23.2 Consent of Woodburn (included in Exhibit 5.1)
**23.3 Consent of Skadden Arps (included in Exhibit 5.2)
*24.1 Power of Attorney (included on signature page of the
Registration Statement)
*25.1 Statement of Eligibility on Form T-1 of The Bank of New
York, as the Trustee under the indenture relating to the
9 1/4% Notes
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Letter of Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees
*99.4 Form of Letter to Clients
*99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
*99.6 Form of Exchange Agent Agreement
</TABLE>
------------------------
* Filed herewith
** To be filed by amendment
II-6
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Barbara, State of
California on September 13, 2000.
<TABLE>
<S> <C> <C>
TENET HEALTHCARE CORPORATION
By: /s/ RICHARD B. SILVER
-----------------------------------------
Name: Richard B. Silver
Title: SENIOR VICE PRESIDENT, SECRETARY
AND ASSISTANT GENERAL COUNSEL
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Jeffrey C. Barbakow, David L. Dennis,
Thomas B. Mackey and Raymond L. Mathiasen, acting alone, his/her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him/her and in his/her name, place and stead, in any and all
capacities, to sign and file any and all amendments (including post-effective
amendments) to this Registration Statement, with all exhibits thereto, and other
documents in connection therewith, with the SEC, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises as fully to all intents and purposes as he/she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on September 13, 2000:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ JEFFREY C. BARBAKOW
------------------------------------------- Chairman, Chief Executive Officer and Director
Jeffrey C. Barbakow (Principal Executive Officer)
/s/ DAVID L. DENNIS Vice Chairman, Chief Corporate Officer and
------------------------------------------- Chief Financial Officer (Principal Financial
David L. Dennis Officer)
/s/ THOMAS B. MACKEY
------------------------------------------- Chief Operating Officer (Principal Operating
Thomas B. Mackey Officer)
/s/ RAYMOND L. MATHIASEN
------------------------------------------- Executive Vice President and Chief Accounting
Raymond L. Mathiasen Officer (Principal Accounting Officer)
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ LAWRENCE BIONDI, S.J.
------------------------------------------- Director
Lawrence Biondi, S.J.
/s/ BERNICE B. BRATTER
------------------------------------------- Director
Bernice B. Bratter
/s/ SANFORD CLOUD, JR.
------------------------------------------- Director
Sanford Cloud, Jr.
/s/ MAURICE J. DEWALD
------------------------------------------- Director
Maurice J. DeWald
/s/ MICHAEL H. FOCHT, SR.
------------------------------------------- Director
Michael H. Focht, Sr.
/s/ RAYMOND A. HAY
------------------------------------------- Director
Raymond A. Hay
/s/ VAN B. HONEYCUTT
------------------------------------------- Director
Van B. Honeycutt
/s/ LESTER B. KORN
------------------------------------------- Director
Lester B. Korn
/s/ FLOYD D. LOOP, M.D.
------------------------------------------- Director
Floyd D. Loop, M.D.
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
*1.1 Purchase Agreement, dated June 13, 2000, among the
Registrant and Donaldson, Lufkin & Jenrette Securities
Corporation, J.P. Morgan Securities Inc., Banc of America
Securities LLC and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
3.1 Restated Articles of Incorporation of Registrant, as amended
October 13, 1987 and June 22, 1995 (Incorporated by
reference to Exhibit 3(a) to Registrant's Annual Report on
Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
3.2 Restated Bylaws of Registrant, as amended October 6, 1999
(Incorporated by reference to Exhibit 3(b) to Registrant's
Annual Report on Form 10-K, dated August 15, 2000, for the
fiscal year ended May 31, 1999)
4.1 Indenture, dated as of March 1, 1995, between Registrant and
The Bank of New York, as Trustee, relating to 9 5/8%
Senior Notes due 2002 (Incorporated by reference to
Exhibit 4(a) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
4.2 First Supplemental Indenture, dated as of October 30, 1995,
between Registrant and The Bank of New York, as Trustee,
relating to 9 5/8% Senior Notes due 2002 (Incorporated by
reference to Exhibit 4(c) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.3 Second Supplemental Indenture, dated as of August 21, 1997,
between Registrant and The Bank of New York, as Trustee,
relating to 9 5/8% Senior Notes due 2002 (Incorporated by
reference to Exhibit 4(d) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.4 Third Supplemental Indenture, dated as of May 7, 1998,
between Registrant and The Bank of New York, as Trustee,
relating to the 9 5/8% Senior Notes due 2002 (Incorporated
by reference to Exhibit 4.9 to Registration Statement on
Form S-4 (Registration No. 333-64157), as filed with the
SEC on September 24, 1998)
4.5 Indenture, dated as of March 1, 1995, between Registrant and
The Bank of New York, as Trustee, relating to 10 1/8%
Senior Subordinated Notes due 2005 (Incorporated by
reference to Exhibit 4(d) to Registrant's Annual Report on
Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
4.6 First Supplemental Indenture, dated as of October 27, 1995,
between Registrant and The Bank of New York, as Trustee,
relating to 10 1/8% Senior Subordinated Notes due 2005
(Incorporated by reference to Exhibit 4(f) to Registrant's
Annual Report on Form 10-K, dated August 27, 1997, for
the fiscal year ended May 31, 1997)
4.7 Second Supplemental Indenture, dated as of August 21, 1997,
between Registrant and The Bank of New York, as Trustee,
relating to 10 1/8% Senior Subordinated Notes due 2005
(Incorporated by reference to Exhibit 4(g) to Registrant's
Annual Report on Form 10-K, dated August 27, 1997, for
the fiscal year ended May 31, 1997)
4.8 Third Supplemental Indenture, dated as of May 7, 1998,
between Registrant and The Bank of New York, as Trustee,
relating to 10 1/8% Senior Subordinated Notes due 2005
(Incorporated by reference to Exhibit 4.13 to Registration
Statement on Form S-4 (Registration No. 333-64157), as
filed with the SEC on September 24, 1998)
4.9 Indenture, dated as of October 16, 1995, between Registrant
and The Bank of New York, as Trustee, relating to 8 5/8%
Senior Notes due 2003 (Incorporated by reference to
Exhibit 4(d) to Registrant's Annual Report on Form 10-K,
dated August 26, 1996, for the fiscal year ended May 31,
1996)
4.10 First Supplemental Indenture, dated as of October 30, 1995,
between Registrant and The Bank of New York, as Trustee,
relating to 8 5/8% Senior Notes due 2003 (Incorporated by
reference to Exhibit 4(i) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
4.11 Second Supplemental Indenture, dated as of August 21, 1997,
between Registrant and The Bank of New York, as Trustee,
relating to 8 5/8% Senior Notes due 2003 (Incorporated by
reference to Exhibit 4(j) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.12 Indenture, dated as of January 10, 1996, between Registrant
and The Bank of New York, as Trustee, relating to 6%
Exchangeable Subordinated Notes due 2005 (Incorporated by
reference to Exhibit 4(a) to Registrant's Quarterly Report
on Form 10-Q, dated January 15, 1996, for the fiscal
quarter ended November 30, 1995)
4.13 Escrow Agreement, dated as of January 10, 1996, among
Registrant, NME Properties, Inc., NME Property
Holding Co., Inc. and The Bank of New York, as Escrow
Agent (Incorporated by reference to Exhibit 4(b)to
Registrant's Quarterly Report on Form 10-Q, dated as of
January 15, 1996, for the fiscal quarter ended
November 30, 1995)
4.14 Indenture, dated January 15, 1997, between Registrant and
The Bank of New York, as Trustee, relating to 7 7/8%
Senior Notes due 2003 (Incorporated by reference to
Exhibit 4(m) to Registrant's Annual Report on Form 10-K,
dated August 27, 1997, for the fiscal year ended May 31,
1997)
4.15 Indenture, dated January 15, 1997, between Registrant and
The Bank of New York, as Trustee, relating to 8% Senior
Notes due 2005 (Incorporated by reference to Exhibit 4(n)
to Registrant's Annual Report on Form 10-K, dated
August 27, 1997, for the fiscal year ended May 31, 1997)
4.16 Indenture, dated January 15, 1997, between Registrant and
The Bank of New York, as Trustee, relating to 8 5/8%
Senior Subordinated Notes due 2007 (Incorporated by
reference to Exhibit 4(o) to Registrant's Annual Report on
Form 10-K, dated August 27, 1997, for the fiscal year
ended May 31, 1997)
4.17 Indenture, dated May 21, 1998, between Registrant and The
Bank of New York, as Trustee, relating to 7 5/8% Senior
Notes due 2008 (Incorporated by reference to Exhibit 4(o)
to Registrant's Annual Report on Form 10-K, dated
August 27, 1998, for the fiscal year ended May 31, 1998)
4.18 Indenture, dated May 21, 1998, between Registrant and The
Bank of New York, as Trustee, relating to 8 1/8% Senior
Subordinated Notes due 2008 (Incorporated by reference to
Exhibit 4(p) to Registrant's Annual Report on Form 10-K,
dated August 27, 1998, for the fiscal year ended May 31,
1998)
4.19 Indenture, dated June 16, 2000, between Registrant and The
Bank of New York, as Trustee, relating to 9 1/4% Senior
Notes due 2010 (the "9 1/4% Note") (Incorporated by
reference to Exhibit 4(q) to Registrant's Annual Report on
Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
*4.20 Registration Rights Agreement, dated as of June 16, 2000,
among Registrant and the Initial Purchasers named therein
4.21 Form of 9 1/4% Note (included in Exhibit 4.19)
**5.1 Opinion of Woodburn & Wedge ("Woodburn")
**5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
("Skadden Arps")
10.1 $91,350,000 Amended and Restated Letter of Credit and
Reimbursement Agreement, dated as of February 28, 1995,
among the Registrant, as Account Party, and Bank of
America National Trust and Savings Association, The Bank
of New York, Bankers Trust Company and Morgan Guaranty
Trust Company of New York, as Banks, and The Bank of New
York, as Issuing Bank (Incorporated by reference to
Exhibit 10(a) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.2 Amendment to Reimbursement Agreement, dated as of March 1,
1996, among the Registrant, as Account Party, Bank of
America National Trust and Savings Association, The Bank
of New York, Bankers Trust Company and Morgan Guaranty
Trust Company of New York, as Banks, and The Bank of New
York, as the Issuing Bank (Incorporated by reference to
Exhibit 10(b) to Registrant's Quarterly Report on
Form 10-Q, dated as of April 12, 1996, for the fiscal
quarter ended February 29, 1996)
10.3 Amendment No. 2 to Reimbursement Agreement, dated
January 30, 1997, among the Registrant, as Account Party,
Bank of America National Trust and Savings Corporation,
The Bank of New York and Morgan Guaranty Trust Company of
New York, as Banks, and The Bank of New York, as Issuing
Bank (Incorporated by reference to Exhibit 10(c) to
Registrant's Annual Report on Form 10-K, dated August 27,
1997, for the fiscal year ended May 31, 1997)
10.4 $2,800,000,000 Credit Agreement, dated as of January 30,
1997, as amended by Amendment No. 1, dated as of July 25,
1997, Amendment No. 2, dated as of March 16, 1999 and
Amendment No. 3, dated as of October 1, 1999, among the
Registrant, as Borrower, the Lenders, Managing Agents and
Co-Agents party thereto, the Swingline Bank party thereto,
The Bank of New York and the Bank of Nova Scotia, as
Documentation Agents, Bank of America National Trust and
Savings Association, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administrative
Agent (Incorporated by reference to Exhibit 10(jj) to
Registrant's Quarterly Report on Form 10-Q, dated as of
January 13, 2000, for the fiscal quarter ended
November 30, 1999)
10.5 Letter from the Registrant to Jeffrey C. Barbakow, dated
May 26, 1993 (Incorporated by reference to Exhibit 10(h)
to Registrant's Annual Report on Form 10-K, dated
August 26, 1999, for the fiscal year ended May 31, 1999)
10.6 Letter from the Registrant to Jeffrey C. Barbakow, dated
June 1, 1993 (Incorporated by reference to Exhibit 10(i)
to Registrant's Annual Report on Form 10-K, dated
August 26, 1999, for the fiscal year ended May 31, 1999)
10.7 Memorandum from the Registrant to Jeffrey C. Barbakow, dated
June 14, 1993 (Incorporated by reference to Exhibit 10(j)
to Registrant's Annual Report on Form 10-K, dated
August 26, 1999, for the fiscal year ended May 31, 1999)
10.8 Memorandum of Understanding, dated May 21, 1996, from
Jeffrey C. Barbakow to the Registrant (Incorporated by
reference to Exhibit 10(t) to Registrant's Annual Report
on Form 10-K, dated as of August 26, 1996, for the fiscal
year ended May 31, 1996)
10.9 Deferred Compensation Agreement, dated May 31, 1997, between
Jeffrey C. Barbakow and the Registrant (Incorporated by
reference to Exhibit 10(l) to Registrant's Annual Report
on Form 10-K, dated August 28, 1998, for the fiscal year
ended May 31, 1998)
10.10 Letter from the Registrant to David L. Dennis, dated
February 18, 2000 (Incorporated by reference to
Exhibit 10(j) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
10.11 Consulting and Non-Compete Agreement between Michael H.
Focht, Sr. and the Registrant, dated as of January 12,
1999 (Incorporated by reference to Exhibit 10(n) to
Registrant's Annual Report on Form 10-K, dated as of
August 26, 1999, for the fiscal year ended May 31, 1999)
10.12 Letter from the Registrant to Trevor Fetter, dated
January 13, 1999 (Incorporated by reference to
Exhibit 10(o) to Registrant's Annual Report on Form 10-K,
dated as of August 26, 1999, for the fiscal year ended
May 31, 1999)
10.13 Letter from the Registrant to Thomas B. Mackey, dated
January 13, 1999 (Incorporated by reference to
Exhibit 10(p) to Registrant's Annual Report on Form 10-K,
dated as of August 26, 1999, for the fiscal year ended
May 31, 1999)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.14 Letter from the Registrant to Barry P. Schochet, dated
February 23, 1999 (Incorporated by reference to
Exhibit 10(q) to Registrant's Annual Report on Form 10-K,
dated as of August 26, 1999, for the fiscal year ended
May 31, 1999)
10.15 Separation and Continuing Employment Agreement between
Trevor Fetter and the Registrant, dated as of March 1,
2000 (Incorporated by reference to Exhibit 10(o) to
Registrant's Annual Report on Form 10-K, dated August 15,
2000, for the fiscal year ended May 31, 1999)
10.16 Executive Officers Relocation Protection Agreement
(Incorporated by reference to Exhibit 10(v) to
Registrant's Annual Report on Form 10-K, dated as of
August 26, 1996, for the fiscal year ended May 31, 1996)
10.17 Executive Officers Severance Protection Plan (Incorporated
by reference to Exhibit 10(w) to Registrant's Annual
Report on Form 10-K, dated as of August 26, 1996, for the
fiscal year ended May 31, 1996)
10.18 Board of Directors Retirement Plan, effective January 1,
1985, as amended August 18, 1993, April 25, 1994 and
July 30, 1997 (Incorporated by reference to Exhibit 10(p)
to Registrant's Annual Report on Form 10-K, dated
August 28, 1998, for the fiscal year ended May 31, 1998)
10.19 Supplemental Executive Retirement Plan, dated as of
November 1, 1984, as amended May 21, 1986, April 25, 1994,
July 25, 1994 and January 28, 1997 (Incorporated by
reference to Exhibit 10(q) to Registrant's Annual Report
on Form 10-K, dated August 28, 1998, for the fiscal year
ended May 31, 1998)
10.20 1997 Annual Incentive Plan (Incorporated by reference to
Exhibit B to the Definitive Proxy Statement, dated as of
August 26, 1997, for the Registrant's 1997 Annual Meeting
of Shareholders)
10.21 Tenet Executive Deferred Compensation and Supplemental
Savings Plan, as amended April 13, 2000 (Incorporated by
reference to Exhibit 10(n) to Registrant's Annual Report
on Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
10.22 Tenet Executive Deferred Compensation Plan Trust, as amended
and restated effective November 10, 1995 (Incorporated by
reference to Exhibit 10(v) to Registrant's Annual Report
on Form 10-K, dated August 15, 2000, for the fiscal year
ended May 31, 1999)
10.23 Agreement, dated October 30, 1996, between Registrant and
United States Trust Company of New York, as Trustee,
Regarding the First Amendment to the Tenet Deferred
Compensation Plan Trust (Incorporated by reference to
Exhibit 10(d) to Registration Statement on Form S-3
(Registration No. 333-26621) dated May 7, 1997, filed with
the Commission on May 7, 1997)
10.24 First Amended and Restated 1994 Directors Stock Option Plan
(Incorporated by reference to Exhibit A to the Definitive
Proxy Statement, dated as of August 26, 1997, for the
Registrant's 1997 Annual Meeting of Shareholders)
10.25 Second Amendment to the First Amended and Restated 1994
Directors Stock Option Plan (Incorporated by reference to
Exhibit 10(y) to Registrant's Annual Report on Form 10-K,
dated August 15, 2000, for the fiscal year ended May 31,
1999)
10.26 1991 Stock Incentive Plan (Incorporated by reference to
Exhibit 10(kk) to Registrant's Annual Report on
Form 10-K, dated as of August 26, 1996, for the fiscal
year ended May 31, 1996)
10.27 Amended and Restated 1995 Stock Incentive Plan (Incorporated
by reference to Annex D to the Proxy Statement/Prospectus,
dated as of December 18, 1997, for the Registrant's
Special Meeting of Shareholders held on January 28, 1997)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.28 Fourth Amended and Restated 1995 Employee Stock Purchase
Plan (Incorporated by reference to Exhibit 4 to
Registrant's Registration Statement on Form S-8, dated
July 14, 2000)
10.29 Tendex Inc. 2000 Senior Executive Stock Purchase Plan
(Incorporated by reference to Exhibit 10(cc) to
Registrant's Annual Report on Form 10-K, dated August 15,
2000, for the fiscal year ended May 31, 1999)
10.30 First Amended and Restated Broadlane, Inc. 2000 Senior
Executive Stock Incentive Plan
*12.1 Statement regarding the computation of ratio of earnings to
fixed charges for the Registrant
*23.1 Consent of KPMG LLP
**23.2 Consent of Woodburn (included in Exhibit 5.1)
**23.3 Consent of Skadden Arps (included in Exhibit 5.2)
*24.1 Power of Attorney (included on signature page of the
Registration Statement)
*25.1 Statement of Eligibility on Form T-1 of The Bank of New
York, as the Trustee under the indenture relating to the
9 1/4% Notes
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Letter of Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees
*99.4 Form of Letter to Clients
*99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
*99.6 Form of Exchange Agent Agreement
</TABLE>
------------------------
* Filed herewith
** To be filed by amendment
