<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1995
REGISTRATION NO. 33-58919
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
COLUMBIA/HCA HEALTHCARE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 8062 75-2497104
(PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
(STATE OR OTHER CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
JURISDICTION OF
INCORPORATION OR
ORGANIZATION)
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
(615) 327-9551
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEPHEN T. BRAUN, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
COLUMBIA/HCA HEALTHCARE CORPORATION
201 WEST MAIN STREET
LOUISVILLE, KENTUCKY 40202
(502) 572-2000
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
----------------
Copies to:
Allan G. Sperling, Esq. Ronald J. Frappier, Esq.
Cleary, Gottlieb, Steen Jenkens & Gilchrist
& Hamilton A Professional Corporation
One Liberty Plaza 1445 Ross Avenue
New York, New York 10006 Suite 3200
(212) 225-2000 Dallas, Texas 75202
(214) 855-4500
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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. [_]
----------------
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(1) FEE(2)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes due June 15,
2005.................. $500,000,000 100% $500,000,000 $172,414
- ------------------------------------------------------------------------------------------
Notes due June 15,
2000.................. $200,000,000 100% $200,000,000 $ 68,966
- ------------------------------------------------------------------------------------------
Notes due June 15,
2025.................. $300,000,000 100% $300,000,000 $103,448
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(f)(1) and (3) under the Securities Act of 1933, as
amended, each amount in this column is the market value of the maximum
amount of notes or debentures to be received by the Registrant from
tendering holders in exchange for the specified issue of Notes, less the
estimated amount of cash to be paid by the Registrant to tendering holders,
pursuant to the exchange offers described herein.
(2) The registration fee has been computed pursuant to Rule 457(f) under the
Securities Act of 1933, as amended.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS AND CONSENT SOLICITATION SUPPLEMENT DATED JUNE 15, 1995
(To Prospectus and Consent Solicitation Dated May 25, 1995)
$1,000,000,000
COLUMBIA/HCA HEALTHCARE CORPORATION
OFFER TO EXCHANGE
$500,000,000 NOTES OF COLUMBIA/HCA HEALTHCARE CORPORATION DUE JUNE 15, 2005
FOR ANY AND ALL
10 3/4% SUBORDINATED NOTES OF HEALTHTRUST, INC.--THE HOSPITAL COMPANY DUE 2002
AND
$200,000,000 NOTES OF COLUMBIA/HCA HEALTHCARE CORPORATION DUE JUNE 15, 2000
FOR ANY AND ALL
10 1/4% SUBORDINATED NOTES OF HEALTHTRUST, INC.--THE HOSPITAL COMPANY DUE 2004
AND
$300,000,000 NOTES OF COLUMBIA/HCA HEALTHCARE CORPORATION DUE JUNE 15, 2025
FOR ANY AND ALL
8 3/4% SUBORDINATED DEBENTURES OF HEALTHTRUST, INC.--THE HOSPITAL COMPANY DUE
2005
AND
CONSENT SOLICITATION
Reference is made to the Prospectus and Consent Solicitation dated May 25,
1995 (together, the "Prospectus") of Columbia/HCA Healthcare Corporation (the
"Company"). Capitalized terms used but not defined herein have the meanings
assigned to such terms in the Prospectus.
The Company has amended the terms of its Exchange Offer for any and all 10
3/4% Subordinated Notes of Healthtrust, Inc.--The Hospital Company
("Healthtrust") due 2002 (the "Old 10 3/4% Notes") by increasing the Fixed
Spread (as such term is defined on page 26 of the Prospectus) that will be
used to determine the per annum interest rate on the $500,000,000 of the
Company's Notes due June 15, 2005 (the "New 2005 Notes") that are being
offered in exchange for the Old 10 3/4% Notes. Such Fixed Spread has been
increased from 0.75% to 0.80%. As a result of this increase, the per annum
interest rate on the New 2005 Notes will equal the sum of (i) the yield on the
6 1/2% U.S. Treasury Note due May 15, 2005, as of the Pricing Time, and (ii)
0.80%, and will be 0.05% higher than such rate would have been if the Exchange
Offer for the Old 10 3/4% Notes were not so amended.
In connection with this amendment of its Exchange Offer for the Old 10 3/4%
Notes, the Company also has (i) extended the term of such offer so that it
will expire on Wednesday, June 28, 1995, at 11:59 p.m., New York City time
(unless extended) and (ii) shortened the settlement period with respect to
such offer so that New 2005 Notes will be delivered and cash payments will be
made, in exchange for any Old 10 3/4% Notes accepted by the Company, two
business days following the expiration of such offer. The Company is
shortening the settlement period for its Exchange Offer for the Old 10 3/4%
Notes so that the scheduled Exchange Date will remain June 30, 1995.
The Company's Exchange Offers for any and all 10 1/4% Subordinated Notes of
Healthtrust due 2004 and for any and all 8 3/4% Subordinated Debentures of
Healthtrust due 2005 remain unchanged. As set forth in the Prospectus, such
offers will expire on Friday, June 23, 1995, at 11:59 p.m., New York City time
(unless extended) and the scheduled Exchange Date for such offers is June 30,
1995.
<PAGE>
What follows are a series of tables that illustrate application of the
formulas to be used to determine Reference Total Prices for the Old Securities
and interest rates on the New Securities. The following tables are similar to
the tables on pages 26 and 27 of the Prospectus; however, the tables below (i)
reflect the change made to the Fixed Spread to be used to determine the per
annum interest rate on the New 2005 Notes and (ii) where applicable reflect
Benchmark Treasury Yields as of 4:00 p.m., New York City time, on June 13,
1995. Set forth in Schedule A to the Prospectus is the methodology used to
determine the Reference Total Prices in the following tables. A revised
Schedule B to the Prospectus is included herewith demonstrating application of
the methodology set forth in Schedule A of the Prospectus assuming that
Benchmark Treasury Yields as of the Pricing Time are the same as they were as
of 4:00 p.m., New York City time, on June 13, 1995. The tables set forth below
and the revised Schedule B included herewith supersede the examples provided
on the front cover, pages 26 and 27 and Schedule B of the Prospectus.
THE INFORMATION SET FORTH IN THE FOLLOWING TABLES IS FOR ILLUSTRATIVE
PURPOSES ONLY AND NO REPRESENTATION IS INTENDED WITH RESPECT TO THE ACTUAL
CONSIDERATION THAT MAY BE PAID PURSUANT TO THE EXCHANGE OFFERS. THE AMOUNT OF
CASH PAID AND THE INTEREST RATES ON THE NEW SECURITIES DELIVERED PURSUANT TO
THE EXCHANGE OFFERS MAY BE GREATER OR LESS THAN THAT APPEARING IN THE
FOLLOWING TABLES DEPENDING ON THE ACTUAL BENCHMARK TREASURY YIELDS AS OF THE
PRICING TIME.
For each issue of Old Securities, the following table sets forth the
Benchmark Treasury Yield as of 4:00 p.m., New York City time, on June 13, 1995
and the applicable fixed spread. The table also sets forth for each issue of
Old Securities the Reference Yield, the Reference Total Price and the amount
of cash consideration (in addition to the $1,000 principal amount of the
corresponding issue of New Securities) that would be received in exchange for
each $1,000 principal amount of such Old Securities accepted by the Company,
assuming (i) that the Benchmark Treasury Yields as of the Pricing Time are the
same as they were as of 4:00 p.m., New York City time, on June 13, 1995 and
(ii) an Exchange Date of June 30, 1995.
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
BENCHMARK TREASURY
YIELD FIXED REFERENCE CASH
ISSUE AS OF 6/13/95 SPREAD REFERENCE YIELD TOTAL PRICE CONSIDERATION
----- ------------------ ------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Old 10 3/4% Notes....... 5.63% 0.15% 5.78% $1,138.89 $138.89
Old 10 1/4% Notes....... 5.80% 0.25% 6.05% $1,192.25 $192.25
Old 8 3/4% Debentures... 5.90% 0.30% 6.20% $1,146.39 $146.39
</TABLE>
For each issue of Old Securities, the following table sets forth the
Reference Yield, the Reference Total Price and the amount of cash
consideration (in addition to $1,000 principal amount of the corresponding
issue of New Securities) that would be received in exchange for each $1,000
principal amount of such Old Securities accepted by the Company, assuming (i)
that the Benchmark Treasury Yields as of the Pricing Time are equal to certain
hypothetical Benchmark Treasury Yields and (ii) an Exchange Date of June 30,
1995.
2
<PAGE>
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
HYPOTHETICAL BENCHMARK FIXED REFERENCE CASH
ISSUE TREASURY YIELD SPREAD REFERENCE YIELD TOTAL PRICE CONSIDERATION
----- ---------------------- ------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Old 10 3/4% Notes....... 5.13% 0.15% 5.28% $1,148.35 $148.35
5.38 0.15 5.53 1,143.61 143.61
5.63 0.15 5.78 1,138.89 138.89
5.88 0.15 6.03 1,134.20 134.20
6.13 0.15 6.28 1,129.54 129.54
Old 10 1/4% Notes....... 5.30% 0.25% 5.55% $1,211.15 $211.15
5.55 0.25 5.80 1,201.66 201.66
5.80 0.25 6.05 1,192.25 192.25
6.05 0.25 6.30 1,182.94 182.94
6.30 0.25 6.55 1,173.73 173.73
Old 8 3/4% Debentures... 5.40% 0.30% 5.70% $1,172.23 $172.23
5.65 0.30 5.95 1,159.22 159.22
5.90 0.30 6.20 1,146.39 146.39
6.15 0.30 6.45 1,133.75 133.75
6.40 0.30 6.70 1,121.28 121.28
</TABLE>
For each issue of New Securities, the following table sets forth the
Benchmark Treasury Yield as of 4:00 p.m., New York City time, on June 13, 1995
and the applicable fixed spread. The table also sets forth what the per annum
interest rate on each issue of New Securities would be, assuming that the
Benchmark Treasury Yields as of the Pricing Time are the same as they were as
of 4:00 p.m., New York City time, on June 13, 1995.
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
BENCHMARK TREASURY YIELD
ISSUE AS OF 6/13/95 FIXED SPREAD INTEREST RATE
----- ------------------------ ------------ -------------
<S> <C> <C> <C>
New 2005 Notes............. 6.12% 0.80% 6.92%
New 2000 Notes............. 5.86% 0.52% 6.38%
New 2025 Notes............. 6.60% 1.10% 7.70%
</TABLE>
For each issue of New Securities, the following table sets forth what the
per annum interest rate on such issue of New Securities would be, assuming
that the Benchmark Treasury Yields as of the Pricing Time are equal to certain
hypothetical Benchmark Treasury Yields.
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
HYPOTHETICAL BENCHMARK
ISSUE TREASURY YIELD FIXED SPREAD INTEREST RATE
----- ---------------------- ------------ -------------
<S> <C> <C> <C>
New 2005 Notes............... 5.62% 0.80% 6.42%
5.87 0.80 6.67
6.12 0.80 6.92
6.37 0.80 7.17
6.62 0.80 7.42
New 2000 Notes............... 5.36% 0.52% 5.88%
5.61 0.52 6.13
5.86 0.52 6.38
6.11 0.52 6.63
6.36 0.52 6.88
New 2025 Notes............... 6.10% 1.10% 7.20%
6.35 1.10 7.45
6.60 1.10 7.70
6.85 1.10 7.95
7.10 1.10 8.20
</TABLE>
3
<PAGE>
REVISED SCHEDULE B
Example Determinations of Reference Total Prices
Demonstrating Application of
The Methodology Specified in Schedule A
THE REFERENCE TOTAL PRICES SET FORTH ON THIS SCHEDULE B ARE FOR ILLUSTRATIVE
PURPOSES ONLY AND NO REPRESENTATION IS INTENDED WITH RESPECT TO THE ACTUAL
CONSIDERATION THAT MAY BE PAID PURSUANT TO THE EXCHANGE OFFERS. THE ACTUAL
REFERENCE TOTAL PRICES MAY BE GREATER OR LESS THAN THOSE DEPICTED BELOW
DEPENDING ON THE ACTUAL BENCHMARK TREASURY YIELDS AS OF THE PRICING TIME.
<TABLE>
<CAPTION>
OLD 10 OLD 10
3/4% 1/4% OLD 8 3/4%
NOTES NOTES DEBENTURES
--------- --------- ----------
<S> <C> <C> <C>
Terms of Old Securities:
Interest Rate 10.75% 10.25% 8.75%
Maturity Date 5/1/02 4/15/04 3/15/05
Redemption Price(/1/) $1,040.00 $1,038.44 $1,000.00
Redemption Date(/1/) 5/1/97 4/15/99 3/15/01
Benchmark Treasury Security:
Interest Rate 6 1/2% 7% 7 3/4%
Maturity Date 4/30/97 4/15/99 2/15/01
Assumed Benchmark
Treasury Yield(/2/) 5.63% 5.80% 5.90%
Fixed Spread 0.15% 0.25% 0.30%
Assumed Reference Yield(/3/) 5.78% 6.05% 6.20%
Assumed Exchange Date(/4/) 6/30/95 6/30/95 6/30/95
Computation of Reference Total Price
for these Examples:
YLD 0.0578 0.0605 0.0620
CPN 0.1075 0.1025 0.0875
N 4 8 12
S 59 75 105
RED 1,040.00 1,038.44 1,000.00
Reference Total Price
for this Example(/5/) 1,138.89 1,192.25 1,146.39
</TABLE>
- --------
(1) As defined in Schedule A. These are used only for the purpose of computing
the Reference Total Price.
(2) The assumed Benchmark Treasury Yields for these examples are the yields on
the Benchmark Treasury Securities as of 4:00 p.m., New York City time, on
June 13, 1995.
(3) The assumed Reference Yields for these examples are the Reference Yields
(which shall equal the applicable Benchmark Treasury Yield plus the
applicable fixed spread) based on the assumed Benchmark Treasury Yields
for these examples.
(4) The assumed Exchange Date for these examples is the scheduled Exchange
Date for each Exchange Offer and will be the Exchange Date unless such
Exchange Offer is extended.
(5) These are the Reference Total Prices for these examples only and assume
Benchmark Treasury Yields and an Exchange Date as indicated.
<PAGE>
PROSPECTUS AND CONSENT SOLICITATION
$1,000,000,000
COLUMBIA/HCA HEALTHCARE CORPORATION
OFFER TO EXCHANGE
$500,000,000 NOTES OF COLUMBIA/HCA HEALTHCARE CORPORATION DUE JUNE 15, 2005
FOR ANY AND ALL
10 3/4% SUBORDINATED NOTES OF HEALTHTRUST, INC.--THE HOSPITAL COMPANY DUE 2002
AND
$200,000,000 NOTES OF COLUMBIA/HCA HEALTHCARE CORPORATION DUE JUNE 15, 2000
FOR ANY AND ALL
10 1/4% SUBORDINATED NOTES OF HEALTHTRUST, INC.--THE HOSPITAL COMPANY DUE 2004
AND
$300,000,000 NOTES OF COLUMBIA/HCA HEALTHCARE CORPORATION DUE JUNE 15, 2025
FOR ANY AND ALL
8 3/4% SUBORDINATED DEBENTURES OF HEALTHTRUST, INC.--THE HOSPITAL COMPANY DUE
2005
AND
CONSENT SOLICITATION
Columbia/HCA Healthcare Corporation (the "Company") hereby offers, upon the
terms and subject to the conditions set forth in this Prospectus and Consent
Solicitation (together, the "Prospectus") and the accompanying Letters of
Transmittal and Consent (each a "Letter of Transmittal"), to exchange (i)
$1,000 principal amount of the Company's Notes due June 15, 2005 (the "New 2005
Notes") plus an amount of cash based on a fixed spread pricing formula
described herein, for each $1,000 principal amount of 10 3/4% Subordinated
Notes of Healthtrust, Inc.--The Hospital Company ("Healthtrust") due 2002 (the
"Old 10 3/4% Notes") properly tendered, (ii) $1,000 principal amount of the
Company's Notes due June 15, 2000 (the "New 2000 Notes") plus an amount of cash
based on a fixed spread pricing formula described herein, for each $1,000
principal amount of 10 1/4% Subordinated Notes of Healthtrust due 2004 (the
"Old 10 1/4% Notes") properly tendered and (iii) $1,000 principal amount of the
Company's Notes due June 15, 2025 (the "New 2025 Notes") plus an amount of cash
based on a fixed spread pricing formula described herein, for each $1,000
principal amount of 8 3/4% Subordinated Debentures of Healthtrust due 2005 (the
"Old 8 3/4% Debentures") properly tendered (each such offer being referred to
herein individually as an "Exchange Offer" and collectively as the "Exchange
Offers"). The Old 10 3/4% Notes, Old 10 1/4% Notes and Old 8 3/4% Debentures
are referred to collectively herein as the "Old Securities"; the New 2005
Notes, New 2000 Notes and New 2025 Notes are referred to collectively herein as
the "New Securities." The New Securities, unlike the Old Securities which are
subordinated to senior indebtedness of the Company and Healthtrust, will be
unsubordinated senior obligations of the Company and will rank pari passu with
all existing and future unsecured and unsubordinated senior indebtedness of the
Company.
cover page continued
EACH EXCHANGE OFFER WILL EXPIRE ON FRIDAY, JUNE 23, 1995,
UNLESS EXTENDED (THE "EXPIRATION DATE"), AT 11:59 P.M., NEW
YORK CITY TIME. OLD SECURITIES TENDERED FOR EXCHANGE MAY BE
WITHDRAWN AT ANY TIME PRIOR TO 11:59 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED IN EVALUATING THE EXCHANGE OFFERS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS AND CONSENT SOLICITATION. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
For assistance in connection with the Exchange Offers, please contact the
appropriate party listed on the back cover page hereof.
The Dealer Manager for the Exchange Offers is:
- ---------------------------------
SALOMON BROTHERS INC
----------------------------------------------------------------------
The date of this Prospectus is May 25, 1995.
<PAGE>
cover page continued
For each issue of Old Securities, a price that includes accrued but unpaid
interest to the Exchange Date (a "Reference Total Price") will be determined
using a specified fixed spread pricing formula for such issue. Such Reference
Total Price will be based on a yield to a specified redemption date for such
issue, equal to the yield on a specified U.S. Treasury Security for such issue
(a "Benchmark Treasury Security") plus a specified number of basis points for
such issue. The redemption price for such issue on the specified redemption
date will be used in determining such Reference Total Price. For each issue of
New Securities, an interest rate will be determined, equal to the yield on a
specified Benchmark Treasury Security for such issue plus a specified number
of basis points for such issue. A tendering holder of a particular issue of
Old Securities will receive, for each $1,000 principal amount of such Old
Securities tendered and accepted by the Company, $1,000 principal amount of
the corresponding issue of New Securities and an amount of cash equal to the
amount by which the Reference Total Price for the tendered issue of Old
Securities exceeds $1,000. Each price and interest rate determination will be
based on the yield on the relevant Benchmark Treasury Security as of 4:00
p.m., New York City time, on the second business day prior to the Expiration
Date (the "Pricing Time"). New Securities will be delivered and cash payments
will be made by check (in New York next day funds) on the fifth business day
following the Expiration Date (the "Exchange Date").
Assuming that as of the Pricing Time the yields on the Benchmark Treasury
Securities are the same as they were as of 4:00 p.m., New York City time, on
May 22, 1995, and assuming an Exchange Date of June 30, 1995 (which will be
the Exchange Date for each Exchange Offer unless such Exchange Offer is
extended), the total consideration that tendering holders would receive in
exchange for $1,000 principal amount of each issue of Old Securities accepted
by the Company would be as follows: (i) Old 10 3/4% Notes: $128.23 in cash and
$1,000 principal amount of New 2005 Notes with an interest rate of 7.38%, per
annum, (ii) Old 10 1/4% Notes: $170.80 in cash and $1,000 principal amount of
New 2000 Notes with an interest rate of 6.98%, per annum, and (iii) Old 8 3/4%
Debentures: $117.32 in cash and $1,000 principal amount of New 2025 Notes with
an interest rate of 8.08%, per annum. THE EXAMPLES PROVIDED IN THIS PARAGRAPH
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND NO REPRESENTATION IS INTENDED WITH
RESPECT TO THE ACTUAL CONSIDERATION THAT MAY BE PAID PURSUANT TO THE EXCHANGE
OFFERS. THE AMOUNT OF CASH PAID AND THE INTEREST RATES ON THE NEW SECURITIES
DELIVERED PURSUANT TO THE EXCHANGE OFFERS MAY BE GREATER OR LESS THAN THAT
DEPICTED ABOVE DEPENDING ON THE ACTUAL YIELDS ON THE RELEVANT BENCHMARK
TREASURY SECURITIES AS OF THE PRICING TIME.
The Company does not intend to list the New Securities on any securities
exchange. The Dealer Manager currently plans to make a market in the New
Securities. However, there can be no assurance that the Dealer Manager will
make such a market or that any active market in the New Securities will
develop or be maintained.
Concurrently with the Exchange Offers, the Company is soliciting (the
"Solicitation") consents ("Consents") as follows: (i) from the holders of the
Old 10 3/4% Notes, Consents to certain amendments to the indenture, dated as
of May 1, 1992 (as heretofore amended, the "1992 Indenture"), between
Healthtrust and The First National Bank of Boston, as trustee (the "Old
Trustee"), pursuant to which the Old 10 3/4% Notes were issued, (ii) from the
holders of the Old 10 1/4% Notes, Consents to certain amendments, with respect
to the Old 10 1/4% Notes, to the indenture, dated as of March 30, 1993 (as
heretofore amended, the "1993 Indenture"), between Healthtrust and the Old
Trustee, pursuant to which the Old 10 1/4% Notes were issued and (iii) from
the holders of the Old 8 3/4% Debentures, Consents to certain amendments, with
respect to the Old 8 3/4% Debentures, to the 1993 Indenture, pursuant to which
the Old 8 3/4% Debentures were issued. Holders of Old Securities who tender in
an Exchange Offer will be deemed, as a condition to a valid tender, to have
given their Consent to the relevant proposed amendments. The Company will make
no separate payment for Consents delivered in the Solicitation. Consents from
holders of a majority in principal amount outstanding of an issue of Old
Securities (the "Requisite Consents") must be received in order to amend the
relevant indenture in the manner contemplated by the Solicitation. Receipt of
the Requisite Consents with respect to all three issues of Old Securities is a
condition to consummation of each Exchange Offer by the Company.
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER MANAGER.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the New Securities
offered hereby (together with all amendments thereto, the "Registration
Statement"). This Prospectus does not contain all of the information set forth
in the Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Company, Healthtrust and the New
Securities, reference is made to the Registration Statement and the exhibits
and schedules thereto. Statements contained in this Prospectus as to the
contents of any document filed with, or incorporated by reference in, the
Registration Statement are not necessarily complete, and in each instance
reference is made to the copy of such document filed with, or incorporated by
reference in, the Registration Statement, and each such statement is qualified
in all respects by such reference.
The Company and Healthtrust are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, file reports, proxy statements and other information
with the Commission.
The Registration Statement, and exhibits thereto, and the proxy statements
and reports of the Company and Healthtrust can be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such materials can be obtained by mail from
the public reference section of the Commission at its office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Certain securities of the Company and Healthtrust currently are listed on the
New York Stock Exchange and reports, proxy statements and other information
concerning the Company and Healthtrust can be inspected at the office of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed or to be filed by the Company with
the Commission pursuant to the Exchange Act are incorporated herein by
reference and shall be deemed a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994;
(b) The Company's Quarterly Report on Form 10-Q for the interim period
ended March 31, 1995;
(c) The Company's Current Reports on Form 8-K dated February 21, 1995 and
April 24, 1995; and
(d) All other reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the
securities offered hereby.
The following documents heretofore filed or to be filed by Healthtrust with
the Commission pursuant to the Exchange Act are incorporated herein by
reference and shall be deemed a part hereof:
(a) Healthtrust's Annual Report on Form 10-K for the fiscal year ended
August 31, 1994;
i
<PAGE>
(b) Healthtrust's Quarterly Reports on Form 10-Q for the interim periods
ended November 30, 1994 and February 28, 1995;
(c) Healthtrust's Current Report on Form 8-K dated October 4, 1994; and
(d) All other reports filed by Healthtrust pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the
securities offered hereby.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document that also is incorporated
or deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Subject to the foregoing, all information appearing in this Prospectus is
qualified in its entirety by the information appearing in the documents
incorporated herein by reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WITH RESPECT TO THE
COMPANY AND HEALTHTRUST THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
SUCH DOCUMENTS ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST TO STEPHEN T. BRAUN,
ESQ., SENIOR VICE PRESIDENT AND GENERAL COUNSEL, COLUMBIA/HCA HEALTHCARE
CORPORATION, 201 WEST MAIN STREET, LOUISVILLE, KENTUCKY 40202 OR BY TELEPHONE
AT (502) 572-2000. TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY SUCH
REQUEST SHOULD BE MADE BY JUNE 16, 1995.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... i
PROSPECTUS SUMMARY........................................................ 1
SUPPLEMENTAL SELECTED FINANCIAL DATA--THE COMPANY......................... 14
SELECTED FINANCIAL DATA--THE COMPANY...................................... 16
SELECTED FINANCIAL DATA--HEALTHTRUST...................................... 18
INVESTMENT CONSIDERATIONS................................................. 20
THE COMPANY............................................................... 22
HEALTHTRUST............................................................... 22
RECENT DEVELOPMENTS....................................................... 23
THE EXCHANGE OFFERS....................................................... 24
Terms of the Exchange Offers............................................ 24
The New Securities...................................................... 28
The Consent Solicitation................................................ 28
Calculations; Information............................................... 29
Dealer Manager Market Activity.......................................... 30
Expiration Date; Extensions; Termination; Amendments.................... 30
Effect of Tender........................................................ 30
Dissenters' Rights...................................................... 31
Acceptance of Old Securities Tendered for Exchange; Delivery of New
Securities............................................................. 31
Procedures for Tendering Old Securities and Giving Consents............. 31
Proper Execution and Delivery of Letters of Transmittal................. 33
Conditions to the Exchange Offers....................................... 34
Withdrawal and Revocation Rights........................................ 35
Future Offers........................................................... 36
Transfer Taxes.......................................................... 36
Exchange Agent.......................................................... 37
Information Agent....................................................... 37
Dealer Manager.......................................................... 37
ACCOUNTING TREATMENT OF THE EXCHANGE OFFERS............................... 37
MARKET AND TRADING INFORMATION............................................ 38
THE CONSENT SOLICITATION.................................................. 39
THE PROPOSED AMENDMENTS................................................... 41
DESCRIPTION OF NEW SECURITIES............................................. 50
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................................. 58
LEGAL MATTERS............................................................. 60
EXPERTS................................................................... 60
</TABLE>
iii
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere, or
incorporated by reference, in this Prospectus. See "Investment Considerations"
for a discussion of certain factors that should be considered in connection
with the Exchange Offers and Solicitation.
THE COMPANY
Columbia/HCA Healthcare Corporation (the "Company") is one of the largest
health care services companies in the United States. At April 24, 1995, the
Company operated 292 general, acute care hospitals and 28 psychiatric hospitals
in 36 states and two foreign countries. In addition, as part of its
comprehensive health care networks, the Company operates facilities that
provide a broad range of outpatient and ancillary services. At April 24, 1995,
the Company operated more than 125 outpatient centers.
The Company was incorporated in Nevada in January 1990 and reincorporated in
Delaware in September 1993. The Company's principal executive offices are
located at One Park Plaza, Nashville, Tennessee 37203, and its telephone number
at such address is (615) 327-9551.
HEALTHTRUST
Healthtrust, Inc.--The Hospital Company ("Healthtrust") is one of the largest
providers of health care services in the United States, delivering a full range
of inpatient, outpatient and other health care services principally through its
affiliated hospitals. At March 31, 1995, Healthtrust operated 117 acute care
hospitals, all of which were owned or leased by Healthtrust through its
subsidiaries or joint venture arrangements. Healthtrust was also an investor,
through joint ventures, in four other acute care hospitals.
Healthtrust was incorporated in Delaware in April 1985. Healthtrust's
principal executive offices are located at 4525 Harding Road, Nashville,
Tennessee 37205, and its telephone number at such address is (615) 383-4444.
THE HEALTHTRUST ACQUISITION
On April 24, 1995, a wholly-owned subsidiary of the Company merged with and
into Healthtrust (as used herein the term "Healthtrust" refers to either the
pre-merger Healthtrust or the post-merger Healthtrust as the context requires).
Each stockholder of Healthtrust received for each share of Healthtrust common
stock owned as of the effective time of the merger 0.88 of a share of the
Company's common stock. The Company has become a co-obligor with Healthtrust
with respect to the Old Securities. The Old Securities are subordinated to
senior indebtedness of Healthtrust and the Company.
THE EXCHANGE OFFERS AND SOLICITATION
THE EXCHANGE OFFERS: Pursuant to the Exchange Offers, the Company is
offering to exchange, for any and all of certain
outstanding debt securities of Healthtrust, an
equal principal amount of certain newly issued debt
securities of the Company plus an amount of cash
based on the fixed spread pricing formulas
described herein.
1
<PAGE>
Specifically, subject to the terms of the Exchange
Offers, the Company is offering to exchange:
(i) $1,000 principal amount of the Company's Notes
due June 15, 2005 (the "New 2005 Notes") plus
an amount of cash based on the relevant fixed
spread pricing formula, for each $1,000
principal amount of Healthtrust's 10 3/4%
Subordinated Notes due 2002 (the "Old 10 3/4%
Notes"),
(ii) $1,000 principal amount of the Company's Notes
due June 15, 2000 (the "New 2000 Notes") plus
an amount of cash based on the relevant fixed
spread pricing formula, for each $1,000
principal amount of Healthtrust's 10 1/4%
Subordinated Notes due 2004 (the "Old 10 1/4%
Notes"), and
(iii) $1,000 principal amount of the Company's
Notes due June 15, 2025 (the "New 2025
Notes") plus an amount of cash based on the
relevant fixed spread pricing formula, for
each $1,000 principal amount of Healthtrust's
8 3/4% Subordinated Debentures due 2005 (the
"Old 8 3/4% Debentures").
The Old 10 3/4% Notes, Old 10 1/4% Notes and Old 8
3/4% Debentures are referred to collectively herein
as the "Old Securities"; the New 2005 Notes, New
2000 Notes and New 2025 Notes are referred to
collectively herein as the "New Securities."
For each issue of Old Securities, a price that
includes accrued but unpaid interest to the
Exchange Date (a "Reference Total Price") will be
determined using the specified fixed spread pricing
formula for such issue. Such Reference Total Price
will be based on a yield (a "Reference Yield") to a
specified redemption date for such issue equal to
(i) the yield (the "Benchmark Treasury Yield") on a
specified U.S. Treasury Security for such issue (a
"Benchmark Treasury Security"), plus (ii) a
specified number of basis points for such issue.
The redemption price for such issue on the
specified redemption date will be used in
determining such Reference Total Price. For each
issue of New Securities, a per annum interest rate
will be determined, equal to (i) the yield on a
specified Benchmark Treasury Security for such
issue, plus (ii) a specified number of basis points
for such issue. For each $1,000 principal amount of
Old Securities accepted by the Company, a tendering
holder will receive $1,000 principal amount of the
corresponding issue of New Securities and an amount
in cash equal to the amount by which the Reference
Total Price for the tendered Old Securities exceeds
$1,000. Reference Total Prices and interest rates
on the New Securities will be determined based on
the Benchmark Treasury Yields as of 4:00 p.m., New
York City time, on the second business day prior to
the Expiration Date (the "Pricing Time").
Because the Reference Total Price is based on a
fixed spread pricing formula linked to a Benchmark
Treasury Yield, the amount of cash that would be
received by a tendering holder in
2
<PAGE>
the event an Exchange Offer is consummated will be
affected by changes in the applicable Benchmark
Treasury Yield during the term of the Exchange
Offer. Similarly, because the interest rate on each
issue of New Securities is linked to a Benchmark
Treasury Yield, the actual interest rate that would
be realized by a tendering holder will be affected
by changes in the applicable Benchmark Treasury
Yield during the term of the Exchange Offer. See
"The Exchange Offers--Terms of the Exchange
Offers."
The New Securities will be unsecured and
unsubordinated senior obligations of the Company
and will rank pari passu with all existing and
future unsecured and unsubordinated senior
indebtedness of the Company. The covenants that
will apply to the Company and its subsidiaries
pursuant to the New Securities will be consistent
with those that currently apply to the Company and
its subsidiaries pursuant to the Company's existing
debt securities. See "Description of New
Securities."
CONSIDERATION FOR OLD 10
3/4% NOTES: In exchange for each $1,000 principal amount of Old
10 3/4% Notes accepted by the Company, a tendering
holder will receive $1,000 principal amount of New
2005 Notes and an amount of cash equal to the
amount by which the Reference Total Price for the
Old 10 3/4% Notes exceeds $1,000. The Reference
Total Price for the Old 10 3/4% Notes will be based
on a Reference Yield to the first optional
redemption date for such notes (May 1, 1997) equal
to the sum of (i) the yield on the 6 1/2% U.S.
Treasury Note due April 30, 1997, as of the Pricing
Time, and (ii) 0.15%. The redemption price for the
Old 10 3/4% Notes on May 1, 1997 ($1,040 per $1,000
principal amount) will be used in determining such
Reference Total Price.
The per annum interest rate on the New 2005 Notes
will equal the sum of (i) the yield on the 6 1/2%
U.S. Treasury Note due May 15, 2005, as of the
Pricing Time, and (ii) 0.75%. See "The Exchange
Offers--Terms of the Exchange Offers--Exchange
Offer for Old 10 3/4% Notes."
CONSIDERATION FOR OLD 10
1/4% NOTES: In exchange for each $1,000 principal amount of Old
10 1/4% Notes accepted by the Company, a tendering
holder will receive $1,000 principal amount of New
2000 Notes and an amount of cash equal to the
amount by which the Reference Total Price for the
Old 10 1/4% Notes exceeds $1,000. The Reference
Total Price for the Old 10 1/4% Notes will be based
on a Reference Yield to the first optional
redemption date for such notes (April 15, 1999)
equal to the sum of (i) the yield on the 7% U.S.
Treasury Note due April 15, 1999, as of the Pricing
Time, and (ii) 0.25%. The redemption price for the
Old 10 1/4% Notes on April 15, 1999 ($1,038.44 per
$1,000 principal amount) will be used in
determining such Reference Total Price.
3
<PAGE>
The per annum interest rate on the New 2000 Notes
will equal the sum of (i) the yield on the 6 1/4%
U.S. Treasury Note due May 31, 2000, as of the
Pricing Time, and (ii) 0.52%. See "The Exchange
Offers--Terms of the Exchange Offers--Exchange
Offer for Old 10 1/4% Notes."
CONSIDERATION FOR OLD 8
3/4% DEBENTURES: In exchange for each $1,000 principal amount of Old
8 3/4% Debentures accepted by the Company, a
tendering holder will receive $1,000 principal
amount of New 2025 Notes and an amount of cash
equal to the amount by which the Reference Total
Price for the Old 8 3/4% Debentures exceeds $1,000.
The Reference Total Price for the Old 8 3/4%
Debentures will be based on a Reference Yield to
the first date at which such debentures may be
redeemed at par (March 15, 2001) equal to the sum
of (i) the yield on the 7 3/4% U.S. Treasury Note
due February 15, 2001, as of the Pricing Time, and
(ii) 0.30%. The redemption price for the Old 8 3/4%
Debentures on March 15, 2001 ($1,000 per $1,000
principal amount) will be used in determining such
Reference Total Price.
The per annum interest rate on the New 2025 Notes
will equal the sum of (i) the yield on the 7 1/2%
U.S. Treasury Note due November 15, 2024, as of the
Pricing Time, and (ii) 1.10%. See "The Exchange
Offers--Terms of the Exchange Offers--Exchange
Offer for Old 8 3/4% Debentures."
CALCULATIONS: The Reference Total Price for each issue of Old
Securities will be determined using the methodology
set forth in Schedule A hereto. An example of the
application of such methodology is provided for
each issue of Old Securities in Schedule B hereto.
The Exchange Date will be used as the settlement
date for all such calculations. Each Benchmark
Treasury Yield will be based on the bid price for
the relevant Benchmark Treasury Security as
displayed on the Garban Limited Quotation Screens
for U.S. Government Securities as of the Pricing
Time. See "The Exchange Offers--Calculations;
Information."
INFORMATION: Any questions concerning the terms of the Exchange
Offers should be directed to the Liability
Management Group at the Dealer Manager at (800)
558-3745 (toll free) or (212) 783-3738 (call
collect). The Dealer Manager intends to publish the
terms of the Exchange Offers, including the final
Reference Total Prices for the Old Securities and
the final interest rates on the New Securities when
available, on MCM "CORPORATEWATCH" Service on
Telerate page 41962 and on Bloomberg under "Company
News."
During the term of the Exchange Offers, current
information regarding Benchmark Treasury Yields,
Reference Yields, Reference Total Prices and
interest rates on the New Securities may be
obtained from the Liability Management Group at the
Dealer Manager at the toll free number listed
above. Questions concerning tender procedures and
requests for additional copies
4
<PAGE>
of this Prospectus should be directed to the
Information Agent. See "The Exchange Offers--
Calculations; Information."
CONSENT SOLICITATION: Concurrently with the Exchange Offers, the Company
is soliciting (the "Solicitation") consents
("Consents") from holders of each issue of Old
Securities to certain amendments to the indenture
governing such issue of Old Securities.
Prior to the announcement of the acquisition of
Healthtrust by the Company, the Old Securities were
rated below investment grade at B1 by Moody's
Investors Service, Inc. ("Moody's") and B by
Standard & Poor's Corporation ("S&P"). Following
the Company's acquisition of Healthtrust, the
Company, whose debt securities as of the date
hereof are rated investment grade at A3 by Moody's
and BBB+ by S&P, became a co-obligor with
Healthtrust (in such capacity, each an "Obligor")
with respect to the Old Securities. As of the date
hereof, each of Moody's and S&P has raised its
rating with respect to the Old Securities to
investment grade at Baa1 by Moody's and BBB by S&P.
Pursuant to the Solicitation, the Company is
proposing parallel amendments (the "Proposed
Amendments") to the indentures under which the Old
Securities were issued in order to make the
covenants and certain other terms in such
indentures consistent with those that currently
apply to the Company and its subsidiaries with
respect to the Company's existing debt securities
and that will apply to the Company and its
subsidiaries with respect to the New Securities.
See "The Consent Solicitation."
The Proposed Amendments contemplated by the
Solicitation would, among other things, eliminate
the covenants in each of the indentures that
restrict the incurrence of Indebtedness and the
making of Restricted Payments (as each such term is
defined in the indentures) by an Obligor and its
subsidiaries and would replace those covenants with
covenants (i) limiting the ability of an Obligor
and certain of its subsidiaries to mortgage or
pledge, or engage in sale and lease-back
transactions with respect to, certain hospital
properties and (ii) restricting the issuance of
preferred stock and the incurrence of indebtedness
by certain subsidiaries of an Obligor. In addition,
the Proposed Amendments would (i) make the
provisions in each indenture that govern
consolidations, mergers and asset sales by an
Obligor less restrictive and (ii) eliminate the
provisions that require that, in the event of a
Change of Control and a Rating Decline (as each
such term is defined in the indentures), the Old
Securities be repurchased at par at the option of
holders.
Consents from holders of a majority in principal
amount outstanding of an issue of Old Securities
(the "Requisite Consents") must be received in
order to adopt the Proposed Amendments to the
relevant indenture with respect to such issue of
Old Securities. The Proposed Amendments will be
adopted with respect to a particular issue of Old
Securities only upon
5
<PAGE>
consummation of the Exchange Offer with respect to
such issue. If the Proposed Amendments are adopted
with respect to a particular issue of Old
Securities, then each non-exchanging holder of such
issue will be bound by the Proposed Amendments even
though such holder did not consent to the Proposed
Amendments. See "The Consent Solicitation,"
"Investment Considerations" and "The Proposed
Amendments."
HOLDERS OF OLD SECURITIES WHO TENDER IN AN EXCHANGE
OFFER WILL BE REQUIRED, AS A CONDITION TO A VALID
TENDER, TO HAVE GIVEN THEIR CONSENT TO THE PROPOSED
AMENDMENTS CONTEMPLATED BY THE SOLICITATION. THE
PROPER COMPLETION, EXECUTION AND DELIVERY OF A
LETTER OF TRANSMITTAL WITH RESPECT TO PARTICULAR
OLD SECURITIES WILL CONSTITUTE THE DELIVERY OF A
CONSENT WITH RESPECT TO SUCH OLD SECURITIES.
WITHDRAWAL OF OLD SECURITIES WILL BE DEEMED A
REVOCATION OF THE CONSENT TO WHICH SUCH OLD
SECURITIES RELATE. CONSENTS WILL BE IRREVOCABLE AS
OF THE EXPIRATION OF THE RELEVANT EXCHANGE OFFER.
CONSENT PAYMENT: The Company will not make a separate payment for
Consents delivered in the Solicitation.
OLD SECURITIES OUTSTANDING: As of the date hereof, there are $500,000,000
aggregate principal amount of Old 10 3/4% Notes
outstanding, $200,000,000 aggregate principal
amount of Old 10 1/4% Notes outstanding and
$300,000,000 aggregate principal amount of Old 8
3/4% Debentures outstanding.
CONDITIONS TO THE
EXCHANGE OFFERS: Consummation of each Exchange Offer is conditioned
upon, among other things, receipt of the Requisite
Consents with respect to all three issues of Old
Securities. The Company may, in its sole
discretion, waive any condition with respect to an
Exchange Offer and accept for exchange any Old
Securities tendered. See "The Exchange Offers--
Conditions to the Exchange Offers."
EXPIRATION AND Each Exchange Offer will expire at 11:59 p.m., New
AMENDMENTS: York City time, on Friday, June 23, 1995 or at any
later time and date to which the Exchange Offers or
any of them may be extended by the Company in
accordance with the procedures described herein.
The date on which an Exchange Offer expires is
referred to herein as the "Expiration Date."
If the consideration offered with respect to any
Exchange Offer is changed, such Exchange Offer will
remain open at least ten business days from the
date public notice of such change is given.
However, in the event the Company has not received
the Requisite Consents with respect to an issue of
Old Securities as of 11:59 p.m., New York City
time, on the Expiration Date, the Company may
extend the relevant Exchange Offer for a period of
less than ten business days, but not less than two
business
6
<PAGE>
days, and redetermine the Reference Total Price
with respect to such issue of Old Securities and
the interest rate on the corresponding issue of New
Securities using the relevant Benchmark Treasury
Yields as of 4:00 p.m., New York City time, on the
second business day prior to such extended
Expiration Date. However, no such extension of less
than ten business days will occur unless the value
of the total consideration (cash plus the value of
the New Securities) to be received by a tendering
holder increases as a result of the redetermination
described above. See "The Exchange Offers--
Expiration Date; Extensions; Termination;
Amendments."
CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS: The exchange of securities pursuant to the Exchange
Offers (the "Exchange") will constitute a
recapitalization for U.S. federal income tax
purposes. As a result, a holder of Old Securities
that tenders in an Exchange Offer generally will
recognize gain, if any, on the Exchange only to the
extent of the cash received by such holder pursuant
to the Exchange or to the extent that the
"principal amount" (as such term is used in Section
354 of the Internal Revenue Code of 1986, as
amended) of New Securities received exceeds the
"principal amount" of Old Securities surrendered.
No loss recognition will be permitted in respect of
the Exchange. See "Certain Federal Income Tax
Considerations."
CERTAIN CONSEQUENCES TO
HOLDERS TENDERING IN THE
EXCHANGE OFFERS:
Holders whose Old Securities are accepted by the
Company in an Exchange Offer will receive New
Securities. Unlike the Old Securities on which both
the Company and Healthtrust are obligors, the
Company will be the only obligor on the New
Securities. Unlike the Old Securities which are
subordinated to senior indebtedness of Healthtrust
and the Company, the New Securities will be
unsubordinated senior obligations of the Company.
The covenants and certain other terms of the New
Securities will be consistent with those that
currently apply to the Company and its subsidiaries
pursuant to the Company's existing debt securities.
Although such covenants and terms will be
substantially less restrictive than those that
currently apply to the Company and its subsidiaries
pursuant to the Old Securities, they will be
consistent with those that will apply pursuant to
an issue of Old Securities if the Proposed
Amendments are adopted with respect to such issue.
The Company does not intend to list the New
Securities on any securities exchange. The Dealer
Manager currently plans to make a market in the New
Securities; however, there can be no assurance that
the Dealer Manager will make such a market or that
any active market in the New Securities will
develop or be maintained. See "Investment
Considerations."
7
<PAGE>
CERTAIN CONSEQUENCES TO
HOLDERS NOT TENDERING IN
THE EXCHANGE OFFERS:
Holders who do not tender in an Exchange Offer will
retain their Old Securities. Unlike the New
Securities which will be unsubordinated senior
obligations of the Company, the Old Securities are
subordinated to senior indebtedness of Healthtrust
and the Company. If one or more of the Exchange
Offers are consummated, New Securities will be
issued (in an amount equal to the principal amount
of the Old Securities exchanged), thereby
increasing the amount of indebtedness of the
Company senior in right of payment to the Old
Securities. If the Proposed Amendments are adopted
with respect to an issue of Old Securities, certain
covenants and other terms of such issue will be
modified or eliminated entirely. The resulting
covenants and terms will be substantially less
restrictive than those currently applicable to the
Old Securities. The Healthtrust Merger (as defined
herein) did not, and the Exchange Offers will not,
constitute a change of control event which would,
under the indentures pursuant to which the Old
Securities were issued, require the Company or
Healthtrust to repurchase such securities.
In the event an Exchange Offer is consummated, the
existing trading market for the subject Old
Securities may become less liquid due to the
reduction in the amount of such Old Securities
outstanding after the Exchange Offer. In addition,
the Company may delist the Old 10 3/4% Notes and
the Old 8 3/4% Debentures, which currently are
listed on the New York Stock Exchange (the "NYSE").
See "Investment Considerations."
TENDER OF OLD SECURITIES
AND DELIVERY OF The GREEN Letter of Transmittal must be used to
CONSENTS: tender Old 10 3/4% Notes. The YELLOW Letter of
Transmittal must be used to tender Old 10 1/4%
Notes. The BLUE Letter of Transmittal must be used
to tender Old 8 3/4% Debentures.
To tender Old Securities, a holder must deliver his
or her Old Securities together with a properly
completed and executed Letter of Transmittal to the
Exchange Agent. If Old Securities are held by a
custodian or other intermediary, to tender such Old
Securities the beneficial owner must instruct his
or her custodian or other intermediary to tender
such Old Securities on his or her behalf. All
tenders must be made by 11:59 p.m., New York City
time, on the Expiration Date. See "The Exchange
Offers--Procedures for Tendering Old Securities and
Giving Consents."
THE PROPER COMPLETION, EXECUTION AND DELIVERY OF A
LETTER OF TRANSMITTAL WITH RESPECT TO PARTICULAR
OLD SECURITIES WILL CONSTITUTE THE GIVING OF A
CONSENT TO THE PROPOSED AMENDMENTS WITH RESPECT TO
SUCH OLD SECURITIES.
New Securities will be delivered only in book-entry
form through The Depository Trust Company ("DTC").
Accordingly, holders who anticipate tendering and
whose Old Securities are not held custodially
through DTC are urged to contact promptly a bank,
broker or other intermediary that has the
capability to hold
8
<PAGE>
securities custodially through DTC, to arrange for
receipt of any New Securities to be delivered
pursuant to the Exchange Offers and to obtain the
information necessary to provide the required DTC
participant and account information in the relevant
Letter of Transmittal. See "The Exchange Offers--
Proper Execution and Delivery of Letters of
Transmittal."
GUARANTEED DELIVERY: No guaranteed delivery procedures are available
with respect to the Exchange Offers.
ACCEPTANCE OF OLD
SECURITIES AND DELIVERY
OF NEW SECURITIES:
Subject to satisfaction or waiver of the conditions
to an Exchange Offer, the Company will exchange
(and thereby purchase) any and all Old Securities
that are properly tendered in such Exchange Offer
and not withdrawn. New Securities will be delivered
only in book-entry form through DTC. New Securities
will be delivered and cash payments will be made by
check (in New York next day funds) on the fifth
business day following the Expiration Date (the
"Exchange Date"). See "The Exchange Offers--
Acceptance of Old Securities Tendered for Exchange;
Delivery of New Securities."
WITHDRAWAL AND REVOCATION
RIGHTS: Tenders of Old Securities may be withdrawn at any
time prior to 11:59 p.m., New York City time, on
the Expiration Date. Withdrawal of tendered Old
Securities will be deemed a rejection of the
Exchange Offer and a revocation of the Consent with
respect to such Old Securities. See "The Exchange
Offers--Withdrawal and Revocation Rights."
NO DISSENTERS' RIGHTS: Holders of Old Securities do not have any appraisal
or dissenters' rights under the Delaware General
Corporation Law or the indentures under which the
Old Securities were issued. See "The Exchange
Offers--Terms of the Exchange Offers--Dissenters'
Rights."
DEALER MANAGER MARKET
ACTIVITY: The Dealer Manager currently plans to make a market
in the New Securities following the completion of
the Exchange Offers and may buy and sell New
Securities on a "when and if issued" basis prior to
the completion of the Exchange Offers. However,
there can be no assurance that the Dealer Manager
will engage in such activities or that any active
market in the New Securities will develop or be
maintained. See "Investment Considerations."
EXCHANGE AGENT: Chemical Mellon Shareholder Services, 85 Challenger
Road, Ridgefield Park, New Jersey 07660. Attention:
Reorganization Department.
DEALER MANAGER: Salomon Brothers Inc, Seven World Trade Center, New
York, New York 10048. Telephone: (800) 558-3745
(toll free); (212) 783-3738 (call collect).
Attention: Liability Management Group.
INFORMATION AGENT: D.F. King & Co., Inc., 77 Water Street, New York,
New York 10005. Telephone: (800) 829-6554 (toll
free).
9
<PAGE>
THE NEW SECURITIES
NEW SECURITIES GENERALLY
Issuer:
Columbia/HCA Healthcare Corporation.
Indenture: The New Securities will be issued under an indenture
dated as of December 15, 1993 (the "Company
Indenture"), between the Company and The First National
Bank of Chicago, as trustee (the "New Trustee").
Interest: Interest will accrue on the New Securities from the
Exchange Date. Interest will be paid each June 15 and
December 15, commencing December 15, 1995.
Rating:
As of the date hereof, the Company's debt securities
are rated A3 by Moody's and BBB+ by S&P. The Company
expects that the New Securities will receive similar
ratings. However, the ratings given the New Securities
should be evaluated independently from similar ratings
on other types of securities. A security rating is not
a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time by
the assigning rating agency.
Ranking: The New Securities will be unsecured obligations of the
Company. Unlike the Old Securities which are
subordinated to senior indebtedness of Healthtrust and
the Company, the New Securities will be unsubordinated
senior obligations of the Company and will rank pari
passu with all existing and future unsecured and
unsubordinated indebtedness of the Company.
Form:
New Securities will be available only in book-entry
form through DTC.
Optional Redemption: Unlike the Old Securities, New Securities may not be
redeemed by the Company prior to the maturity thereof.
Covenants: The Company Indenture limits, among other things, the
ability of the Company and certain of its subsidiaries
to mortgage or pledge, or engage in sale and lease-back
transactions with respect to, certain hospital
properties, and the ability of certain subsidiaries of
the Company to issue preferred stock and incur
indebtedness. The restrictive covenants with respect to
the New Securities are substantially less restrictive
than the covenants currently applicable to the Old
Securities. The Company Indenture does not require the
Company to make an offer to repurchase the New
Securities in the event of a change of control of the
Company.
Use of Proceeds:
The New Securities will be issued only in exchange for
the Old Securities. The Company will not receive any
cash proceeds from the issuance of the New Securities.
10
<PAGE>
NEW 2005 NOTES
Principal Amount Offered: $500,000,000.
Maturity Date: June 15, 2005.
Interest Rate: Equal to the sum of (i) the yield on the 6 1/2% U.S.
Treasury Note due May 15, 2005, as of the Pricing
Time, and (ii) 0.75%, per annum.
NEW 2000 NOTES
Principal Amount Offered: $200,000,000.
Maturity Date: June 15, 2000.
Interest Rate: Equal to the sum of (i) the yield on the 6 1/4% U.S.
Treasury Note due May 31, 2000, as of the Pricing
Time, and (ii) 0.52%, per annum.
NEW 2025 NOTES
Principal Amount Offered: $300,000,000.
Maturity Date: June 15, 2025.
Interest Rate: Equal to the sum of (i) the yield on the 7 1/2% U.S.
Treasury Note due November 15, 2024, as of the Pricing
Time, and (ii) 1.10 %, per annum.
11
<PAGE>
COMPARISON OF OLD SECURITIES AND NEW SECURITIES
What follows is a brief comparison of the principal features of the Old
Securities and the New Securities. The description of the Old Securities
reflects the Old Securities as currently constituted and does not reflect any
changes to the terms and covenants of the Old Securities that may be effected
pursuant to the Solicitation. The following descriptions are brief summaries,
do not purport to be complete and are qualified in their entirety by reference,
with respect to the Old Securities, to the Old Securities and the indentures
(as heretofore amended) under which the Old Securities were issued and, with
respect to the New Securities, to the Company Indenture. For further
information regarding the Old Securities and for definitions of capitalized
terms used with respect to the Old Securities but not heretofore defined, see
"The Proposed Amendments." For further information regarding the New Securities
and for definitions of capitalized terms used with respect to the New
Securities but not heretofore defined, see "Description of New Securities."
<TABLE>
<CAPTION>
OLD SECURITIES NEW SECURITIES
-------------- --------------
<S> <C> <C>
OBLIGOR(S): The Company and Healthtrust. The Company.
The First National Bank of The First National Bank of
TRUSTEE: Boston. Chicago.
AGGREGATE PRINCIPAL Old 10 3/4% Notes: New 2005 Notes: up to
AMOUNT: $500,000,000. $500,000,000.
Old 10 1/4% Notes: New 2000 Notes: up to
$200,000,000. $200,000,000.
Old 8 3/4% Debentures: New 2025 Notes: up to
$300,000,000. $300,000,000.
MATURITY: Old 10 3/4% Notes: May 1, 2002. New 2005 Notes: June 15,
Old 10 1/4% Notes: April 15, 2005.
2004. New 2000 Notes: June 15,
Old 8 3/4% Debentures: March 2000.
15, 2005. New 2025 Notes: June 15,
2025.
INTEREST RATE: Old 10 3/4% Notes: 10 3/4%, per The interest rate on each
annum. issue of New Securities will
Old 10 1/4% Notes: 10 1/4%, per be set pursuant to the
annum. applicable formula described
Old 8 3/4% Debentures: 8 3/4%, herein. Interest will accrue
per annum. on the New Securities from
the Exchange Date.
RATING: As of the date hereof, the Old As of the date hereof, the
Securities are rated Baa1 by Company's debt securities
Moody's and BBB by S&P. are rated A3 by Moody's and
BBB+ by S&P. The Company
expects that the New
Securities will receive
similar ratings.
RANKING: The Old Securities are The New Securities will be
subordinated to senior unsubordinated senior
indebtedness of Healthtrust and obligations of the Company
the Company. and will rank pari passu
with all existing and future
unsubordinated senior
indebtedness of the Company.
OPTIONAL REDEMPTION: The Old 10 3/4% Notes are The New Securities will not
redeemable at any time on or be redeemable prior to
after May 1, 1997 at a maturity.
redemption price of 104%
declining annually to par on
May 1, 1999. The Old 10 1/4%
Notes are redeemable at any
time on or after April 15, 1999
at a redemption price of
103.844% declining annually to
par on April 15, 2002. The Old
8 3/4% Debentures are
redeemable at any time on or
after March 15, 1998 at a
redemption price of 104.375%
declining annually to par on
March 15, 2001.
SINKING FUND: None. None.
SECURITY: None. None.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
OLD SECURITIES NEW SECURITIES
-------------- --------------
<S> <C> <C>
CHANGE OF CONTROL: Holders may require repurchase The Company will not be
of Old Securities at par required to repurchase New
following a Change of Control Securities following a
and a Rating Decline. The change of control of the
Proposed Amendments would Company.
eliminate this requirement.
CERTAIN COVENANTS: The Old Securities restrict, The covenants with respect
among other things, (i) the to the New Securities will
incurrence of indebtedness by be substantially less
an Obligor and its subsidiaries restrictive than those with
and (ii) dividends and respect to the Old
distributions on, and Securities. The New
repurchases of, an Obligor's Securities will restrict,
capital stock and certain other among other things, (i) the
restricted payments and ability of the Company and
investments by an Obligor and its subsidiaries to secure
its subsidiaries. The Proposed indebtedness by mortgaging,
Amendments would modify the or engaging in sale and
covenants with respect to the lease-back transactions with
Old Securities to make such respect to, certain hospital
covenants consistent with those properties and (ii) the
with respect to the Company's incurrence of indebtedness
existing debt securities and and issuance of preferred
the New Securities. stock by the Company's
subsidiaries.
CONSOLIDATION, MERGER,
ASSET SALES: An Obligor may not consolidate, The Company may not
merge or sell all or consolidate, merge or sell
substantially all of its all or substantially all of
assets, unless (i) the its assets, unless (i) the
successor corporation expressly successor corporation
assumes the Obligor's assumes the Company's
obligations under the Old obligations under the New
Securities, (ii) the Securities, (ii) immediately
Consolidated Net Worth of the thereafter no event of
successor corporation is equal default with respect to the
to or greater than that of the New Securities shall have
Obligor immediately prior to occurred and be continuing
the transaction, (iii) the and (iii) certain other
successor corporation could conditions are satisfied.
incur $1.00 of additional
indebtedness under the covenant
limiting incurrence of
indebtedness by an Obligor and
(iv) immediately thereafter no
event of default with respect
to the Old Securities shall
have occurred and be
continuing. The Proposed
Amendments would modify this
provision to make it consistent
with the analogous provision in
the Company's existing debt
securities and the New
Securities.
EVENTS OF DEFAULT: Failure to pay principal when Failure to pay principal
due; failure to pay interest when due; failure to pay
for 30 days; failure to perform interest for 30 days;
any other covenant following failure to perform any other
notice continued for, 90 days covenant continued for 60
in the case of the Old 10 1/4% days following notice; and
Notes and Old 8 3/4% certain bankruptcy and
Debentures, or 60 days in the insolvency events.
case of the Old 10 3/4% Notes;
certain bankruptcy and
insolvency events; cross-
acceleration of, or failure to
pay at maturity, debt of,
$50,000,000 or more in the case
of the Old 10 1/4% Notes and
Old 8 3/4% Debentures, or
$25,000,000 or more in the case
of the Old 10 3/4% Notes; and,
in the case of the Old 10 3/4%
Notes, final judgment exceeding
$25,000,000 unstayed for 60
days.
LISTING: The Old 10 3/4% Notes and Old 8 The Company does not plan to
3/4% Debentures currently are list the New Securities on
listed on the NYSE; however, any securities exchange.
such issues may be delisted
following the Exchange Offers.
The Old 10 1/4% Notes are not
listed on any securities
exchange.
</TABLE>
13
<PAGE>
SUPPLEMENTAL SELECTED FINANCIAL DATA--THE COMPANY
Set forth below is certain supplemental selected financial data for the
Company for the periods and as of the dates indicated, which is based on the
supplemental consolidated financial statements of the Company incorporated by
reference in this Prospectus.
For accounting purposes, the Healthtrust Merger (as defined herein) has been
treated as a pooling of interests. Accordingly, the supplemental consolidated
financial statements and supplemental selected financial data give retroactive
effect to the Healthtrust Merger and include the combined operations of the
Company and Healthtrust for all periods presented. The historical financial
information related to Healthtrust (which prior to the Healthtrust Merger was
reported on a fiscal year ending August 31) has been recast to conform to the
Company's annual reporting period ending December 31. The following data
should be read in conjunction with the supplemental consolidated financial
statements of the Company incorporated by reference in this Prospectus.
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
---------------- -------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Revenues................ $ 4,380 $ 3,432 $14,543 $12,678 $12,226 $11,722 $10,517
------- ------- ------- ------- ------- ------- -------
Salaries, wages and
benefits............... 1,738 1,374 5,963 5,202 5,062 4,924 4,401
Supplies................ 635 525 2,144 2,015 1,948 1,774 1,590
Other operating
expenses............... 812 612 2,722 2,351 2,292 2,153 1,953
Provision for doubtful
accounts............... 241 193 853 699 652 638 558
Depreciation and
amortization........... 233 178 804 689 670 647 618
Interest expense........ 115 85 387 415 506 748 852
Investment income....... (21) (16) (69) (74) (88) (83) (85)
Non-recurring
transactions........... - 159 159 151 532 521 22
------- ------- ------- ------- ------- ------- -------
3,753 3,110 12,963 11,448 11,574 11,322 9,909
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations before
minority interests and
income taxes........... 627 322 1,580 1,230 652 400 608
Minority interests in
earnings of
consolidated entities.. 25 6 40 18 25 24 14
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations before
income taxes........... 602 316 1,540 1,212 627 376 594
Provision for income
taxes.................. 244 129 611 492 334 158 233
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations............. 358 187 929 720 293 218 361
Discontinued operations:
Income (loss) from
operations of
discontinued health
plan segment, net of
income tax (benefit).. - - - 16 (108) 16 (6)
Costs associated with
discontinuance of
health plan segment,
net of income tax
benefit............... - - - - (17) - -
Extraordinary loss on
extinguishment of debt,
net of income tax
benefit................ - (92) (115) (97) (23) (114) (5)
Cumulative effect on
prior years of a change
in accounting for
income taxes........... - - - - 51 - -
------- ------- ------- ------- ------- ------- -------
Net income............. $ 358 $ 95 $ 814 $ 639 $ 196 $ 120 $ 350
======= ======= ======= ======= ======= ======= =======
Earnings per common and
common equivalent
share(a):
Income from continuing
operations............ $ .80 $ .45 $ 2.16 $ 1.75 $ .75 $ .59 $ .95
Discontinued
operations:
Income (loss) from
operations of
discontinued health
plan segment.......... - - - .04 (.27) .05 (.02)
Costs associated with
discontinuance of
health plan segment... - - - - (.05) - -
Extraordinary loss on
extinguishment of
debt.................. - (.22) (.27) (.24) (.06) (.34) (.02)
Cumulative effect on
prior years of a
change in accounting
for income taxes...... - - - - .13 - -
------- ------- ------- ------- ------- ------- -------
Net income............. $ .80 $ .23 $ 1.89 $ 1.55 $ .50 $ .30 $ .91
======= ======= ======= ======= ======= ======= =======
Shares used in earnings
per common and common
equivalent share
computations (in
thousands)............. 447,446 416,477 429,295 413,036 394,378 334,676 315,606
Net cash provided by
continuing operations.. $ 523 $ 504 $ 1,747 $ 1,585 $ 1,776 $ 1,607 $ 1,531
Cash dividends per
common share........... $ .03 $ .03 $ .12 $ .06 - - -
Ratio of earnings to
fixed charges.......... 5.19x 3.78x 4.09x 3.33x 2.05x 1.47x 1.65x
</TABLE>
- --------
(a) Earnings per common and common equivalent share include the effect of
preferred stock dividend requirements totaling $18 million in 1991 and $63
million in 1990.
14
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)--CONTINUED
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -----------------------------------------------------
1995 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION:
Assets.................. $17,387 $ 16,278 $ 12,685 $ 12,773 $ 13,081 $ 12,321
Working capital......... 1,242 1,092 835 899 917 856
Net assets of
discontinued
operations............. - - - 376 411 303
Long-term debt,
including amounts due
within one year........ 6,178 5,672 4,682 4,735 6,380 6,385
Minority interests in
equity of consolidated
entities............... 380 278 67 51 44 36
Common stockholders'
equity................. $ 6,471 $ 6,090 $ 4,158 $ 4,241 $ 3,219 $ 2,236
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of hospitals at
end of period.......... 318 277 311 274 281 301 306
Number of licensed beds
at end of period....... 61,261 54,179 59,595 53,245 53,457 54,616 54,443
Weighted average
licensed beds.......... 60,960 53,909 57,517 53,247 51,955 54,072 54,297
Average daily census.... 27,713 24,905 23,841 22,973 23,569 25,819 26,096
Occupancy............... 45% 46% 41% 43% 45% 48% 48%
Admissions.............. 454,500 387,100 1,565,500 1,451,000 1,448,000 1,486,200 1,475,400
Average length of stay
(days)................. 5.5 5.8 5.6 5.8 6.0 6.3 6.5
Emergency room visits... 1,258,900 1,060,000 4,651,000 4,248,900 4,065,000 4,016,700 3,852,100
</TABLE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS
ENDED MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
--------------- ----------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income from continuing
operations before minority
interests and income
taxes..................... $ 627 $ 322 $1,580 $1,230 $ 652 $ 400 $ 608
Fixed charges, exclusive of
capitalized interest...... 143 108 491 497 584 817 904
------- ------- ------ ------ ------ ------ ------
$ 770 $ 430 $2,071 $1,727 $1,236 $1,217 $1,512
======= ======= ====== ====== ====== ====== ======
Fixed charges:
Interest charged to
expense................... $ 115 $ 85 $ 387 $ 415 $ 506 $ 748 $ 852
One-third of rent expense
and amortization of
deferred loan costs (a)... 28 23 104 82 78 69 52
------- ------- ------ ------ ------ ------ ------
Fixed charges, exclusive of
capitalized interest...... 143 108 491 497 584 817 904
Capitalized interest....... 5 6 15 22 18 12 11
------- ------- ------ ------ ------ ------ ------
$ 148 $ 114 $ 506 $ 519 $ 602 $ 829 $ 915
======= ======= ====== ====== ====== ====== ======
Ratio of earnings to fixed
charges.................... 5.19x 3.78x 4.09x 3.33x 2.05x 1.47x 1.65x
</TABLE>
- --------
(a) One-third of rent expense is considered representative of the underlying
interest.
15
<PAGE>
SELECTED FINANCIAL DATA--THE COMPANY
Set forth below is certain selected financial data for the Company for the
periods and as of the dates indicated, which is based upon the historical
consolidated financial statements of the Company incorporated by reference in
this Prospectus. Such data does not give effect to the Healthtrust Merger. See
"Supplemental Selected Financial Data--The Company." The following data should
be read in conjunction with the historical consolidated financial statements
and supplemental consolidated financial statements of the Company incorporated
by reference in this Prospectus.
COLUMBIA/HCA HEALTHCARE CORPORATION
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
---------------- -------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Revenues................ $ 3,337 $ 2,778 $11,132 $10,252 $ 9,932 $ 9,598 $ 8,641
------- ------- ------- ------- ------- ------- -------
Salaries, wages and
benefits............... 1,309 1,113 4,545 4,215 4,112 3,976 3,510
Supplies................ 498 434 1,686 1,664 1,613 1,467 1,314
Other operating
expenses............... 608 492 2,059 1,893 1,849 1,739 1,586
Provision for doubtful
accounts............... 180 150 628 542 515 508 444
Depreciation and
amortization........... 177 144 609 554 541 524 499
Interest expense........ 75 64 248 321 401 597 694
Investment income....... (19) (14) (62) (66) (81) (64) (69)
Non-recurring
transactions........... - 159 159 151 439 300 22
------- ------- ------- ------- ------- ------- -------
2,828 2,542 9,872 9,274 9,389 9,047 8,000
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations before
minority interests and
income taxes........... 509 236 1,260 978 543 551 641
Minority interests in
earnings of
consolidated entities.. 23 3 29 9 10 9 4
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations before
income taxes........... 486 233 1,231 969 533 542 637
Provision for income
taxes.................. 194 96 486 394 294 189 240
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations............. 292 137 745 575 239 353 397
Discontinued operations:
Income (loss) from
operations of
discontinued health
plan segment, net of
income tax (benefit).. - - - 16 (108) 16 (6)
Costs associated with
discontinuance of
health plan segment,
net of income tax
benefit............... - - - - (17) - -
Extraordinary loss on
extinguishment of debt,
net of income tax
benefit................ - (92) (115) (84) - - -
Cumulative effect on
prior years of a change
in accounting for
income taxes........... - - - - 51 - -
------- ------- ------- ------- ------- ------- -------
Net income............. $ 292 $ 45 $ 630 $ 507 $ 165 $ 369 $ 391
======= ======= ======= ======= ======= ======= =======
Earnings per common and
common equivalent share
(a):
Income from continuing
operations............ $ .80 $ .40 $ 2.13 $ 1.70 $ .73 $ 1.20 $ 1.28
Discontinued
operations:
Income (loss) from
operations of
discontinued health
plan segment.......... - - - .04 (.33) .05 (.02)
Costs associated with
discontinuance of
health plan segment... - - - - (.06) - -
Extraordinary loss on
extinguishment of
debt.................. - (.27) (.33) (.24) - - -
Cumulative effect on
prior years of a
change in accounting
for income taxes...... - - - - .16 - -
------- ------- ------- ------- ------- ------- -------
Net income............. $ .80 $ .13 $ 1.80 $ 1.50 $ .50 $ 1.25 $ 1.26
======= ======= ======= ======= ======= ======= =======
Shares used in earnings
per common and common
equivalent share
computations (in
thousands)............. 365,506 341,621 350,075 339,222 328,564 279,954 262,552
Net cash provided by
continuing operations.. $ 419 $ 367 $ 1,301 $ 1,298 $ 1,287 $ 1,257 $ 1,191
Cash dividends per
common share........... $ .03 $ .03 $ .12 $ .06 - - -
Ratio of earnings to
fixed charges.......... 5.92x 3.82x 4.68x 3.42x 2.11x 1.82x 1.85x
</TABLE>
- --------
(a) Earnings per common and common equivalent share include the effect of
preferred stock dividend requirements totaling $18 million in 1991 and $63
million in 1990.
16
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)--CONTINUED
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -----------------------------------------------------
1995 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION:
Assets.................. $13,344 $ 12,339 $ 10,216 $ 10,347 $ 10,843 $ 10,391
Working capital......... 908 783 573 606 635 482
Net assets of
discontinued
operations............. - - - 376 411 303
Long-term debt,
including amounts due
within one year........ 4,439 3,930 3,698 3,656 5,158 5,139
Minority interests in
equity of consolidated
entities............... 360 258 57 31 23 16
Common stockholders'
equity................. $ 5,328 $ 5,022 $ 3,471 $ 3,691 $ 2,822 $ 2,099
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
---------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of hospitals at
end of period.......... 201 196 195 193 200 219 221
Number of licensed beds
at end of period....... 45,141 43,171 43,670 42,237 42,245 43,231 42,789
Weighted average bed
capacity............... 43,777 41,955 42,357 41,263 40,608 42,437 42,264
Average daily census.... 21,246 20,341 18,524 18,702 19,253 21,255 21,351
Occupancy............... 49% 48% 44% 45% 47% 50% 51%
Admissions.............. 339,600 309,800 1,189,400 1,158,400 1,161,100 1,189,700 1,174,700
Average length of stay
(days)................. 5.6 5.9 5.7 5.9 6.1 6.5 6.6
Emergency room visits... 856,400 788,300 3,215,500 3,139,700 3,042,900 3,028,600 2,894,800
Outpatient revenues as a
percentage of patient
revenues............... 32% 27% 30% 27% 26% 24% 22%
</TABLE>
17
<PAGE>
SELECTED FINANCIAL DATA--HEALTHTRUST
Set forth below is certain selected financial data for Healthtrust for the
periods and as of the dates indicated, which is based on the historical
consolidated financial statements of Healthtrust incorporated by reference in
this Prospectus. The following data is reported on a fiscal year ended August
31 (in contrast to the selected financial data of the Company which is
reported on a fiscal year ended December 31). The following data should be
read in conjunction with the historical consolidated financial statements of
Healthtrust incorporated by reference in this Prospectus.
HEALTHTRUST, INC.--THE HOSPITAL COMPANY
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
---------------- -------------------------------------------
1995(A) 1994 1994(A) 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
(B):
Revenues................ $ 1,985 $ 1,275 $ 2,970 $ 2,395 $ 2,265 $ 2,026 $ 1,857
------- ------- ------- ------- ------- ------- -------
Salaries, wages and
benefits............... 823 511 1,216 976 938 923 899
Supplies................ 261 179 405 347 326 292 271
Other operating
expenses............... 387 240 582 463 445 400 370
Provision for doubtful
accounts............... 129 89 196 146 137 124 113
Depreciation and
amortization........... 113 70 166 133 128 121 119
Interest expense........ 81 42 114 100 120 153 161
Investment income....... (4) (5) (8) (8) (9) (22) (9)
------- ------- ------- ------- ------- ------- -------
1,790 1,126 2,671 2,157 2,085 1,991 1,924
------- ------- ------- ------- ------- ------- -------
Income (loss) before
minority interests and
income taxes........... 195 149 299 238 180 35 (67)
Minority interests in
earnings of
consolidated entities.. 4 4 10 12 15 13 8
------- ------- ------- ------- ------- ------- -------
Income (loss) before
income taxes........... 191 145 289 226 165 22 (75)
Provision (benefit) for
income taxes........... 80 59 116 91 72 15 (22)
------- ------- ------- ------- ------- ------- -------
Income (loss) before
extraordinary item..... 111 86 173 135 93 7 (53)
Extraordinary loss on
extinguishment of debt,
net of income tax
benefit................ - - - (13) (136) - (6)
------- ------- ------- ------- ------- ------- -------
Net income (loss)..... 111 86 173 122 (43) 7 (59)
Dividends paid and
discount accretion on
preferred
stock (c).............. - - - - 25 77 66
------- ------- ------- ------- ------- ------- -------
Net income (loss) to
common stockholders.. $ 111 $ 86 $ 173 $ 122 $ (68) $ (70) $ (125)
======= ======= ======= ======= ======= ======= =======
Earnings (loss) per
common and common
equivalent share:
Income (loss) before
extraordinary item... $ 1.20 $ 1.02 $ 1.98 $ 1.62 $ .90 $ (1.15) $ (2.03)
Extraordinary loss on
extinguishment of
debt................. - - - (.16) (1.78) - (.10)
------- ------- ------- ------- ------- ------- -------
Net income (loss) to
common stockholders.. $ 1.20 $ 1.02 $ 1.98 $ 1.46 $ (.88) $ (1.15) $ (2.13)
======= ======= ======= ======= ======= ======= =======
Shares used in earnings
per common and common
equivalent share
computations (in
thousands)............. 92,770 84,639 87,444 83,541 76,769 60,409 58,534
Net cash provided by
operations............. $ 145 $ 77 $ 369 $ 365 $ 430 $ 321 $ 349
Ratio of earnings to
fixed charges.......... 2.96x 3.56x 3.08x 2.79x 2.18x 1.13x (d)
</TABLE>
- --------
(a) The selected historical consolidated financial data includes the effect of
the acquisition of EPIC Holdings, Inc. in May 1994.
(b)Certain amounts have been reclassified to conform to classifications in the
Company's Summary of Operations.
(c) The redeemable preferred stock (which was held by the Company) was retired
as a component of Healthtrust's 1991 recapitalization.
(d) Healthtrust's earnings were inadequate to cover fixed charges for the year
ended August 31, 1990 by $76 million.
18
<PAGE>
HEALTHTRUST, INC.--THE HOSPITAL COMPANY
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)--CONTINUED
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 28, --------------------------------------------------
1995(A) 1994(A) 1993 1992 1991 1990
------------ --------- --------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION:
Assets.................. $4,019 $ 3,967 $ 2,537 $ 2,380 $ 2,445 $ 2,294
Working capital......... 297 283 219 245 390 310
Long-term debt,
including amounts due
within one year........ 1,741 1,785 1,049 1,109 1,221 1,226
Minority interests in
equity of consolidated
entities............... 21 17 14 21 21 21
Redeemable preferred
stock (c).............. - - - - 576 500
Common stockholders'
equity................. $1,146 $ 1,026 $ 656 $ 531 $ 88 $ 42
<CAPTION>
FOR THE SIX
MONTHS ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
--------------------- --------------------------------------------------
1995(A) 1994 1994(A) 1993 1992 1991 1990
------- -------- --------- --------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of hospitals at
end of period.......... 117 81 116 81 81 85 86
Weighted average
licensed beds.......... 15,955 11,008 12,466 11,233 11,374 11,607 12,022
Average daily census.... 6,026 4,273 4,747 4,223 4,416 4,543 4,911
Occupancy............... 38% 39% 38% 38% 39% 39% 41%
Admissions.............. 215,208 147,401 333,200 284,606 291,599 293,344 307,758
Average length of stay
(days)................. 5.1 5.2 5.2 5.4 5.5 5.7 5.8
Emergency room visits... 776,989 548,933 1,288,377 1,065,626 1,015,708 958,642 972,678
Outpatient revenues as a
percentage of patient
revenues............... 36% 32% 34% 31% 30% 27% 24%
</TABLE>
- --------
(a) The selected historical consolidated financial data includes the effect of
the acquisition of EPIC Holdings, Inc. in May 1994.
(b)Certain amounts have been reclassified to conform to classifications in the
Company's Summary of Operations.
(c) The redeemable preferred stock (which was held by the Company) was retired
as a component of Healthtrust's 1991 recapitalization.
(d) Healthtrust's earnings were inadequate to cover fixed charges for the year
ended August 31, 1990 by $76 million.
19
<PAGE>
INVESTMENT CONSIDERATIONS
The following factors and other information described, or incorporated by
reference, herein should be carefully considered by each prospective investor
before deciding whether to tender Old Securities pursuant to the Exchange
Offers.
CERTAIN CONSIDERATIONS FOR NON-TENDERING HOLDERS
Amendment of Indentures. Prior to the announcement of the acquisition of
Healthtrust by the Company, the Old Securities were rated below investment
grade at B1 by Moody's and B by S&P. The Old Securities currently are subject
to terms and restrictive covenants that are, in general, typical of debt
securities with similar ratings. Following the Company's acquisition of
Healthtrust, the Company, whose debt securities as of the date hereof are
rated investment grade at A3 by Moody's and BBB+ by S&P, became a co-obligor
with Healthtrust with respect to the Old Securities. As of the date hereof,
each of Moody's and S&P has raised its rating with respect to the Old
Securities to investment grade at Baa1 by Moody's and BBB by S&P. Pursuant to
the Solicitation, the Company is proposing parallel amendments to the 1992
Indenture and the 1993 Indenture (under which the Old Securities were issued)
in order to make the covenants and certain other terms in each such indenture
consistent with those that currently apply to the Company and its subsidiaries
with respect to the Company's existing debt securities and that will apply to
the Company and its subsidiaries with respect to the New Securities. There can
be no assurance, however, that the Old Securities, or any of the Company's
debt securities, will continue to be rated investment grade in the future. See
"The Consent Solicitation."
In the event that the Proposed Amendments are adopted with respect to an
issue of Old Securities, the covenants and certain other terms with respect to
such issue of Old Securities, although consistent with those applicable to the
Company with respect to its existing debt securities and the New Securities,
will be substantially less restrictive, and afford less protection to holders,
than those currently set forth in the 1992 Indenture and the 1993 Indenture.
The Proposed Amendments contemplated by the Solicitation would, among other
things, eliminate the covenants in each of the 1992 Indenture and the 1993
Indenture that restrict the incurrence of Indebtedness and the making of
Restricted Payments (as each such term is defined in the indentures) by an
Obligor and its subsidiaries and would replace those covenants with covenants
(i) limiting the ability of an Obligor and certain of its subsidiaries to
mortgage or pledge, or engage in sale and lease-back transactions with respect
to, certain hospital properties and (ii) restricting the issuance of preferred
stock and the incurrence of indebtedness by certain subsidiaries of an
Obligor. In addition, the Company proposes to (i) make the provisions in the
1992 Indenture and the 1993 Indenture governing consolidations, mergers and
asset sales less restrictive and (ii) eliminate the provisions that require
that, in the event of a Change of Control and a Rating Decline (as each such
term is defined in the indentures), the Old Securities be repurchased at par
at the option of holders.
If Requisite Consents are received with respect to an issue of Old
Securities and the Exchange Offer with respect to such issue is consummated,
the relevant indenture will be amended with respect to such issue as discussed
herein. Each non-exchanging holder of such issue of Old Securities will be
bound by the Proposed Amendments even if such holder did not consent to the
Proposed Amendments. See "The Consent Solicitation" and "The Proposed
Amendments."
Reduced Liquidity of Old Securities. If the Exchange Offer for an issue of
Old Securities is consummated, then the trading market for such issue could
become more limited because of the reduction in the amount outstanding of Old
Securities of such issue. This may adversely effect the liquidity and market
price of such Old Securities. In addition, following the Exchange Offers the
Company may delist the Old 10 3/4% Notes and the Old 8 3/4% Debentures, which
currently are listed on the NYSE. Delisting may have a further adverse effect
on the liquidity and market price of such Old Securities.
20
<PAGE>
Subordination. Unlike the New Securities, the Old Securities are
subordinated to senior indebtedness of Healthtrust and the Company. If one or
more of the Exchange Offers are consummated, New Securities will be issued (in
an amount equal to the principal amount of the Old Securities exchanged),
thereby increasing the amount of indebtedness of the Company senior in right
of payment to the Old Securities.
CERTAIN CONSIDERATIONS FOR TENDERING HOLDERS
Terms of New Securities. Unlike the Old Securities with respect to which
both the Company and Healthtrust are obligors, the Company is the only obligor
with respect to the New Securities. The Company, like Healthtrust, is a
holding company; as a result, the rights of the Company to participate in any
distribution of assets of any subsidiary upon its liquidation or
reorganization or otherwise (and thus the ability of holders of the New
Securities to benefit from such distribution) are subject to the prior claims
of creditors of that subsidiary, except to the extent that the Company may
itself be a creditor with recognized claims against that subsidiary. Claims on
the Company's subsidiaries by creditors may include claims of holders of
indebtedness and claims of creditors in the ordinary course of business. Such
claims may increase or decrease, and additional claims may be incurred in the
future.
The New Securities will contain covenants and certain other terms consistent
with those that currently apply to the Company and its subsidiaries pursuant
to the Company's existing debt securities. Such covenants and terms are
substantially less restrictive, and afford less protection to holders, than
those currently set forth in the 1992 Indenture and the 1993 Indenture.
However, such covenants will be consistent with those that will apply pursuant
to an issue of Old Securities if the Proposed Amendments are adopted with
respect to such issue. See "Description of New Securities."
Liquidity of New Securities. The Company does not plan to list the New
Securities on any securities exchange. In addition, depending on, among other
things, the amount of New Securities outstanding after the Exchange Offers,
the trading market for the New Securities may be more limited than the trading
market for the Old Securities prior to the Exchange Offers. A limited trading
market may adversely affect the liquidity and market price of the New
Securities.
The Dealer Manager currently plans to make a market in the New Securities
following the completion of the Exchange Offers and may buy and sell New
Securities on a "when and if issued" basis prior to the completion of the
Exchange Offers. However, there can be no assurance that the Dealer Manager
will engage in such activities or that any active market in the New Securities
will develop or be maintained.
THE COMPANY
Healthtrust Merger. On April 24, 1995, the Company acquired Healthtrust. The
acquisition of Healthtrust involves the integration of the operations of the
Company and Healthtrust, two companies that previously operated independently.
There can be no assurance that the Company will not encounter difficulties in
integrating its operations with those of Healthtrust. See "Recent
Developments."
21
<PAGE>
THE COMPANY
Columbia/HCA Healthcare Corporation (the "Company") is one of the largest
health care services companies in the United States. At April 24, 1995, the
Company operated 292 general, acute care hospitals and 28 psychiatric
hospitals in 36 states and two foreign countries. In addition, as part of its
comprehensive health care networks, the Company operates facilities that
provide a broad range of outpatient and ancillary services. At April 24, 1995,
the Company operated more than 125 outpatient centers.
The Company's primary objective is to provide to the markets it serves a
comprehensive array of quality health care services in the most cost effective
manner possible. The Company's general, acute care hospitals typically provide
a full range of services commonly available in hospitals to accommodate such
medical specialties as internal medicine, general surgery, cardiology,
oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and
emergency services. Outpatient and ancillary health care services are provided
by the Company's general, acute care hospitals as well as at freestanding
facilities operated by the Company, including outpatient surgery and
diagnostic centers, rehabilitation facilities, home health care agencies and
other facilities. In addition, the Company operates psychiatric hospitals
which generally provide a full range of mental health care services in
inpatient, partial hospitalization and outpatient settings.
On April 24, 1995, the Company acquired Healthtrust, pursuant to a merger
transaction accounted for as a pooling of interests. See "Recent
Developments." On September 16, 1994, the Company acquired Medical Care
America, Inc. in a transaction accounted for as a purchase. On February 10,
1994, the Company acquired HCA-Hospital Corporation of America pursuant to a
merger transaction accounted for as a pooling of interests. Effective
September 1, 1993, the Company acquired Galen Health Care, Inc. pursuant to a
merger transaction accounted for as a pooling of interests.
The Company's strategy is to become a significant, comprehensive provider of
quality health care services in targeted markets. The Company pursues its
strategy by acquiring the health care facilities necessary to develop a
comprehensive health care network with wide geographic presence throughout the
market. Typically, the Company enters a market by acquiring one or more mid-
to large-size general, acute care hospitals (over 150 licensed beds), which
have either desirable physical plants or ones which can be upgraded on an
economically feasible basis. The Company then upgrades equipment and
facilities and adds new services to increase the attractiveness of the
hospital to local physicians and patient populations. The Company typically
develops a network by acquiring additional health care facilities including
additional general, acute care hospitals, psychiatric hospitals and outpatient
facilities such as surgery centers, diagnostic centers, physical therapy
centers and other treatment or wellness facilities including home health care
agencies. By developing a comprehensive health care network in a local market,
the Company achieves greater visibility and is better able to attract
physicians and patients by offering a full range of services in the entire
market area. The Company is also able to reduce operating costs by sharing
certain services among several facilities in the same market and is better
positioned to work with health maintenance organizations, preferred provider
organizations and employers.
HEALTHTRUST
Healthtrust is one of the largest providers of health care services in the
United States, delivering a full range of inpatient, outpatient and other
health care services principally through its affiliated hospitals. At March
31, 1995, Healthtrust operated 117 acute care hospitals, all of which were
owned or leased by Healthtrust through its subsidiaries or joint venture
arrangements. Healthtrust was also an investor, through joint ventures, in
four other acute care hospitals. Healthtrust's affiliated hospitals are
located in rural, suburban and urban communities in 22 southern and western
states. Heathtrust's
22
<PAGE>
affiliated hospitals generally provide a full range of inpatient and
outpatient health care services, including medical/surgical, diagnostic,
obstetric, pediatric and emergency services. Many of Healthtrust's hospitals
also offer certain specialty programs and services, including occupational
medicine programs, home health care services, skilled nursing services,
physical therapy programs, rehabilitation services, alcohol and drug
dependency programs and selected mental health services. The health care
services provided by each hospital are based on the local demand for such
services and the ability to provide such services on a competitive basis.
Healthtrust has experienced consistent growth since it began operations
through the acquisition of a group of hospitals and related assets from
Hospital Corporation of America in September 1987. On May 5, 1994, Healthtrust
acquired EPIC Holdings, Inc. in a transaction accounted for as a purchase.
RECENT DEVELOPMENTS
On April 24, 1995, a wholly-owned subsidiary of the Company merged with and
into Healthtrust (the "Healthtrust Merger"). Healthtrust was the surviving
company following the Healthtrust Merger (as used herein the term
"Healthtrust" refers to either the pre-merger Healthtrust or the post-merger
Healthtrust as the context requires). Each stockholder of Healthtrust received
for each share of Healthtrust common stock owned as of the effective time of
the Healthtrust Merger 0.88 of a share of the Company's common stock. The
Healthtrust Merger was accounted for as a pooling of interests. Following the
Healthtrust Merger, the Company has become a co-obligor with Healthtrust with
respect to the Old Securities.
The Healthtrust Merger involves the integration of two companies that
previously operated independently. There can be no assurance that the Company
will not encounter difficulties in integrating the operations of Healthtrust
with those of the Company or that the benefits expected from such integration
will be realized. Any delays or unexpected costs incurred in connection with
such integration could have a material adverse effect on the Company's
business, operating results or financial condition. Furthermore, there can be
no assurance that the operations, managements and personnel of the two
companies will be compatible or that the Company or Healthtrust will not
experience the loss of key personnel. Among the factors considered by the
Board of Directors of the Company in connection with its approval of the
Healthtrust Merger were the opportunities for economies of scale and operating
efficiencies that should result from the Healthtrust Merger. While the Company
expects to achieve annual savings in operating costs as a result of the
Healthtrust Merger (including, without limitation, as a result of the
integration of office facilities, information systems and support functions
and the combined purchasing power of the two companies), there can be no
assurance that these savings will be realized.
23
<PAGE>
THE EXCHANGE OFFERS
The Company is making the Exchange Offers in order to reduce the Company's
future long-term interest expense. The Company is soliciting the Consents in
order to eliminate certain restrictions on the Company and Healthtrust set
forth in the 1992 Indenture and the 1993 Indenture that, as a result of the
Company's becoming a co-obligor on the Old Securities, the Company believes
are no longer necessary for the protection of holders of Old Securities. There
can be no assurance, however, that the Company will achieve these objectives
as a result of the Exchange Offers and the Solicitation.
TERMS OF THE EXCHANGE OFFERS
Subject to the terms and conditions set forth in this Prospectus and the
accompanying Letters of Transmittal, the Company is offering to exchange (i)
$1,000 principal amount of the Company's New 2005 Notes plus an amount of cash
based on the relevant fixed spread pricing formula, for each $1,000 principal
amount of Healthtrust's Old 10 3/4% Notes properly tendered, (ii) $1,000
principal amount of the Company's New 2000 Notes plus an amount of cash based
on the relevant fixed spread pricing formula, for each $1,000 principal amount
of Healthtrust's Old 10 1/4% Notes properly tendered and (iii) $1,000
principal amount of the Company's New 2025 Notes plus an amount of cash based
on the relevant fixed spread pricing formula, for each $1,000 principal amount
of Healthtrust's Old 8 3/4% Debentures properly tendered.
For each issue of Old Securities, a price that includes accrued but unpaid
interest to the Exchange Date (a "Reference Total Price") will be determined
using the specified fixed spread pricing formula for such issue. Such
Reference Total Price will be based on a yield (a "Reference Yield") to a
specified redemption date for such issue equal to (i) the yield (the
"Benchmark Treasury Yield") on a specified U.S. Treasury Security for such
issue (a "Benchmark Treasury Security"), plus (ii) a specified number of basis
points for such issue. The redemption price for such issue on the specified
redemption date will be used in determining such Reference Total Price. For
each issue of New Securities, a per annum interest rate will be determined,
equal to (i) the yield on a specified Benchmark Treasury Security for such
issue, plus (ii) a specified number of basis points for such issue. For each
$1,000 principal amount of Old Securities accepted by the Company, a tendering
holder will receive $1,000 principal amount of the corresponding issue of New
Securities and an amount in cash equal to the amount by which the Reference
Total Price for the tendered Old Securities exceeds $1,000. Reference Total
Prices and interest rates on the New Securities will be determined based on
the Benchmark Treasury Yields as of 4:00 p.m., New York City time, on the
second business day prior to the Expiration Date (the "Pricing Time").
Because the Reference Total Price is based on a fixed spread pricing formula
linked to a Benchmark Treasury Yield, the amount of cash that would be
received by a tendering holder in the event an Exchange Offer is consummated
will be affected by changes in the applicable Benchmark Treasury Yield during
the term of the Exchange Offer. Similarly, because the interest rate on each
issue of New Securities is linked to a Benchmark Treasury Yield, the actual
interest rate that would be realized by a tendering holder will be affected by
changes in the applicable Benchmark Treasury Yield during the term of the
Exchange Offer. During the term of the Exchange Offers, current information
regarding Benchmark Treasury Yields, Reference Yields, Reference Total Prices
and interest rates on the New Securities may be obtained from the Liability
Management Group at the Dealer Manager at (800) 558-3745 (toll free) or (212)
783-3738 (call collect). The Reference Total Price with respect to each issue
of Old Securities and the interest rate with respect to each issue of New
Securities will be fixed based on the Benchmark Treasury Yields as of the
Pricing Time.
Exchange Offer for the Old 10 3/4% Notes. In exchange for each $1,000
principal amount of Old 10 3/4% Notes tendered by the holder thereof in
accordance with the terms of this Prospectus and the applicable Letter of
Transmittal and accepted by the Company, the tendering holder will receive
$1,000
24
<PAGE>
principal amount of New 2005 Notes and an amount in cash equal to the amount
by which the Reference Total Price for the Old 10 3/4% Notes exceeds $1,000.
Such Reference Total Price will be based on a Reference Yield to the first
optional redemption date with respect to such notes (May 1, 1997) equal to the
sum of (i) the yield on the 6 1/2% U.S. Treasury Note due April 30, 1997, as
of the Pricing Time, and (ii) 0.15%. The redemption price with respect to the
Old 10 3/4% Notes for the redemption date of May 1, 1997 ($1,040 per $1,000
principal amount of such notes) will be used in determining such Reference
Total Price.
The per annum interest rate on the New 2005 Notes will equal the sum of (i)
the yield on the 6 1/2% U.S. Treasury Note due May 15, 2005, as of the Pricing
Time, and (ii) 0.75%.
Exchange Offer for the Old 10 1/4% Notes. In exchange for each $1,000
principal amount of Old 10 1/4% Notes tendered by the holder thereof in
accordance with the terms of this Prospectus and the applicable Letter of
Transmittal and accepted by the Company, the tendering holder will receive
$1,000 principal amount of New 2000 Notes and an amount in cash equal to the
amount by which the Reference Total Price for the Old 10 1/4% Notes exceeds
$1,000. Such Reference Total Price will be based on a Reference Yield to the
first optional redemption date with respect to such notes (April 15, 1999)
equal to the sum of (i) the yield on the 7% U.S. Treasury Note due April 15,
1999, as of the Pricing Time, and (ii) 0.25%. The redemption price with
respect to the Old 10 1/4% Notes for the redemption date of April 15, 1999
($1,038.44 per $1,000 principal amount of such notes) will be used in
determining such Reference Total Price.
The per annum interest rate on the New 2000 Notes will equal the sum of (i)
the yield on the 6 1/4% U.S. Treasury Note due May 31, 2000, as of the Pricing
Time, and (ii) 0.52%.
Exchange Offer for the Old 8 3/4% Debentures. In exchange for each $1,000
principal amount of Old 8 3/4% Debentures tendered by the holder thereof in
accordance with the terms of this Prospectus and the applicable Letter of
Transmittal and accepted by the Company, the tendering holder will receive
$1,000 principal amount of New 2025 Notes and an amount of cash equal to the
amount by which the Reference Total Price for the Old 8 3/4% Debentures
exceeds $1,000. Such Reference Total Price will be based on a Reference Yield
to the first date at which such debentures could be redeemed at par (March 15,
2001) equal to the sum of (i) the yield on the 7 3/4% U.S. Treasury Note due
February 15, 2001, as of the Pricing Time, and (ii) 0.30%. The redemption
price with respect to the Old 8 3/4% Debentures for the redemption date of
March 15, 2001 ($1,000 per $1,000 principal amount of such debentures) will be
used in determining such Reference Total Price.
The per annum interest rate on the New 2025 Notes will equal the sum of (i)
the yield on the 7 1/2% U.S. Treasury Note due November 15, 2024, as of the
Pricing Time, and (ii) 1.10%.
Summary of Terms. The following is a summary of certain defined terms used
in describing the Exchange Offers.
BENCHMARK TREASURY SECURITY: means (i) for the Old 10 3/4% Notes, the 6 1/2%
U.S. Treasury Note due April 30, 1997, (ii) for the Old 10 1/4% Notes, the 7%
U.S. Treasury Note due April 15, 1999, (iii) for the Old 8 3/4% Debentures,
the 7 3/4% U.S. Treasury Note due February 15, 2001, (iv) for the New 2005
Notes, the 6 1/2% U.S. Treasury Note due May 15, 2005, (v) for the New 2000
Notes, the 6 1/4% U.S. Treasury Note due May 31, 2000 and (vi) for the New
2025 Notes, the 7 1/2% U.S. Treasury Note due November 15, 2024.
BENCHMARK TREASURY YIELD: means, as of the specified time, (i) for the Old
10 3/4% Notes, the yield on the 6 1/2% U.S. Treasury Note due April 30, 1997,
(ii) for the Old 10 1/4% Notes, the yield on the 7% U.S. Treasury Note due
April 15, 1999, (iii) for the Old 8 3/4% Debentures, the yield on the 7 3/4%
U.S. Treasury Note due February 15, 2001, (iv) for the New 2005 Notes, the
yield on the 6 1/2% U.S. Treasury Note due May 15, 2005, (v) for the New 2000
Notes, the yield on the 6 1/4% U.S. Treasury Note due May 31, 2000 and (vi)
for the New 2025 Notes, the yield on the 7 1/2% U.S. Treasury Note due
November 15, 2024.
EXCHANGE DATE: means the date five business days following the Expiration
Date on which New Securities will be delivered and cash payments made pursuant
to an Exchange Offer.
25
<PAGE>
EXPIRATION DATE: means Friday, June 23, 1995, unless the relevant Exchange
Offer is extended.
FIXED SPREAD: means (i) for the Old 10 3/4% Notes, 0.15%, (ii) for the Old
10 1/4% Notes, 0.25%, (iii) for the Old 8 3/4% Debentures, 0.30%, (iv) for the
New 2005 Notes, 0.75%, (v) for the New 2000 Notes, 0.52% and (vi) for the New
2025 Notes, 1.10%.
PRICING TIME: means 4:00 p.m., New York City time, on the second business
day prior to the Expiration Date.
REFERENCE TOTAL PRICE: means the price per $1,000 principal amount of an
issue of Old Securities that includes accrued but unpaid interest to the
Exchange Date, determined using the specified fixed spread pricing formula for
such issue. Such price will be based on the Reference Yield for such issue to
the specified redemption date for such issue.
REFERENCE YIELD: means, as of the specified time, (i) for the Old 10 3/4%
Notes, the sum of the yield on the 6 1/2% U.S. Treasury Note due April 30,
1997 and 0.15%, (ii) for the Old 10 1/4% Notes, the sum of the yield on the 7%
U.S. Treasury Note due April 15, 1999 and 0.25% and (iii) for the Old 8 3/4%
Debentures, the sum of the yield on the 7 3/4% U.S. Treasury Note due February
15, 2001 and 0.30%.
Illustrative Examples and Simplified Formulas. What follows are (i) a series
of tables that illustrate application of the formulas to be used to determine
Reference Total Prices for the Old Securities and interest rates on the New
Securities and (ii) simplified formulas pursuant to which a Reference Total
Price for each issue of Old Securities can be determined for any given
Benchmark Treasury Yield assuming an Exchange Date of June 30, 1995 (which
will be the Exchange Date for each Exchange Offer unless such Exchange Offer
is extended). Set forth in Schedule A hereto is the methodology used to
determine the Reference Total Prices in the following tables and derive the
simplified formulas set forth below.
THE INFORMATION SET FORTH IN THE FOLLOWING TABLES IS FOR ILLUSTRATIVE
PURPOSES ONLY AND NO REPRESENTATION IS INTENDED WITH RESPECT TO THE ACTUAL
CONSIDERATION THAT MAY BE PAID PURSUANT TO THE EXCHANGE OFFERS. THE AMOUNT OF
CASH PAID AND THE INTEREST RATES ON THE NEW SECURITIES DELIVERED PURSUANT TO
THE EXCHANGE OFFERS MAY BE GREATER OR LESS THAN THAT APPEARING IN THE
FOLLOWING TABLES DEPENDING ON THE ACTUAL BENCHMARK TREASURY YIELDS AS OF THE
PRICING TIME.
For each issue of Old Securities, the following table sets forth the
Benchmark Treasury Yield as of 4:00 p.m., New York City time, on May 22, 1995
and the applicable fixed spread. The table also sets forth for each issue of
Old Securities the Reference Yield, the Reference Total Price and the amount
of cash consideration (in addition to the $1,000 principal amount of the
corresponding issue of New Securities) that would be received in exchange for
each $1,000 principal amount of such Old Securities accepted by the Company,
assuming (i) that the Benchmark Treasury Yields as of the Pricing Time are the
same as they were as of 4:00 p.m., New York City time, on May 22, 1995 and
(ii) an Exchange Date of June 30, 1995.
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
BENCHMARK TREASURY
YIELD FIXED REFERENCE CASH
ISSUE AS OF 5/22/95 SPREAD REFERENCE YIELD TOTAL PRICE CONSIDERATION
----- ------------------ ------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Old 10 3/4% Notes....... 6.20% 0.15% 6.35% $1,128.23 $128.23
Old 10 1/4% Notes....... 6.38% 0.25% 6.63% $1,170.80 $170.80
Old 8 3/4% Debentures... 6.48% 0.30% 6.78% $1,117.32 $117.32
</TABLE>
For each issue of Old Securities, the following table sets forth the
Reference Yield, the Reference Total Price and the amount of cash
consideration (in addition to $1,000 principal amount of the corresponding
issue of New Securities) that would be received in exchange for each $1,000
principal
26
<PAGE>
amount of such Old Securities accepted by the Company, assuming (i) that the
Benchmark Treasury Yields as of the Pricing Time are equal to certain
hypothetical Benchmark Treasury Yields and (ii) an Exchange Date of June 30,
1995.
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
HYPOTHETICAL BENCHMARK FIXED REFERENCE CASH
ISSUE TREASURY YIELD SPREAD REFERENCE YIELD TOTAL PRICE CONSIDERATION
----- ---------------------- ------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Old 10 3/4% Notes....... 5.70% 0.15% 5.85% $1,137.58 $137.58
5.95 0.15 6.10 1,132.89 132.89
6.20 0.15 6.35 1,128.23 128.23
6.45 0.15 6.60 1,123.60 123.60
6.70 0.15 6.85 1,119.00 119.00
Old 10 1/4% Notes....... 5.88% 0.25% 6.13% $1,189.27 $189.27
6.13 0.25 6.38 1,179.99 179.99
6.38 0.25 6.63 1,170.80 170.80
6.63 0.25 6.88 1,161.70 161.70
6.88 0.25 7.13 1,152.69 152.69
Old 8 3/4% Debentures... 5.98% 0.30% 6.28% $1,142.33 $142.33
6.23 0.30 6.53 1,129.74 129.74
6.48 0.30 6.78 1,117.32 117.32
6.73 0.30 7.03 1,105.08 105.08
6.98 0.30 7.28 1,093.00 93.00
</TABLE>
For each issue of New Securities, the following table sets forth the
Benchmark Treasury Yield as of 4:00 p.m., New York City time, on May 22, 1995
and the applicable fixed spread. The table also sets forth what the per annum
interest rate on each issue of New Securities would be, assuming that the
Benchmark Treasury Yields as of the Pricing Time are the same as they were as
of 4:00 p.m., New York City time, on May 22, 1995.
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
BENCHMARK TREASURY YIELD
ISSUE AS OF 5/22/95 FIXED SPREAD INTEREST RATE
----- ------------------------ ------------ -------------
<S> <C> <C> <C>
New 2005 Notes............. 6.63% 0.75% 7.38%
New 2000 Notes............. 6.46% 0.52% 6.98%
New 2025 Notes............. 6.98% 1.10% 8.08%
</TABLE>
For each issue of New Securities, the following table sets forth what the
per annum interest rate on such issue of New Securities would be, assuming
that the Benchmark Treasury Yields as of the Pricing Time are equal to certain
hypothetical Benchmark Treasury Yields.
FOR ILLUSTRATIVE PURPOSES ONLY
<TABLE>
<CAPTION>
HYPOTHETICAL BENCHMARK
ISSUE TREASURY YIELD FIXED SPREAD INTEREST RATE
----- ---------------------- ------------ -------------
<S> <C> <C> <C>
New 2005 Notes............... 6.13% 0.75% 6.88%
6.38 0.75 7.13
6.63 0.75 7.38
6.88 0.75 7.63
7.13 0.75 7.88
New 2000 Notes............... 5.96% 0.52% 6.48%
6.21 0.52 6.73
6.46 0.52 6.98
6.71 0.52 7.23
6.96 0.52 7.48
New 2025 Notes............... 6.48% 1.10% 7.58%
6.73 1.10 7.83
6.98 1.10 8.08
7.23 1.10 8.33
7.48 1.10 8.58
</TABLE>
27
<PAGE>
Pursuant to the following simplified formulas, a Reference Total Price can
be determined for each issue of Old Securities for any given Reference Yield,
assuming an Exchange Date of June 30, 1995 (which will be the Exchange Date
for each Exchange Offer unless such Exchange Offer is extended). The
simplified formulas will not produce a correct Reference Total Price for any
other Exchange Date. The formulas are derived from the methodology set forth
in Schedule A. The reader is referred to the methodology set forth in Schedule
A which permits computations for various Exchange Dates.
"YLD" = Reference Yield, equal to the
Benchmark Treasury Yield plus the applicable
fixed spread, expressed as a decimal number.
OLD 10 3/4% NOTES
107.5
( 1040 - ----- )
107.5 YLD YLD to the 0.328 pwr
Reference Total Price = [----- + -----------------] X (1 + ---)
YLD 2
YLD to the 4th power
(1 + --- )
2
OLD 10 1/4% NOTES
102.5
(1038.44 - -----)
102.5 YLD YLD to the 0.417 pwr
Reference Total Price = [----- + ------------------] X (1 + ---)
YLD 2
YLD to the 8th power
(1 + --- )
2
OLD 8 3/4% DEBENTURES
87.5
(1000 - ----)
87.5 YLD YLD to the 0.583 pwr
Reference Total Price = [---- + -----------------] X (1 + ---)
YLD 2
YLD to the 12th power
(1 + --- )
2
During the term of the Exchange Offers, holders of Old Securities can obtain
current information regarding Benchmark Treasury Yields, Reference Yields,
Reference Total Prices and interest rates on the New Securities and other
information regarding the terms of the Exchange Offers from the Liability
Management Group at the Dealer Manager at (800) 558-3745 (toll free) or (212)
783-3738 (call collect).
THE NEW SECURITIES
The New Securities to be delivered pursuant to the Exchange Offers will be
issued under the Company Indenture and will be unsecured obligations of the
Company. The New Securities will be unsubordinated senior obligations of the
Company and will rank pari passu with all existing and future unsecured and
unsubordinated senior indebtedness of the Company. See "Description of New
Securities."
THE CONSENT SOLICITATION
Concurrently with the Exchange Offers, the Company is soliciting Consents
from the holders of Old Securities to amend the 1992 Indenture under which the
Old 10 3/4% Notes were issued and the 1993 Indenture under which the Old 10
1/4% Notes and the Old 8 3/4% Debentures were issued. HOLDERS OF OLD
SECURITIES WHO TENDER IN AN EXCHANGE OFFER WILL BE REQUIRED, AS A CONDITION TO
A VALID TENDER, TO HAVE GIVEN THEIR CONSENT TO THE PROPOSED AMENDMENTS
CONTEMPLATED BY THE SOLICITATION. THE PROPER COMPLETION, EXECUTION AND
DELIVERY OF A LETTER OF TRANSMITTAL WITH RESPECT TO PARTICULAR OLD SECURITIES
WILL CONSTITUTE THE DELIVERY OF A CONSENT WITH RESPECT TO SUCH OLD SECURITIES.
WITHDRAWAL OF OLD SECURITIES WILL BE DEEMED A REVOCATION OF THE CONSENT TO
WHICH SUCH OLD SECURITIES RELATE. CONSENTS WILL BE IRREVOCABLE AS OF THE
EXPIRATION TIME. See "The Consent Solicitation" and "The Proposed Amendments."
28
<PAGE>
Consents from holders of a majority in principal amount outstanding of an
issue of Old Securities (the "Requisite Consents") must be received in order
to amend the relevant indenture in the manner contemplated by the
Solicitation. Receipt of the Requisite Consents with respect to all three
issues of Old Securities is a condition to consummation of each Exchange Offer
by the Company. See "--Conditions to the Exchange Offers."
The Company will not make a separate payment for Consents delivered in the
Solicitation.
CALCULATIONS; INFORMATION
The Reference Total Price for a particular issue of Old Securities, which is
a price that includes accrued but unpaid interest to the Exchange Date, will
be determined by calculating, per $1,000 principal amount of such Old
Securities, the present value, using the appropriate Reference Yield, of (i)
the principal amount and premium, if any, payable on the applicable redemption
date (assuming such Old Securities were redeemed in full on such date) plus
(ii) all remaining payments of interest up to and including the applicable
redemption date. The Reference Total Price will be rounded to the nearest cent
per $1,000 principal amount of Old Securities. The methodology to be used in
calculating the Reference Total Price for each issue of Old Securities is set
forth in Schedule A hereto. An example of the application of such methodology
is provided for each issue of Old Securities in Schedule B hereto. The
interest rate on each issue of New Securities will be determined by
calculating the sum of the applicable Benchmark Treasury Yield and the
specified number of basis points. Each price and interest rate calculation
will be made using the relevant Benchmark Treasury Yield as of the Pricing
Time. The Exchange Date will be the settlement date for all Reference Total
Price calculations.
The Benchmark Treasury Yield on each Benchmark Treasury Security will be
calculated by the Dealer Manager in accordance with standard market practice,
based on the bid price for such Benchmark Treasury Security as of the Pricing
Time, as such bid price is displayed on the Garban Limited Quotation Screens
for U.S. Government Securities. If any relevant price is not available on a
timely basis on the Garban Limited Quotation Screens or is manifestly
erroneous, the relevant price information may be obtained from such other
quotation service as the Dealer Manager shall select in its sole discretion,
the identity of which shall be disclosed by the Dealer Manager to tendering
holders. Although the Benchmark Treasury Yields will be determined based
solely on the sources described above, information regarding the prices of
Benchmark Treasury Securities also may be found in The Wall Street Journal.
As soon as practicable after the Pricing Time, but in any event before 9:00
a.m., New York City time, on the following business day, the Dealer Manager
will publicly announce by press release to the Dow Jones News Service: (i) for
each issue of Old Securities: the Benchmark Treasury Yield, the Reference
Yield, the Reference Total Price and the consideration (cash plus New
Securities) to be received by tendering holders in the event the relevant
Exchange Offer is consummated and (ii) for each issue of New Securities: the
Benchmark Treasury Yield and the per annum interest rate.
During the term of the Exchange Offers, holders of Old Securities can obtain
current information regarding Benchmark Treasury Yields, Reference Yields,
Reference Total Prices and interest rates on the New Securities and other
information regarding the terms of the Exchange Offers from the Liability
Management Group at the Dealer Manager at (800) 558-3745 (toll free) or (212)
783-3738 (call collect). In addition, the Dealer Manager intends to publish
information about the Exchange Offers, including the information described in
the preceding paragraph when available, on the MCM "CORPORATEWATCH" Service on
Telerate page 41962 and on Bloomberg under "Company News."
In the event any dispute arises with respect to any Benchmark Treasury
Yield, Reference Yield, Reference Total Price, interest rate on an issue of
New Securities or any quotation or calculation with respect to the Exchange
Offers, the Dealer Manager's determination shall be conclusive and binding
absent manifest error.
29
<PAGE>
DEALER MANAGER MARKET ACTIVITY
The Dealer Manager currently plans to make a market in the New Securities
following the completion of the Exchange Offers and may buy and sell New
Securities on a "when and if issued" basis prior to the completion of the
Exchange Offers. However, there can be no assurance that the Dealer Manager
will engage in such activities or that any active market in the New Securities
will develop or be maintained.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offers will expire at 11:59 p.m., New York City time, on
Friday, June 23, 1995 (the "Expiration Date"), subject to extension by the
Company as provided herein. In the event that an Exchange Offer is extended,
the term "Expiration Date" with respect to such extended Exchange Offer shall
mean the date on which such Exchange Offer as so extended shall expire (11:59
p.m., New York City time, on the Expiration Date sometimes being referred to
herein as the "Expiration Time").
The Company expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) extend or terminate any of the Exchange Offers and not
accept for exchange any tendered Old Securities, if any of the conditions
specified in "--Conditions to the Exchange Offers" is not satisfied or waived,
(ii) waive any condition to any Exchange Offer and accept all Old Securities
tendered pursuant to such Exchange Offer, (iii) extend any Exchange Offer and
retain all Old Securities tendered pursuant to such Exchange Offer until the
expiration of such Exchange Offer, subject, however, to the withdrawal rights
of holders, see "--Withdrawal Rights," (iv) amend the terms of any Exchange
Offer and (v) modify the form of the consideration to be paid pursuant to any
Exchange Offer.
If the consideration offered with respect to any Exchange Offer is changed,
such Exchange Offer will remain open at least ten business days from the date
public notice of such change is given. However, in the event the Company has
not received the Requisite Consents with respect to an issue of Old Securities
as of the Expiration Time, the Company may extend the relevant Exchange Offer
for a period of less than ten business days, but not less than two business
days, and redetermine the Reference Total Price with respect to such issue of
Old Securities and the interest rate on the corresponding issue of New
Securities using the relevant Benchmark Treasury Yields as of the Pricing Time
with respect to such extended Exchange Offer. However, no such extension of
less than ten business days will occur unless the value of the total
consideration (cash plus the value of the New Securities) to be received by a
tendering holder increases as a result of such redetermination of the relevant
Reference Total Price and interest rate on the corresponding New Securities.
Any extension, termination, or amendment will be followed as promptly as
practicable by a public announcement and notification of the Exchange Agent
and Dealer Manager thereof. In the case of any extension, a public
announcement will be issued prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date of the
Exchange Offer or Exchange Offers subject to such extension. Without limiting
the manner in which the Company may choose to make any public announcement,
the Company shall have no obligations to publish, advertise or otherwise
communicate any such public announcement other than by release to the Dow
Jones News Service or otherwise as required by law. In the event of any
extension of an Exchange Offer, all Old Securities tendered pursuant to such
Exchange Offer and not subsequently withdrawn, will remain subject to, and
holders will continue to have withdrawal rights until the expiration of, such
Exchange Offer.
Every holder who tenders Old Securities of a particular issue and whose
tender is accepted, will receive the same consideration per $1,000 principal
amount of such Old Securities tendered.
EFFECT OF TENDER
Tendering holders of Old Securities that are exchanged in an Exchange Offer
will not be obligated to pay transfer taxes nor any fee or commission to the
Dealer Manager, with respect to the acquisition
30
<PAGE>
of their Old Securities by the Company pursuant to such Exchange Offer. See
"--Transfer Taxes." However, if the tendering holder handles the transaction
through his or her broker, dealer, commercial bank, trust company or other
institution, such holder may be required to pay fees or commissions to such
institution.
DISSENTERS' RIGHTS
Holders of Old Securities do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law, the 1992 Indenture or the 1993
Indenture, in connection with the Exchange Offers.
ACCEPTANCE OF OLD SECURITIES TENDERED FOR EXCHANGE; DELIVERY OF NEW SECURITIES
Subject to the terms and conditions of the Exchange Offers, the Company will
purchase Old Securities by accepting such securities for exchange and in
consideration therefor will issue the appropriate New Securities and make the
appropriate cash payments. New Securities will be delivered and cash payments
made by check (in New York next day funds) on the fifth business day following
the Expiration Date (the "Exchange Date"). The Exchange Agent will act as
agent for the tendering holders for the purpose of receiving Old Securities
and transmitting payments and New Securities to such holders.
New Securities will be delivered only in book-entry form through DTC and
only to the DTC account of the tendering holder or the tendering holder's
custodian. Accordingly, a holder who tenders Old Securities must specify on
the applicable Letter of Transmittal the DTC participant to which New
Securities should be delivered and all necessary account information to effect
such delivery. Failure to provide such information will render such holder's
tender defective and the Company will have the right, which it may waive, to
reject such tender. The Company, the Exchange Agent and the Dealer Manager
shall not incur any liability for delivering New Securities in accordance with
any instructions provided by a tendering holder.
Holders who anticipate tendering other than through DTC are urged to contact
promptly a bank, broker or other intermediary (that has the capability to hold
securities custodially through DTC) to arrange for receipt of any New
Securities to be delivered pursuant to the Exchange Offers and to obtain the
information necessary to complete the account information table in the
applicable Letter of Transmittal.
The Company shall be deemed to have accepted for exchange (and thereby to
have purchased) tendered Old Securities as, if and when the Company gives oral
or written notice to the Exchange Agent of the Company's acceptance of such
securities for exchange. Old Securities accepted for exchange by the Company
will be cancelled.
If Old Securities in a principal amount in excess of the principal amount
indicated as being tendered on the Letter of Transmittal are submitted, an Old
Security in principal amount equal to the excess principal amount over the
amount indicated as tendered in the Letter of Transmittal will be issued to
the tendering holder, at the Company's expense, in the same form in which such
security was tendered, as promptly as practicable following the expiration or
termination of the relevant Exchange Offer. If any tendered Old Securities are
not accepted for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, such Old Securities will
be returned, at the Company's expense, to the tendering holder thereof, as
promptly as practicable following the expiration or termination of the
relevant Exchange Offer.
PROCEDURES FOR TENDERING OLD SECURITIES AND GIVING CONSENTS
The GREEN Letter of Transmittal must be used to tender Old 10 3/4% Notes.
The YELLOW Letter of Transmittal must be used to tender Old 10 1/4% Notes. The
BLUE Letter of Transmittal must be used to tender Old 8 3/4% Debentures. A
holder may tender less than all Old Securities held by such holder. Old
Securities of any issue may be tendered only in denominations of $1,000.
Holders who wish to tender Old Securities from more than one issue must
complete a separate Letter of Transmittal with respect to each issue of Old
Securities tendered.
THERE ARE NO GUARANTEED DELIVERY PROCEDURES WITH RESPECT TO THE EXCHANGE
OFFERS.
31
<PAGE>
THE PROPER COMPLETION, EXECUTION AND DELIVERY OF A LETTER OF TRANSMITTAL
WITH RESPECT TO PARTICULAR OLD SECURITIES WILL CONSTITUTE THE GIVING OF A
CONSENT WITH RESPECT TO SUCH OLD SECURITIES.
ALL NEW SECURITIES WILL BE DELIVERED ONLY IN BOOK-ENTRY FORM THROUGH DTC.
ACCORDINGLY, HOLDERS WHO ANTICIPATE TENDERING OTHER THAN THROUGH DTC ARE URGED
TO CONTACT PROMPTLY A BANK, BROKER OR OTHER INTERMEDIARY (THAT HAS THE
CAPABILITY TO HOLD SECURITIES CUSTODIALLY THROUGH DTC) TO ARRANGE FOR RECEIPT
OF ANY NEW SECURITIES TO BE DELIVERED PURSUANT TO THE EXCHANGE OFFERS AND TO
OBTAIN THE INFORMATION NECESSARY TO PROVIDE THE REQUIRED DTC PARTICIPANT AND
ACCOUNT INFORMATION IN THE APPLICABLE LETTER OF TRANSMITTAL.
Tender of Old Securities Held in Physical Form. To tender Old Securities
held in physical form, a holder must (i) complete (including the required
information regarding delivery of New Securities through DTC) and sign the
applicable Letter of Transmittal in accordance with the instructions set forth
therein and (ii) deliver the properly completed and executed Letter of
Transmittal, together with any other documents required by the Letter of
Transmittal, and the Old Securities in physical form to the Exchange Agent at
the address set forth on the back cover page of this Prospectus prior to the
Expiration Time.
Tender of Old Securities Held Through a Custodian. To tender Old Securities
held by a custodian or other intermediary (a "Custodian"), the beneficial
owner of the Old Securities must contact the Custodian and direct the
Custodian to tender such Old Securities in accordance with the procedures set
forth herein and in the applicable Letter of Transmittal.
If the Custodian holds such Old Securities in physical form, the Custodian
must follow the procedure set forth above under "--Tender of Old Securities
Held in Physical Form."
If the Custodian holds such Old Securities in book-entry form through DTC,
the Midwest Securities Trust Company or the Philadelphia Depository Trust
Company (each, a "Book-Entry Transfer Facility"), to tender such Old
Securities the Custodian must (i) effect a book-entry transfer of all Old
Securities to be tendered to the Exchange Agent's account at such Book-Entry
Transfer Facility prior to the Expiration Time, (ii) complete (including the
required information regarding delivery of New Securities through DTC) and
sign the applicable Letter of Transmittal in accordance with the instructions
set forth therein and (iii) deliver the properly completed and executed Letter
of Transmittal, together with any other documents required by the Letter of
Transmittal, to the Exchange Agent at the address set forth on the back cover
page of this Prospectus prior to the Expiration Time.
Book-Entry Delivery Procedures. The Exchange Agent will establish promptly
an account with respect to the Old Securities at each Book-Entry Transfer
Facility for purposes of the Exchange Offers. Any financial institution that
is a participant in a Book-Entry Transfer Facility may make a book-entry
delivery of Old Securities by causing such Book-Entry Transfer Facility to
transfer Old Securities to the Exchange Agent's account. However, although
delivery of Old Securities may be effected through book-entry transfer at a
Book-Entry Transfer Facility, a properly completed and executed Letter of
Transmittal, together with any other documents required by the Letter of
Transmittal, must, in any case, be transmitted to, and received by, the
Exchange Agent at its address set forth on the back cover page of this
Prospectus prior to the Expiration Time. Old Securities will not be deemed
surrendered until the Letter of Transmittal is received by the Exchange Agent.
DELIVERY OF A LETTER OF TRANSMITTAL TO A BOOK-ENTRY TRANSFER FACILITY WILL NOT
CONSTITUTE VALID DELIVERY TO THE EXCHANGE AGENT.
Any holder whose Old Securities have been mutilated, lost, stolen or
destroyed will be responsible for obtaining replacement securities or for
arranging for indemnification with the Old Trustee. Holders may contact the
Information Agent for assistance with such matters.
IN ORDER FOR A TENDERING HOLDER TO BE ASSURED OF PARTICIPATING IN AN
EXCHANGE OFFER, SUCH HOLDER MUST TENDER OLD SECURITIES IN ACCORDANCE WITH THE
PROCEDURES SET FORTH HEREIN AND IN THE APPROPRIATE LETTER OF TRANSMITTAL PRIOR
TO THE EXPIRATION TIME. THE METHOD OF DELIVERY OF OLD SECURITIES AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING HOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED AND ENOUGH TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
32
<PAGE>
LETTERS OF TRANSMITTAL AND OLD SECURITIES MUST BE SENT ONLY TO THE EXCHANGE
AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR OLD SECURITIES TO THE COMPANY,
THE OLD TRUSTEE, THE NEW TRUSTEE, THE INFORMATION AGENT OR THE DEALER MANAGER.
PROPER EXECUTION AND DELIVERY OF LETTERS OF TRANSMITTAL
In general, all signatures on a Letter of Transmittal or a notice of
withdrawal must be guaranteed by an Eligible Institution (as such term is
defined in the Letters of Transmittal); however, such signatures need not be
guaranteed if (a) the Letter of Transmittal is signed by the registered holder
of Old Securities tendered thereby or by a participant in a Book-Entry
Transfer Facility whose name appears on a security position listing as the
holder of Old Securities tendered thereby and such holder/participant has not
completed the portion entitled "Special Issuance and Payment Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (b) such Old
Securities are tendered for the account of an Eligible Institution.
If the Letter of Transmittal is signed by the registered holder of the Old
Securities tendered thereby or a participant in a Book-Entry Transfer Facility
whose name appears on a security position listing with respect to the Old
Securities tendered thereby, the signature must correspond with the name as
written on the face of the Old Securities or on the security position listing,
respectively, without any change whatsoever. If any of the Old Securities
tendered thereby are held by two or more holders, all such holders must sign
the Letter of Transmittal. If any of the Old Securities tendered thereby are
registered in different names on different Old Securities, it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations.
If the Letter of Transmittal is signed by a person other than the registered
holder of Old Securities tendered thereby or a participant in a Book-Entry
Transfer Facility whose name appears on a security position listing with
respect to the Old Securities tendered thereby, the Old Securities must be
endorsed or accompanied by appropriate instruments of transfer, in either
case, signed exactly as the name of the holder appears on the face of the Old
Securities or on the security position listing with respect thereto. If the
Letter of Transmittal or any Old Securities, proxy or instrument of transfer
is signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person must so indicate when signing, and proper
evidence satisfactory to the Exchange Agent of the authority of such person so
to act must be submitted.
New Securities will be delivered only in book-entry form through DTC and
only to the DTC account of the tendering holder or the tendering holder's
custodian. If cash payments for any Old Securities exchanged, or if Old
Securities not tendered or not exchanged are to be delivered to a person other
than the holder of the Old Securities tendered, or to an address other than
that of the holder of the Old Securities tendered, such holder should indicate
in the applicable box the person and/or address to which such payments or Old
Securities are to be delivered. If a cash payment or Old Securities not
tendered or not exchanged are to be issued to a person other than the holder
of the Old Securities tendered, the employer identification or social security
number of the person to whom issuance is to be made must be indicated on the
Letter of Transmittal. If Old Securities not tendered or not exchanged are to
be issued to a person other than the holder of the Old Securities tendered,
the Old Securities must be endorsed or accompanied by appropriate instruments
of transfer, signed exactly as the name of the holder appears on the face of
the Old Securities or the security position listing with respect thereto, with
the signature on the certificates or instruments of transfer guaranteed by an
Eligible Institution. If no such instructions are given, any cash payments and
any Old Securities not tendered or not exchanged will be delivered to the
holder of the Old Securities tendered.
Because New Securities will be delivered only in book-entry form through
DTC, a holder who tenders Old Securities must specify on the applicable Letter
of Transmittal the DTC participant to which New Securities should be delivered
and all necessary account information to effect such delivery. Such DTC
participant must be either the tendering holder or a custodian for the
tendering holder. Failure to
33
<PAGE>
provide such information will render such holder's tender defective and the
Company will have the right, which it may waive, to reject such tender.
Holders who anticipate tendering other than through DTC are urged to contact
promptly a bank, broker or other intermediary (that has the capability to hold
securities custodially through DTC) to arrange for receipt of any New
Securities to be delivered pursuant to the Exchange Offers and to obtain the
information necessary to complete the account information table in the
applicable Letter of Transmittal.
No alternative, conditional, irregular or contingent tenders or Consents
will be accepted. By executing the Letter of Transmittal, the tendering holder
of Old Securities waives any right to receive any notice of the acceptance for
exchange or purchase, as the case may be, of his or her Old Securities, except
as otherwise provided herein.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Securities will be resolved by the
Company, whose determination shall be conclusive and binding. The Company
reserves the absolute right to reject any or all tenders that are not in
proper form or the acceptance of which may be, in the opinion of counsel for
the Company, unlawful. The Company also reserves the absolute right to waive
any condition of any Exchange Offer as set forth under "--Conditions to the
Exchange Offers" and any irregularities or conditions of tender as to
particular Old Securities. The Company's interpretation of the terms and
conditions of the Exchange Offers (including the instructions in the Letters
of Transmittal) shall be conclusive and binding.
Unless waived, any irregularities in connection with tenders must be cured
within such time as the Company may determine. The Company, the Exchange
Agent, the Information Agent and the Dealer Manager shall not be under any
duty to give notification of defects in such tenders and shall not incur
liability for any failure to give such notification. Tenders of Old Securities
will not be deemed to have been made until such irregularities have been cured
or waived. Any Old Securities received by the Exchange Agent that are not
properly tendered and as to which the irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holder, unless
otherwise provided in the Letters of Transmittal, as soon as practicable
following the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFERS
Notwithstanding any other provisions of an Exchange Offer, or any extension
of such Exchange Offer, the Company will not be required to issue New
Securities or make any payments in respect of any properly tendered Old
Securities, and may terminate such Exchange Offer by oral or written notice to
the Exchange Agent and the holders of such Old Securities, or, at its option,
modify or otherwise amend such Exchange Offer with respect to such Old
Securities, if any of the following conditions has not been satisfied, prior
to or concurrently with the consummation of such Exchange Offer:
(a) receipt of the Requisite Consents with respect to all three issues of
Old Securities;
(b) there shall not have been any action taken or threatened, or any
statute, rule, regulation, judgment, order, stay, decree or injunction
promulgated, enacted, entered, enforced or deemed applicable to the
Exchange Offers, the Proposed Amendments contemplated by the Solicitation
or the exchange of Old Securities pursuant to the Exchange Offers (the
"Exchange"), by or before any court or governmental regulatory or
administrative agency or authority or tribunal, domestic or foreign, which
(i) challenges the making of the Exchange Offers, the Proposed Amendments
contemplated by the Solicitation or the Exchange, or might, directly or
indirectly, prohibit, prevent, restrict or delay consummation of the
Exchange Offers, the Proposed Amendments contemplated by the Solicitation
or the Exchange, or might otherwise adversely affect in any material manner
the Exchange Offers, the Proposed Amendments contemplated by the
Solicitation or the Exchange or (ii) in the sole judgment of the Company,
could materially adversely affect the business, condition (financial or
otherwise), income, operations, properties, assets, liabilities or
prospects of the Company and its subsidiaries, taken as a whole, or
materially impair the contemplated benefits of the Exchange Offers, the
Proposed Amendments contemplated by the Solicitation or the Exchange to the
Company or might be material to holders of Old Securities in deciding
whether to accept such Exchange Offers;
34
<PAGE>
(c) there shall not have occurred or be likely to occur any event
affecting the business or financial affairs of the Company that, in the
sole judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Exchange Offers, the Proposed Amendments
contemplated by the Solicitation or the Exchange or that will, or is
reasonably likely to, materially impair the contemplated benefits of the
Exchange Offers, the Proposed Amendments contemplated by the Solicitation
or the Exchange to the Company or might be material to holders of Old
Securities in deciding whether to accept such Exchange Offers;
(d) there shall not have occurred (i) any general suspension of or
limitation on trading in securities on the NYSE or in the over-the-counter
market (whether or not mandatory), (ii) any material adverse change in the
price of the Old Securities, (iii) a material impairment in the general
trading market for debt securities, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks by federal or
state authorities in the United States (whether or not mandatory), (v) a
commencement of a war, armed hostilities or other national or international
crisis directly or indirectly relating to the United States, (vi) any
limitation (whether or not mandatory) by any governmental authority on, or
other event having a reasonable likelihood of affecting, the extension of
credit by banks or other lending institutions in the United States or (vii)
any material adverse change in United States securities or financial
markets generally, or in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offers, a material acceleration or
worsening thereof; and
(e) the Old Trustee shall not have objected in any respect to, or taken
any action that could in the sole judgment of the Company adversely affect
the consummation of, any of the Exchange Offers, the Exchange or the
Company's ability to effect the Proposed Amendments contemplated by the
Solicitation, nor shall the Old Trustee have taken any action that
challenges the validity or effectiveness of the procedures used by the
Company in soliciting Consents (including the form thereof) or in making
the Exchange Offers or the Exchange.
If any of the foregoing conditions are not satisfied with respect to a
particular issue of Old Securities, the Company may (i) terminate the Exchange
Offer with respect to such issue of Old Securities and return such Old
Securities to the holders who tendered them; (ii) extend such Exchange Offer
and retain all tendered Old Securities until the expiration of such Exchange
Offer, as extended, subject, however, to the withdrawal rights of holders, see
"--Withdrawal Rights" and "--Expiration Date; Extensions; Termination;
Amendments"; or (iii) waive the unsatisfied conditions with respect to such
Exchange Offer and accept all Old Securities tendered therein.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company, in whole or in part, in its sole discretion. Any
determination made by the Company concerning an event, development or
circumstance described or referred to above shall be conclusive and binding.
WITHDRAWAL AND REVOCATION RIGHTS
Tendered Old Securities may be withdrawn by the tendering holder prior to
the Expiration Time.
A holder of Old Securities who tendered Old Securities in physical form may
withdraw the Old Securities tendered by providing a written notice of
withdrawal (or facsimile thereof) to the Exchange Agent, at its address set
forth on the back cover page of this Prospectus, prior to the Expiration Time,
which notice must contain: (i) the name of the person who tendered the Old
Securities; (ii) a description of the Old Securities to be withdrawn; (iii)
the certificate numbers shown on the particular certificates evidencing such
Old Securities; (iv) the aggregate principal amount represented by such Old
Securities; (v) the signature of the holder of such Old Securities executed in
the same manner as the original signature on the Letter of Transmittal
(including a signature guarantee, if such original signature was guaranteed);
and (vi) if such Old Securities are owned by a new beneficial owner, evidence
satisfactory to the Company that the person withdrawing the tender has
succeeded to the beneficial ownership of the Old Securities.
35
<PAGE>
If a beneficial owner of Old Securities tendered through a Custodian and
wishes to withdraw the Old Securities tendered, such beneficial owner must
contact the Custodian and direct the Custodian to withdraw such Old Securities
in accordance with the following procedures. In order to withdraw such Old
Securities the Custodian must provide a written notice of withdrawal (or
facsimile thereof) to the Exchange Agent, at its address set forth on the back
cover page of this Prospectus, prior to the Expiration Time, which notice must
contain: (i) the name of the person who tendered the Old Securities; (ii) a
description of the Old Securities to be withdrawn; (iii) the certificate
numbers shown on the particular certificates evidencing such Old Securities
(if Old Securities were tendered in physical form); (iv) the aggregate
principal amount represented by such Old Securities; and (v) if such Old
Securities are owned by a new beneficial owner, evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the Old Securities. If the Old Securities were tendered by book-
entry transfer, the Custodian also must debit the Exchange Agent's account at
the Book-Entry Transfer Facility through which the tender was made of all Old
Securities to be withdrawn.
A PURPORTED NOTICE OF WITHDRAWAL WHICH LACKS ANY OF THE REQUIRED INFORMATION
WILL NOT BE AN EFFECTIVE WITHDRAWAL OF A TENDER PREVIOUSLY MADE. TENDERS MAY
NOT BE WITHDRAWN AFTER THE EXPIRATION TIME.
Holders who have tendered in an Exchange Offer will continue to have
withdrawal rights following any extension of such Exchange Offer. Any
permitted withdrawals of tenders of Old Securities may not be rescinded, and
any Old Securities so withdrawn will thereafter be deemed not validly tendered
for purposes of the Exchange Offer and the holder thereof will be deemed to
have rejected the Exchange Offer with respect to the withdrawn Old Securities.
However, withdrawn Old Securities may be re-tendered prior to the Expiration
Time by following the procedures for tendering.
THE WITHDRAWAL OF TENDERED OLD SECURITIES WILL BE DEEMED TO BE A REJECTION
OF THE RELEVANT EXCHANGE OFFER AND A REVOCATION OF THE CONSENTS TO WHICH SUCH
TENDERED OLD SECURITIES RELATE.
All questions as to the validity (including time of receipt) of notices of
withdrawal will be determined by the Company, whose determination will be
conclusive and binding. None of the Company, the Exchange Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification.
FUTURE OFFERS
The Company reserves the right, in its sole discretion, to purchase or make
offers for any Old Securities that remain outstanding subsequent to the
completion of the relevant Exchange Offer. The terms of any such purchase or
offer could differ from the terms of the Exchange Offers.
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the transfer
and sale of Old Securities to it pursuant to the Exchange Offers. If, however,
substitute Old Securities for amounts not tendered or not exchanged are to be
delivered to, or are to be registered in the name of, any person other than
the registered holder of Old Securities tendered, or if tendered Old
Securities are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer or sale of Old Securities to the Company
pursuant to an Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) shall be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the appropriate Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder and/or withheld from any payments due with respect to the Old
Securities tendered by such holder.
36
<PAGE>
EXCHANGE AGENT
Chemical Mellon Shareholder Services has been appointed Exchange Agent for
the Exchange Offers. The Company will pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expenses in connection therewith. Letters of Transmittal and all
correspondence in connection with the Exchange Offers must be sent or
delivered to the Exchange Agent at the address set forth on the back cover
page of this Prospectus.
INFORMATION AGENT
D. F. King & Co., Inc. has been appointed Information Agent for the Exchange
Offers. The Company will pay the Information Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith.
Any questions concerning tender procedures or requests for assistance or
additional copies of this Prospectus or the Letters of Transmittal may be
directed to the Information Agent at the address and telephone number set
forth on the back cover page of this Prospectus. Holders of Old Securities may
also contact the Dealer Manager or their broker, dealer, commercial bank or
trust company for assistance concerning the Exchange Offers.
DEALER MANAGER
The Company has engaged Salomon Brothers Inc to act as Dealer Manager in
connection with the Exchange Offers. Any holder who has questions concerning
the terms of the Exchange Offers or who would like current information
regarding Benchmark Treasury Yields, Reference Yields, Reference Total Prices
or interest rates on the New Securities may contact the Liability Management
Group at the Dealer Manager at (800) 558-3745 (toll free) or (212) 783-3738
(call collect) or at the address set forth on the back cover page of this
Prospectus.
The Company has agreed to pay the Dealer Manager a fee for its services and
to reimburse the Dealer Manager for its reasonable out-of-pocket expenses,
including reasonable fees and expenses of legal counsel, and the Company has
agreed to indemnify the Dealer Manager against certain liabilities, including
certain liabilities under the federal securities laws, in connection with the
Exchange Offers. In the past, the Dealer Manager has provided other investment
banking and financial advisory services to the Company.
The Dealer Manager currently plans to make a market in the New Securities
following the completion of the Exchange Offers and may buy and sell New
Securities on a "when and if issued basis" prior to the completion of the
Exchange Offers. However, there can be no assurance that the Dealer Manager
will engage in such activities or that any active market in the New Securities
will develop or be maintained. See "--Dealer Manager Market Activity" and
"Investment Considerations."
ACCOUNTING TREATMENT OF EXCHANGE OFFERS
The Exchange will be accounted for by the Company as an extinguishment of
debt as provided for under generally accepted accounting principles. The
Company expects to record an extraordinary loss in connection with the
Exchange in the period the Exchange is consummated.
37
<PAGE>
MARKET AND TRADING INFORMATION
The Old 10 3/4% Notes and Old 8 3/4% Debentures are listed and traded on the
NYSE. The following table sets forth the high and low closing sales prices on
the NYSE for such Old Securities for the periods indicated, as reported by
BLOOMBERG FINANCIAL MARKETS.
<TABLE>
<CAPTION>
OLD 10 3/4% NOTES HIGH LOW
- ----------------- -------- --------
<S> <C> <C>
1995:
April 1, 1995 through May 22, 1995.......................... 110 1/2% 109 1/8%
First Quarter............................................... 109 5/8 105 3/8
1994:
Fourth Quarter.............................................. 109 101 1/2
Third Quarter............................................... 104 3/4 101 1/4
Second Quarter.............................................. 106 102
First Quarter............................................... 112 3/4 105
1993:
Fourth Quarter.............................................. 112 108 3/4
Third Quarter............................................... 111 1/4 109 5/8
Second Quarter.............................................. 110 1/2 106 5/8
First Quarter............................................... 108 3/4 105 7/8
<CAPTION>
OLD 8 3/4% DEBENTURES HIGH LOW
- --------------------- -------- --------
<S> <C> <C>
1995:
April 1, 1995 through May 22, 1995.......................... 107 1/8% 101 1/2%
First Quarter............................................... 102 1/2 95 1/2
1994:
Fourth Quarter.............................................. 97 3/4 93
Third Quarter............................................... 93 7/8 88 1/2
Second Quarter.............................................. 95 1/4 90
First Quarter............................................... 103 5/8 90
1993:
Fourth Quarter.............................................. 104 100 3/8
Third Quarter............................................... 102 1/8 99 5/8
Second Quarter.............................................. 100 1/8 98
</TABLE>
On May 22, 1995, the reported closing sales price on the NYSE for the Old 10
3/4% Notes and the Old 8 3/4% Debentures was 110 1/4% and 106%, respectively.
Although the Old 10 3/4% Notes and Old 8 3/4% Debentures are listed and traded
on the NYSE, the over-the-counter market, not the NYSE, is the principal
market for the Old 10 3/4% Notes and Old 8 3/4% Debentures. Accordingly, the
information provided above with respect to NYSE closing sales prices does not
reflect the prices at which Old 10 3/4% Notes and Old 8 3/4% Debentures were
traded in their principal market during the periods indicated, which prices
may have been different than those on the NYSE. The Old 10 3/4% Notes were
issued on May 1, 1992 and the Old 8 3/4% Debentures on March 30, 1993.
The Old 10 1/4% Notes are traded only in the over-the-counter market. On May
22, 1995, the closing bid price for the Old 10 1/4% Notes was 113.47% as
reported by BLOOMBERG FINANCIAL MARKETS. The Old 10 1/4% Notes were issued on
May 5, 1994.
There can be no assurance regarding the prices at which the Old Securities
may trade during and following the Exchange Offers. See "Investment
Considerations." HOLDERS ARE URGED TO OBTAIN CURRENT INFORMATION WITH RESPECT
TO THE MARKET PRICES OF THE OLD SECURITIES.
38
<PAGE>
THE CONSENT SOLICITATION
Concurrently with the Exchange Offers, the Company is soliciting Consents as
follows: (i) from the holders of the Old 10 3/4% Notes, Consents to certain
amendments to the 1992 Indenture, pursuant to which the Old 10 3/4% Notes were
issued, (ii) from the holders of the Old 10 1/4% Notes, Consents to certain
amendments, with respect to the Old 10 1/4% Notes, to the 1993 Indenture,
pursuant to which the Old 10 1/4% Notes were issued and (iii) from the holders
of the Old 8 3/4% Debentures, Consents to certain amendments, with respect to
the Old 8 3/4% Debentures, to the 1993 Indenture, pursuant to which the Old 8
3/4% Debentures were issued. Each of the 1992 Indenture and the 1993 Indenture
sometimes is referred to herein as the "Indenture" and they sometimes are
referred to collectively herein as the "Indentures."
Prior to the announcement of the acquisition of Healthtrust by the Company,
the Old Securities were rated below investment grade at B1 by Moody's and B by
S&P. The Old Securities currently are subject to terms and restrictive
covenants that are, in general, typical of debt securities with similar
ratings. Following the Company's acquisition of Healthtrust, the Company,
whose debt securities as of the date hereof are rated investment grade at A3
by Moody's and BBB+ by S&P, became a co-obligor with Healthtrust with respect
to the Old Securities. As of the date hereof, each of Moody's and S&P has
raised its rating with respect to the Old Securities to investment grade at
Baa1 by Moody's and BBB by S&P. Pursuant to the Solicitation, the Company is
proposing parallel amendments (the "Proposed Amendments") to the 1992
Indenture and the 1993 Indenture in order to make the covenants and certain
other terms in the Indentures consistent with those that currently apply to
the Company and its subsidiaries with respect to the Company's existing debt
securities and that will apply to the Company and its subsidiaries with
respect to the New Securities. It should be noted, however, that the ratings
given the Old Securities should be evaluated independently from similar
ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency. Accordingly, there
can be no assurance that the Old Securities, or any of the Company's debt
securities, will continue to be rated investment grade in the future.
The Proposed Amendments as contemplated by the Solicitation would, among
other things, eliminate the covenants in each Indenture that restrict the
incurrence of Indebtedness and the making of Restricted Payments (as each such
term is defined in the Indentures) by an Obligor and its subsidiaries and
would replace those covenants with covenants (i) limiting the ability of an
Obligor and certain of its subsidiaries to mortgage or pledge, or engage in
sale and lease-back transactions with respect to, certain hospital properties
and (ii) restricting the issuance of preferred stock and the incurrence of
indebtedness by certain subsidiaries of an Obligor. In addition, the Company
proposes to (i) make the provisions in the each Indenture governing
consolidations, mergers and asset sales less restrictive and (ii) eliminate
the provisions in each Indenture that require that, in the event of a Change
of Control and a Rating Decline (as each such term is defined in the
Indentures), the Old Securities be repurchased at par at the option of
holders. Although the resulting covenants and terms would be substantially
less restrictive than those currently set forth in the Indentures, they would
be consistent with those of the Company's existing debt securities and the New
Securities. See "The Proposed Amendments" and "Investment Considerations."
Requisite Consents must be received in order to adopt the Proposed
Amendments to the relevant Indenture with respect to an issue of Old
Securities. The Proposed Amendments will be adopted with respect to a
particular issue of Old Securities only upon consummation of the Exchange
Offer with respect to such issue. If the Proposed Amendments are adopted with
respect to an issue of Old Securities, then each non-exchanging holder will be
bound by the Proposed Amendments even though such holder did not consent to
the Proposed Amendments. See "Investment Considerations."
As of the date hereof, there are $500,000,000 aggregate principal amount of
Old 10 3/4% Notes outstanding, $200,000,000 aggregate principal amount of Old
10 1/4% Notes outstanding and $300,000,000 aggregate principal amount of Old 8
3/4% Debentures outstanding.
39
<PAGE>
HOLDERS OF OLD SECURITIES WHO TENDER IN AN EXCHANGE OFFER WILL BE REQUIRED,
AS A CONDITION TO A VALID TENDER, TO HAVE GIVEN THEIR CONSENT TO THE PROPOSED
AMENDMENTS WITH RESPECT TO SUCH ISSUE OF OLD SECURITIES. THE PROPER
COMPLETION, EXECUTION AND DELIVERY OF A LETTER OF TRANSMITTAL WITH RESPECT TO
PARTICULAR OLD SECURITIES WILL CONSTITUTE THE DELIVERY OF A CONSENT WITH
RESPECT TO SUCH OLD SECURITIES. WITHDRAWAL OF OLD SECURITIES WILL BE DEEMED A
REVOCATION OF THE CONSENT TO WHICH SUCH OLD SECURITIES RELATE. CONSENTS WILL
BE IRREVOCABLE AS OF THE EXPIRATION TIME.
THE COMPANY WILL MAKE NO SEPARATE PAYMENT FOR CONSENTS DELIVERED IN THE
SOLICITATION.
40
<PAGE>
THE PROPOSED AMENDMENTS
The 1992 Indenture and the 1993 Indenture contain substantially similar
covenants and terms. What follows are summaries of the covenants and terms
proposed to be eliminated from, and the covenants and terms proposed to be
added to, each Indenture pursuant to the Solicitation. Each summary is
followed by a summary of related definitions. The summaries do not purport to
be complete and are qualified in their entirety by reference to the 1992
Indenture, the 1993 Indenture and the form of the supplemental indenture to
each of the 1992 Indenture and the 1993 Indenture that contain the Proposed
Amendments with respect to the Old Securities (and that are to be executed in
respect of an issue of Old Securities by the Company, Healthtrust and the Old
Trustee in the event the Requisite Consents necessary to adopt the Proposed
Amendments with respect to such issue are obtained). The form of each such
supplemental indenture has been filed with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part. The term "Obligor"
refers to each of the Company and Healthtrust as an obligor under the
Indentures.
SUMMARY OF PROVISIONS TO BE ELIMINATED
Pursuant to the Solicitation, the Company is proposing to eliminate the
following from each Indenture with respect to each issue of Old Securities:
Limitation on Indebtedness. Each Indenture currently provides that the
Obligor will not, and will not permit any subsidiary to, directly or
indirectly, incur, assume, guarantee or otherwise become liable for (each such
action, an "incurrence") the payment of any Indebtedness unless, after giving
effect thereto, the Obligor's Fixed Charge Coverage Ratio on a pro forma basis
for its last four completed fiscal quarters, taken as a whole (calculated on
the assumptions that (i) such Indebtedness and the application of the proceeds
thereof and (ii) any other Indebtedness incurred, modified or repaid by the
Obligor or any subsidiary and the application of the proceeds thereof and
(iii) any acquisition or disposition by the Obligor or any subsidiary of
assets in excess of $25.0 million, in each case since the end of such last
four completed fiscal quarters, had been incurred, modified, repaid,
consummated or applied, as the case may be, on the first day of such four-
quarter period) would have been greater than 2.25 to 1; provided, however,
that the foregoing does not restrict the incurrence of Permitted Indebtedness.
(Section 1005 of the 1992 Indenture; Section 5.06 of the 1993 Indenture)
Limitation on Restricted Payments. Each Indenture currently provides that
the Obligor will not, directly or indirectly, declare or pay any dividend or
make any distribution in respect of its capital stock, or make or permit any
subsidiary to make any payment on account of the purchase, redemption or other
acquisition or retirement for value of any capital stock of the Obligor or any
affiliate of the Obligor, or any warrants, rights or options to purchase such
capital stock, or make or permit any subsidiary to make any Investment (all of
the foregoing other than any such action that is a Permitted Payment, being
collectively referred to as "Restricted Payments"), unless (a) at the time of
and after giving effect to the proposed Restricted Payment, no default or
event of default under the Indenture shall have occurred and be continuing and
(b) at the time of and after giving effect to the proposed Restricted Payment,
the aggregate amount of all Restricted Payments made on or after March 1, 1992
shall not exceed the sum of (i) 50% of the Consolidated Net Income of the
Obligor for the period (taken as one accounting period) from and including
March 1, 1992 to the last day of the fiscal quarter preceding the date of the
proposed Restricted Payment, plus (ii) the aggregate net proceeds, including
the fair market value of property other than cash, received by the Obligor
from the issuance or sale (other than to a subsidiary) on or after March 1,
1992, of shares of its capital stock (other than Redeemable Stock) or
warrants, options or rights to purchase such capital stock (other than
Redeemable Stock), plus (iii) the aggregate net proceeds received by the
Obligor from the issue or sale (other than to a subsidiary) on or after March
1, 1992, of any debt securities evidencing Indebtedness or Redeemable Stock,
which thereafter have been converted into or exchanged for capital stock
(other than Redeemable Stock) of the Obligor.
41
<PAGE>
The foregoing, however, does not prohibit the following Restricted Payments:
(i) the payment of any dividend within 60 days after the date of declaration
thereof, if such declaration complied with the provisions of the Indenture on
the date of such declaration, (ii) the redemption, repurchase or other
acquisition or retirement of any shares of any class of capital stock of the
Obligor or any subsidiary in exchange for or out of the proceeds of a
substantially concurrent issuance and sale (other than to a subsidiary) of,
shares of capital stock of the Obligor, (iii) the payment of dividends on the
Obligor's capital stock, of up to 6% per annum of the aggregate net proceeds
received by the Obligor in any public offerings of capital stock, and (iv) the
purchase or redemption of shares of capital stock, options to purchase shares
of capital stock, or stock appreciation rights of the Obligor or any
subsidiary issued pursuant to certain compensation, incentive or benefit
plans. The Indentures provide that Restricted Payments described in this
paragraph shall reduce the amount that would otherwise be available for
Restricted Payments under the test described in the preceding paragraph.
(Section 1006 of the 1992 Indenture; Section 5.07 of the 1993 Indenture)
Limitation on Certain Other Subordinated Indebtedness. Each Indenture
currently provides that the Obligor shall not incur or assume any other
subordinated Indebtedness unless such Indebtedness is subordinate in right of
payment to, or ranks pari passu with, the Old Securities. However, each
Indenture permits the Obligor to incur other subordinated Indebtedness that is
not subordinate in right of payment, or does not rank pari passu with, the Old
Securities if such Indebtedness is assumed in connection with any
consolidation, merger or sale of assets permitted under the Indenture.
(Section 1004 of the 1992 Indenture, Section 5.05 of the 1993 Indenture)
Purchase of Securities upon Change of Control Triggering Event. Each
Indenture currently provides that upon the occurrence of both a Change of
Control and a Rating Decline (together a "Change of Control Triggering Event")
each holder of Old Securities has the right to require the repurchase of such
holder's Old Securities in whole or in part at a purchase price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest. In general, given that the Old Securities constitute subordinated
debt, any other Indebtedness which is senior to the Old Securities and would
by its terms be accelerated upon the purchase of the Old Securities after the
occurrence of a Change of Control Triggering Event, would have to be repaid
prior to the repurchase of the Old Securities. (Section 1010 of the 1992
Indenture; Section 5.08 of the 1993 Indenture)
Consolidations, Mergers and Sale of Assets. Each Indenture currently
provides that an Obligor may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of its assets
substantially as an entirety to, any person, unless: (i) either (a) the
Obligor shall be the continuing corporation or (b) the person (if other than
the Obligor) formed by such consolidation or into which the Obligor is merged
or the person that acquires by conveyance, transfer or lease the properties
and assets of the Obligor substantially as an entirety shall be a corporation,
partnership or trust organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia, and shall
expressly assume, by a supplemental indenture, the due and punctual payment of
the principal of, and premium, if any, and interest on the relevant issue of
Old Securities and the performance and observance of every covenant of the
Indenture on the part of the Obligor to be performed or observed; (ii)
immediately thereafter, the Obligor or such person (a) shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net Worth of
the Obligor immediately prior to such transaction and (b) could incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) under
"Limitation on Indebtedness" described above; (iii) immediately thereafter, no
event of default (and no event which, after notice or lapse of time, or both,
would become an event of default) shall have occurred and be continuing; and
(iv) certain other conditions are satisfied. (Section 801 of the 1992
Indenture; Section 10.01 of the 1993 Indenture)
The following definitions apply to the provisions proposed to be eliminated
from each Indenture:
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<PAGE>
"Change of Control" means such time as (i) a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than one of
the Obligor's employee benefit plans, (A) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 50%, in the case of
the 1993 Indenture, or 35%, in the case of the 1992 Indenture, of the total
voting rights attaching to the then outstanding voting stock of the Obligor or
(B) has the right or the ability by voting right, contract or otherwise to
elect or designate for election a majority of the entire board of directors of
the Obligor; or (ii)(A) the Obligor consolidates with or merges into any other
person or conveys, transfers or leases all or substantially all of its assets
to any person or (B) any person merges into the Obligor, in either event
pursuant to a transaction in which voting stock of the Obligor representing
more than 50%, in the case of the 1993 Indenture, and 35%, in the case of the
1992 Indenture, of the total voting rights of the Obligor outstanding
immediately prior to the effectiveness thereof is reclassified or changed into
or exchanged for cash, securities or other property.
"Consolidated Capital Expenditure Indebtedness" means (i) any Indebtedness
of the Obligor and its subsidiaries issued to finance the purchase or
construction of any assets acquired (other than from affiliates) or
constructed after the date of the Indenture to the extent the purchase or
construction prices for such assets are or should be included in "property,
plant or equipment" in the consolidated financial statements of the Obligor
and its subsidiaries and (ii) to the extent not covered by clause (i), any
Indebtedness of the Obligor and its subsidiaries issued to finance the
acquisition (by purchase or otherwise) of the business, property or fixed
assets of, or other evidence of beneficial ownership of, any person.
"Consolidated Interest Expense" means for any period, without duplication,
the sum of (i) the aggregate of the interest expense of the Obligor and its
consolidated subsidiaries for such period plus (ii) net payments in respect of
interest rate swap agreements.
"Consolidated Net Income" means for any period the consolidated net income
(or loss) of the Obligor and its consolidated subsidiaries (excluding any
income (or loss) from any person not controlled by the Obligor or any
subsidiary other than cash dividends or distributions received from such
person) adjusted by excluding (i) any gain (or loss) realized upon the
termination of any employee pension plan, (ii) net extraordinary gains or net
extraordinary losses, (iii) net gains or losses in respect of dispositions of
assets other than in the ordinary course of business, (iv) expenses incurred
in or relating to periods prior to March 1, 1992, relating to Healthtrust's
Employee Stock Ownership Plan, as amended from time to time, and (v) any
deferred compensation or other charge relating to or arising out of
Healthtrust's recapitalization completed on December 19, 1991.
"Consolidated Net Worth" means for any date of determination the sum of the
capital stock and additional paid-in-capital plus retained earnings (or minus
accumulated deficit) of the Obligor and its consolidated subsidiaries, less
amounts attributable to Redeemable Stock.
"Consolidated Non-cash Charges" means for any period, the aggregate
depreciation, amortization and other non-cash charges (other than reserves or
expenses established in anticipation of future cash requirements such as
reserves for taxes and uncollectible accounts) of the Obligor and its
consolidated subsidiaries, provided, that (i) any charges which are not
included for the purpose of determining Consolidated Net Income shall be
excluded from Consolidated Non-cash Charges and (ii) any charges which are
included for the purpose of determining Consolidated Interest Expense or
Consolidated Tax Expense shall be excluded from Consolidated Non-cash Charges.
"Consolidated Tax Expense" means for any period the aggregate of the tax
expense of the Obligor and its consolidated subsidiaries for such period.
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"Fixed Charge Coverage Ratio" means for any period the ratio of (i) the sum
of (without duplication) Consolidated Net Income, Consolidated Interest
Expense, Consolidated Tax Expense and Consolidated Non-cash Charges for such
period, to (ii) Consolidated Interest Expense for such period.
"Healthcare Venture" means a person at least a majority of whose revenues
result from healthcare related businesses or facilities (including, without
limitation, a physician).
"Indebtedness" means, without duplication, (i) any liability of any person
(A) for borrowed money, or under any reimbursement obligation relating to a
letter of credit, or (B) evidenced by a bond, note, debenture or similar
instrument (including a purchase money obligation) given in connection with
the acquisition of any businesses, properties or assets of any kind (other
than a trade payable or a current liability arising in the ordinary course of
business), or (3) for the payment of money relating to a capitalized lease
obligation; (ii) all Redeemable Stock valued at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid dividends; and
(iii) any liability of others described in the preceding clauses (i) or (ii)
that the person has guaranteed or that is otherwise its legal liability.
"Investment" means (other than accrued and unpaid interest in respect of any
advance, loan or other extension of credit) any advance, loan, account
receivable or other extension of credit (other than in the ordinary course of
business) or any capital contribution to, any purchase or ownership of any
securities of, or any bank accounts with or guarantee of any Indebtedness or
other obligations of, any person. However, "Investment" does not include the
repayment or the purchase, repurchase, retirement, redemption or other
acquisition by the Obligor or any subsidiary of any Indebtedness of the
Obligor or any subsidiary.
"Permitted Indebtedness" means (i) Indebtedness of the Obligor or any
subsidiary outstanding on the date of the Indenture, (ii) Indebtedness of the
Obligor pursuant to the Old Securities, (iii) Indebtedness (not to exceed the
stated aggregate commitment thereunder) under a certain credit agreement of
Healthtrust, (iv) certain obligations pursuant to interest rate and currency
swap agreements, (v) certain renewals, extensions, substitutions, refinancings
or replacements of any Indebtedness described in clauses (i), (ii), (iii) and
(iv) of this definition, (vi) intercompany debt obligations, (vii)
Consolidated Capital Expenditure Indebtedness in an amount not to exceed $100
million during the fiscal year ending August 31, 1993 and $50 million during
any fiscal year thereafter, provided that any amounts not used in any fiscal
year may be used in a subsequent year; provided, however, that Consolidated
Capital Expenditure Indebtedness permitted to be incurred under this clause
(vii) may not exceed $250 million in the aggregate during the term of the
Indenture, (viii) Physician Support Obligations, (ix) Indebtedness arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Obligor or any subsidiary,
incurred or assumed in connection with the disposition of any stock, business
or assets of the Obligor, a subsidiary or any Healthcare Venture, other than
guarantees or similar credit support by the Obligor of Indebtedness incurred
by any person acquiring all or any portion of such business, assets,
subsidiary or Healthcare Venture for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of all
such Indebtedness in the nature of such guarantees shall at no time exceed the
gross proceeds actually received from the sale of such business, assets,
subsidiary or Healthcare Venture, (x) Indebtedness consisting of deferred
payment obligations resulting from the adjudication or settlement of any claim
or litigation in an amount not to exceed $50 million in the aggregate during
the term of the Indenture, (xi) Indebtedness evidenced by (A) standby letters
of credit which are issued for the purpose of supporting the Obligor's,
subsidiaries' and any Healthcare Venture's insurance and self-insurance
obligations (including to secure workers' compensation and similar insurance
coverages) and (B) other standby letters of credit not to exceed $50 million
in the aggregate at any time, (xii) Indebtedness evidenced by trade letters of
credit incurred in the ordinary course of business which are to be repaid in
full not more than one year after the date
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on which such Indebtedness is originally incurred to finance the purchase of
goods and supplies by the Obligor or a subsidiary, not to exceed $50 million
in the aggregate at any time, (xiii) Indebtedness owed to a Healthcare Venture
incurred in the ordinary course of business consistent with the Obligor's cash
management practices, (xiv) Indebtedness arising from the honoring by a bank
or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided that such
Indebtedness is extinguished within three business days of incurrence, (xv)
any guaranty by the Obligor or any subsidiary of Indebtedness under certain
enumerated credit agreements and (xvi) Indebtedness of the Obligor, in
addition to that described in clauses (i) through (xv) of this definition of
"Permitted Indebtedness," not in excess of $250 million aggregate principal
amount outstanding at any time.
"Permitted Investments" means purchases of (i) readily marketable
obligations of or obligations guaranteed by the United States of America or
issued by any agency thereof and backed by the full faith and credit of the
United States of America, (ii) readily marketable direct obligations issued by
any state of the United States of America or any political subdivision or
public instrumentality thereof having the highest rating obtainable from
either Moody's or S&P, (iii) commercial paper or privately placed unsecured
general obligations of a corporation, whether redeemable at the Obligor's
demand for next day settlement or otherwise; provided that the issuing
corporation's commercial paper has, at the time of purchase by the Obligor of
such commercial paper or other obligation, a rating in one of the two highest
rating categories of Moody's or S&P, (iv) certificates of deposit, bankers'
acceptances and deposit accounts, and time deposits (A) in the ordinary course
of business or (B) with commercial banks of recognized standing chartered in
the United States of America or Canada with capital, surplus and undivided
profits aggregating in excess of $125,000,000 or foreign commercial banks with
capital, surplus and undivided profits aggregating in excess of $250,000,000
or (v) shares of money market funds that invest solely in Permitted
Investments of the kind described in clauses (i) through (iv) above.
"Permitted Payments" means (i) Restricted Payments, other than Restricted
Payments permitted by Section 1006(b) of the 1992 Indenture or Section 5.07(b)
of the 1993 Indenture, as the case may be, made after the date of the
Indenture in an aggregate amount not to exceed $100 million; provided, that,
at the time of and after giving effect to the proposed Restricted Payment, the
Obligor could incur at least $1.00 of additional Indebtedness pursuant to the
"Limitation on Indebtedness" covenant described above, (ii) Restricted
Payments in the form of dividends or distributions on shares of capital stock
of the Obligor in each case solely in shares of capital stock of the Obligor
or in warrants, rights or options to purchase such capital stock, (iii) any
dividend or other distribution payable to the Obligor or a subsidiary, (iv)
any contractual obligation of the Obligor or any subsidiary, existing on the
date of the Indenture, to make a Restricted Payment and such Restricted
Payment when made, (v) Investments existing on the date of the Indenture and
any renewal or reclassification of any such Investment, (vi) guarantees by the
Obligor or a subsidiary resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business, (vii) the
making of any Permitted Investment by the Obligor or any subsidiary, (viii)
Investments by any qualified or non-qualified benefit plan established by the
Obligor, (ix) in the event the Obligor shall establish a subsidiary for the
purpose of insuring the healthcare businesses or facilities owned or operated
by the Obligor, any subsidiary, any Healthcare Venture or any physician
employed by or on the medical staff of any such business or facility (the
"Insurance Subsidiary"), Investments in an amount which does not exceed the
minimum amount of capital required under the laws of the jurisdiction in which
the Insurance Subsidiary is formed, and any Investment by such Insurance
Subsidiary which is a legal investment for an insurance company under the laws
of the jurisdiction in which the Insurance Subsidiary is formed, (x) any
Investment made by the Obligor in any subsidiary (other than a Healthcare
Venture) or by any subsidiary in the Obligor or any other subsidiary not
otherwise permitted by Section 1006(b) of the 1992 Indenture or Section
5.07(b) of the 1993 Indenture, as the case may be, other than (A) the purchase
of shares of capital stock of the Obligor by a subsidiary and (B) any guaranty
by a subsidiary
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of any Indebtedness or other obligation of the Obligor, except for Senior
Indebtedness, (xi) Investments in an aggregate amount not to exceed $25
million at any time, (xii) any purchase or repurchase of capital stock or
obligations of a Healthcare Venture, (xiii) the repurchase or redemption by a
subsidiary of its capital stock (other than Redeemable Stock), (xiv) certain
purchases of shares of capital stock in connection with the Obligor's employee
benefit plans, (xv) purchases of fractional shares of capital stock which
exist as the result of any stock split, (xvi) market purchases of capital
stock by the Obligor or its subsidiaries for the purpose of contributing such
capital stock to the retirement plans of the Obligor and its subsidiaries in
lieu of making contributions to such plans in treasury stock or capital stock
issued for such purpose, (xvii) the making of any Investment in a Healthcare
Venture by the Obligor or any subsidiary, (xviii) loans or advances to
employees in the ordinary course of business, and (xix) Physician Support
Obligations.
"Physician Support Obligations" means any obligation or guarantee incurred
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 healthcare facility owned or operated by
the Obligor, any of its subsidiaries or any Healthcare Venture; excluding,
however, compensation for services provided by physicians, pharmacists or
other allied healthcare professionals to any healthcare facility owned or
operated by the Obligor, any of its subsidiaries or any Healthcare Venture.
"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention by the Obligor to effect a Change of Control.
"Rating Decline" means the occurrence, on or within 90 days after the date
of public notice of the occurrence of a Change of Control or of the intention
by the Obligor to effect a Change of Control, of: (i) in the event the
relevant Old Securities are rated by either Moody's or S&P on the Rating Date
as investment grade, the rating of such Old Securities by both such rating
agencies below investment grade, or (ii) in the event the relevant Old
Securities are rated below investment grade by both such rating agencies on
the Rating Date, a decrease in the rating of the relevant Old Securities by
either of such rating agencies by one or more gradations (including gradations
within rating categories as well as between rating categories).
"Redeemable Stock" means any class or series of capital stock that by its
terms or otherwise is required to be redeemed prior to the stated maturity of
the relevant issue of Old Securities, or is redeemable at the option of the
holder thereof at any time prior to the stated maturity of such Old
Securities.
SUMMARY OF PROVISIONS TO BE ADDED
Pursuant to the Solicitation, the Company is proposing to add the following
to each Indenture with respect to each issue of Old Securities:
Limitations on Mortgages. Each Indenture would be amended to provide that
neither the Obligor nor any subsidiary will issue, assume or guarantee any
indebtedness secured by any mortgages, liens, pledges or other encumbrances
("Mortgages") upon any Principal Property without effectively providing that
the Old Securities then outstanding (together with, if the Obligor so
determines, any other indebtedness or obligation then existing or thereafter
created ranking equally with the Old Securities) shall be secured equally and
ratably with (or prior to) such indebtedness so long as such indebtedness
shall be so secured, except that this restriction will not apply to: (i)
Mortgages securing the purchase price or cost of construction of property (or
additions, substantial repairs, alterations or substantial improvements
thereto if the amount of such indebtedness does not exceed the cost thereof),
provided such indebtedness and the Mortgages are incurred within 18 months of
the acquisition or completion of construction and full operation (or within 18
months of the completion of
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such repairs, alterations or improvements); (ii) Mortgages existing on
property at the time of its acquisition by the Obligor or a subsidiary or on
the property of a corporation at the time of the acquisition of such
corporation by the Obligor or a subsidiary (including acquisitions through
merger or consolidation); (iii) Mortgages to secure indebtedness on which the
interest payments are exempt from federal income tax under Section 103 of the
Internal Revenue Code of 1986 (the "Code"); (iv) in the case of a consolidated
subsidiary, Mortgages in favor of the Obligor or a consolidated subsidiary;
(v) Mortgages existing on the date the Proposed Amendments are adopted; (vi)
certain Mortgages to governmental entities; (vii) Mortgages incurred in
connection with the borrowing of funds, if within 120 days such funds are used
to repay indebtedness in the same principal amount secured by other Mortgages
on Principal Property with an independently appraised fair market value at
least equal to the appraised fair market value of the Principal Property which
secures the new Mortgage; (viii) Mortgages incurred within 90 days (or any
longer period, not in excess of one year, as permitted by law) after
acquisition of the related property or equipment subject to such Mortgage
arising solely in connection with the transfer of tax benefits in accordance
with Section 168(f)(8) of the Code (or any similar provision); and (ix) any
extension, renewal or replacement of any Mortgage referred to in the foregoing
clauses (i) through (viii) provided the amount secured is not increased and
that such extension, renewal or replacement Mortgage is limited to
substantially the same property that secured the Mortgage extended.
Limitations on Sale and Lease-Back Transactions. Each Indenture would be
amended to provide that neither the Obligor nor any subsidiary will enter into
any Sale and Lease-Back Transaction with respect to any Principal Property
with any person (other than the Obligor or a subsidiary) unless either (i) the
Obligor or such subsidiary would be entitled, pursuant to the provisions
described in clauses (i) through (ix) under "Limitations on Mortgages" above,
to incur indebtedness secured by a Mortgage on the Principal Property to be
leased without equally and ratably securing the Old Securities or (ii) the
Obligor during or immediately after the expiration of 120 days after the
effective date of such transaction applies to the voluntary retirement of its
Funded Debt and/or the acquisition or construction of Principal Property an
amount equal to the greater of the net proceeds of the sale of the property
leased in such transaction or the fair value in the opinion of the chief
financial officer of the Obligor of the leased property at the time such
transaction was entered into in each case net of the principal amount of all
securities of the relevant issue of Old Securities delivered for cancellation
within such 120 day period.
Limitations on Subsidiary Debt and Preferred Stock. Each Indenture would be
amended to provide that the Obligor may not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, issue, assume or otherwise become
liable with respect to, extend the maturity of, or become responsible for the
payment of, as applicable, any Debt or Preferred Stock other than (i) Debt
outstanding on the date the Proposed Amendments are adopted; (ii) Debt of a
Restricted Subsidiary which represents the assumption by such Restricted
Subsidiary of Debt of another Restricted Subsidiary; (iii) Debt or Preferred
Stock of any corporation or partnership existing at the time such corporation
or partnership becomes a subsidiary; (iv) Debt of a Restricted Subsidiary
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations or from guarantees, letters of credit, surety
bonds or performance bonds securing any obligations of the Obligor or any of
its subsidiaries incurred or assumed in connection with the disposition of any
business, property or subsidiary, other than guarantees or similar credit
support by any Restricted Subsidiary of indebtedness incurred by any person
acquiring all or any portion of such business, property or subsidiary for the
purpose of financing such acquisition; (v) Debt of a Restricted Subsidiary in
respect of performance, surety and other similar bonds, bankers acceptances
and letters of credit provided by such Restricted Subsidiary in the ordinary
course of business; (vi) Debt secured by a Mortgage incurred to finance the
purchase price or cost of construction of property (or additions, substantial
repairs, alterations or substantial improvements thereto), provided that (A)
such Mortgage and the Debt secured thereby are incurred within 18 months of
the later of such acquisition or completion of construction (or such addition,
repair, alteration or improvement) and full operation
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thereof and (B) such Mortgage does not relate to any property other than the
property so purchased or constructed (or added, repaired, altered or
improved); (vii) Permitted Subsidiary Refinancing Debt; (viii) Debt
(including, without limitation, Debt arising from a guarantee) of a Restricted
Subsidiary to the Obligor or another subsidiary, but only for so long as held
or owned by the Obligor or another subsidiary; or (ix) any obligation pursuant
to a Sale and Lease-Back Transaction permitted pursuant to the provisions
described under "Limitations on Sale and Lease-Back Transactions" above.
Consolidation, Merger, Sale or Lease of Assets. Each Indenture would be
amended to provide that an Obligor, without the consent of the holders of the
Old Securities, may consolidate with or merge into, or transfer or lease its
assets substantially as an entirety to, any corporation organized under the
laws of any domestic jurisdiction, provided, that (i) the successor
corporation assumes the Obligor's obligations on the relevant issue of Old
Securities and under the Indenture, (ii) immediately after giving effect to
the transactions no event of default, and no event which with notice or
passage of time, or both, would become an event of default, shall have
occurred and be continuing and (iii) certain other conditions are met.
The Indentures also would be amended to provide that, notwithstanding the
foregoing, an Obligor and any subsidiary may issue, assume or guarantee
indebtedness secured by Mortgages and enter into Sale and Lease-Back
Transactions that would otherwise be subject to the restrictions of
"Limitations on Mortgages" or "Limitations on Sale and Lease-Back
Transactions," and any Restricted Subsidiary may issue, assume or otherwise
become liable for any Debt or Preferred Stock that would otherwise be subject
to "Limitations on Subsidiary Debt and Preferred Stock," provided, that the
aggregate amount of all other such Debt or Preferred Stock of the Obligor and
its subsidiaries (not including Debt or Preferred Stock permitted pursuant to
paragraphs (i) through (ix) of "Limitations on Mortgages" or (i) through (ix)
of "Limitations on Subsidiary Debt and Preferred Stock") together with the
aggregate Attributable Debt in respect of Sale and Lease-Back Transactions
(not including Sale and Lease-Back Transactions permitted pursuant to
paragraphs (i) and (ii) of "Limitations on Sale and Lease-Back"), does not
exceed 15% of Consolidated Net Tangible Assets of the Obligor and its
consolidated subsidiaries.
The following definitions apply to the provisions proposed to be added to
each Indenture:
"Attributable Debt" means (i) as to any capitalized lease obligations, the
indebtedness carried on the balance sheet, and (ii) as to any operating
leases, the total net minimum rent required to be paid under such leases
during the remaining term thereof discounted at the rate of 1% per annum over
the weighted average yield to maturity of all debt securities issued and
outstanding under the Company Indenture, or, in the event there are no such
debt securities outstanding, debt securities issued and outstanding under the
1992 Indenture or the 1993 Indenture, compounded semi-annually.
"Consolidated Net Tangible Assets" means the total amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities as disclosed on the consolidated balance
sheet of the Obligor (excluding any thereof that are by their terms extendible
or renewable at the option of the obligor thereon to a time more than 12
months after the time as of which the amount thereof is being computed and
excluding any deferred income taxes that are included in current liabilities),
and (ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangible assets, all as set forth on the
most recent consolidated balance sheet of the Obligor.
"Debt" means (i) indebtedness for borrowed money, (ii) indebtedness
(including capitalized lease obligations) for the deferred payment of the
purchase price of property or assets purchased, and (iii) guarantees or other
contingent obligations of or for borrowed money of another person or
indebtedness of another person for the deferred payment of the purchase price
of property or assets purchased; provided, however, that with respect to an
Obligor or a Restricted Subsidiary, as the case may be, "Debt" does not
include indebtedness owed by a Restricted Subsidiary to an Obligor, by a
Restricted Subsidiary to a subsidiary or by an Obligor to a subsidiary.
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"Funded Debt" means any indebtedness for money borrowed, created, issued,
incurred, assumed or guaranteed that would be classified as long-term debt,
but in any event including all indebtedness for money borrowed, whether
secured or unsecured, maturing more than one year, or extendible at the option
of the obligor to a date more than one year, after the date of determination
thereof (excluding any amount thereof included in current liabilities).
"Permitted Subsidiary Refinancing Debt" means Debt of any subsidiary, the
proceeds of which are used to renew, extend, refinance or refund outstanding
Debt of such subsidiary, provided that such Debt is scheduled to mature no
earlier than the Debt being renewed, extended, refinanced or refunded;
provided, further, that such Debt shall be Permitted Subsidiary Refinancing
Debt only to the extent that the aggregate principal amount of such Debt does
not exceed the aggregate principal amount then outstanding under the Debt
being renewed, extended, refinanced or refunded.
"Preferred Stock" of any person means any capital stock of such person which
by its terms or by the terms of any security into which it is convertible or
exchangeable is preferred as to the payment of dividends or upon liquidation
to any class of the common stock of such person or which matures or is
mandatorily redeemable at the option of the holder thereof, in whole or in
part, on or prior to the maturity date of any outstanding Old Securities.
"Principal Property" means each acute-care hospital providing general
medical and surgical services (excluding equipment, personal property and
hospitals that primarily provide specialty medical services, such as
psychiatric and obstetrical and gynecological services) owned solely by the
Obligor and/or one or more subsidiaries and located in the United States.
"Restricted Subsidiary" means (i) any subsidiary other than an Unrestricted
Subsidiary and (ii) any subsidiary which was an Unrestricted Subsidiary but
which, subsequent to the date hereof, is designated by the Obligor to be a
Restricted Subsidiary; provided, however, that the Obligor may not designate
any such subsidiary to be a Restricted Subsidiary if the Obligor would thereby
breach any covenant or agreement contained in the Indenture (on the assumption
that any transaction to which such subsidiary was a party at the time of such
designation and which would have given rise to Debt or Preferred Stock or
constituted a Sale and Lease-Back Transaction at the time it was entered into
had such subsidiary then been a Restricted Subsidiary was entered into at the
time of such designation).
"Unrestricted Subsidiary" means (i) any subsidiary acquired or organized
after the date of the Company Indenture, provided, however, that such
subsidiary is not a successor, directly or indirectly, to and does not,
directly or indirectly, own any equity interest in, any Restricted Subsidiary;
(ii) any subsidiary the principal business of which consists of obtaining
financing in capital markets outside the United States or financing the
acquisition or disposition of machinery, equipment, inventory, accounts
receivable and other real, personal and intangible property by persons
including the Obligor or a subsidiary; (iii) any subsidiary the principal
business of which is owning, leasing, dealing in or developing real property
for residential or office building purposes or land, buildings or related real
property owned by the Obligor or any subsidiary as of the date of the
Indenture; (iv) any Joint Venture Subsidiary; or (v) stock or other securities
of an Unrestricted Subsidiary of the character described in clauses (i)
through (iv) of this definition, unless and until, in each of the cases
specified in this paragraph, any such subsidiary shall have been designated to
be a Restricted Subsidiary pursuant to clause (ii) of the definition of
"Restricted Subsidiary."
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DESCRIPTION OF NEW SECURITIES
GENERAL
The New Securities will be issued under an indenture, dated as of December
15, 1993 (the "Company Indenture"), between the Company and The First National
Bank of Chicago, as trustee (the "New Trustee"). The terms of the New
Securities include those stated in the Company Indenture, those incorporated
in the Company Indenture by reference to the Trust Indenture Act of 1939 (the
"Trust Indenture Act") and those set forth in certain resolutions adopted as
of April 12, 1995 by the Board of Directors of the Company (the "Board
Resolutions"). The New Securities are subject to all such terms and holders
are referred to each of the Company Indenture, the Trust Indenture Act and the
Board Resolutions for a statement of such terms.
The statements and definitions of terms under this caption are summaries and
do not purport to be complete and are qualified in their entirety by express
reference to the Company Indenture, the Trust Indenture Act and the Board
Resolutions. The Board Resolutions have been filed with the Commission as an
exhibit to the Registration Statement of which this Prospectus is a part.
The Company Indenture does not limit the aggregate principal amount of debt
securities that may be issued thereunder and provides that debt securities may
be issued thereunder from time to time in series. The New 2005 Notes, New 2000
Notes and New 2025 Notes will each be a series of debt securities under the
Company Indenture. The Company Indenture limits the ability of the Company and
its subsidiaries, under certain circumstances, to secure debt by mortgaging
its Principal Properties or entering into Sale and Lease-Back Transactions and
restricts certain of the Company's subsidiaries from incurring Debt or issuing
Preferred Stock, as more fully described below.
The New Securities will be unsecured obligations of the Company. Unlike the
Old Securities, which are subordinated to senior indebtedness of Healthtrust
and the Company, the New Securities will be unsubordinated senior obligations
of the Company and will rank pari passu with all existing and future unsecured
and unsubordinated senior indebtedness of the Company. Each issue of New
Securities will bear interest from the Exchange Date at the rate described
below for such issue. Interest on the New Securities will be payable
semiannually in arrears on each June 15 and December 15, commencing December
15, 1995; provided that if any June 15 or December 15 is not a business day,
interest will be paid on the next succeeding business day. The New Securities
will be issued in denominations of $1,000 and integral multiples thereof.
As of the date hereof, the Company's debt securities are rated A3 by Moody's
and BBB+ by S&P. The Company expects that the New Securities will receive
similar ratings; however, the ratings given the New Securities should be
evaluated independently from similar ratings on other types of securities. A
security rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time by the assigning rating
agency.
New 2005 Notes. The New 2005 Notes will be limited to $500,000,000 aggregate
principal amount and will mature on June 15, 2005. The New 2005 Notes will
bear interest from the Exchange Date at a rate per annum equal to the sum of
(i) the yield on the 6 1/2% U.S. Treasury Note due May 15, 2005, as of the
Pricing Time, and (ii) 0.75%.
New 2000 Notes. The New 2000 Notes will be limited to $200,000,000 aggregate
principal amount and will mature on June 15, 2000. The New 2000 Notes will
bear interest from the Exchange Date at a rate per annum equal to the sum of
(i) the yield on the 6 1/4% U.S. Treasury Note due May 31, 2000, as of the
Pricing Time, and (ii) 0.52%.
New 2025 Notes. The New 2025 Notes will be limited to $300,000,000 aggregate
principal amount and will mature on June 15, 2025. The New 2025 Notes will
bear interest from the Exchange Date at a rate per annum equal to the sum of
(i) the yield on the 7 1/2% U.S. Treasury Note due November 15, 2024, as of
the Pricing Time, and (ii) 1.10%.
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BOOK-ENTRY NOTES
The certificates representing the New Securities will be issued in fully
registered form without coupons. Each issue of New Securities will be
represented by a single, fully registered global security (a "Global
Security"). Each Global Security will be deposited with The Depository Trust
Company, New York, New York (sometimes referred to herein as the
"Depositary"), which will act as securities depositary for the New Securities,
and will be registered in the name of Cede & Co., a nominee of the Depositary.
No Global Security may be transferred except as a whole by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by
the Depositary or any such nominee to a successor of the Depositary or such
nominee.
So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
holder of the New Securities represented thereby for all purposes under the
Company Indenture. Unlike the Old Securities, which were issued in
certificated form, except as otherwise provided in this section, the
beneficial owners of New Securities will not be entitled to receive New
Securities in certificated form and will not be considered the holders thereof
for any purpose under the Company Indenture. Accordingly, each person owning a
beneficial interest in a Global Security must rely on the procedures of the
Depositary and, if such person is not a Participant (as defined below), on the
procedures of the Participant through which such person owns his or her
interest in order to exercise any rights of a holder under the Company
Indenture. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security representing New Securities.
Each Global Security is exchangeable for certificated securities of like
tenor and terms and of differing authorized denominations aggregating a like
amount, only if (i) the Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for the Global Security, (ii) the
Depositary ceases to be a clearing agency registered under the Exchange Act,
(iii) the Company in its sole discretion determines that the Global Security
shall be exchangeable for certificated securities or (iv) there shall have
occurred and be continuing an Event of Default under the Company Indenture
with respect to the relevant series of New Securities.
In general, the Depositary holds securities that its participants
("Participants") deposit with the Depositary. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Access to the Depositary's 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 the Depositary and its Participants are on file with
the Commission.
Acquisitions of New Securities under the Depositary's system must be made by
or through Direct Participants, which receive a credit on the Depositary's
records for such New Securities acquired. The ownership interest of each
actual purchaser of New Securities represented by a Global Security (a
"Beneficial Owner") is in turn to be recorded on the relevant Direct and
Indirect Participants' records. A Beneficial Owner will not receive written
confirmation from the Depositary of its purchase. Transfers of ownership
interests in a Global Security representing New Securities are to be
accomplished by entries made on the books of Direct or Indirect Participants
acting on behalf of Beneficial Owners.
The deposit of Global Securities with the Depositary and their registration
in the name of Cede & Co. effect no change in beneficial ownership. The
Depositary has no knowledge of the actual Beneficial Owners of the Global
Securities representing the New Securities; the Depositary's records reflect
only the identity of the Direct Participants to whose accounts such New
Securities are credited, which Direct
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Participants may or may not be the Beneficial Owners. Participants will be
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the Global Securities representing the New Securities. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the New Securities are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Securities representing the
New Securities will be made to the Depositary. The Depositary's practice is to
credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive payment
on such date. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
the Depositary, the New Trustee or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to the Depositary is the responsibility of the Company
and the New Trustee, disbursement of such payments to Direct Participants
shall be the responsibility of the Depositary, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct
Participants and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to the New Securities at any time by giving reasonable
notice to the Company or the New Trustee. Under such circumstances, in the
event that a successor securities depositary is not obtained, certificated
securities will be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depositary). In
that event, certificated securities will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes
to be reliable, but the Company takes no responsibility for the accuracy
thereof.
OPTIONAL REDEMPTION
Unlike the Old Securities, the New Securities may not be redeemed by the
Company prior to the maturity thereof.
CERTAIN COVENANTS
The restrictive covenants applicable to the Company and its subsidiaries
pursuant to the New Securities are substantially less restrictive than those
currently applicable pursuant to the Old Securities. See "The Proposed
Amendments" for a description of certain covenants currently applicable with
respect to the Old Securities. Set forth below are certain covenants that will
be applicable with respect to the New Securities.
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Limitations on Mortgages. The Company Indenture provides that neither the
Company nor any subsidiary will issue, assume or guarantee any indebtedness
secured by any mortgages, liens, pledges or other encumbrances ("Mortgages")
upon any Principal Property without effectively providing that the New
Securities then outstanding (together with, if the Company so determines, any
other indebtedness or obligation then existing or thereafter created ranking
equally with the New Securities) shall be secured equally and ratably with (or
prior to) such indebtedness so long as such indebtedness shall be so secured,
except that this restriction will not apply to: (i) Mortgages securing the
purchase price or cost of construction of property (or additions, substantial
repairs, alterations or substantial improvements thereto if the amount of such
indebtedness does not exceed the cost thereof), provided such indebtedness and
the Mortgages are incurred within 18 months of the acquisition or completion
of construction and full operation (or within 18 months of the completion of
such repairs, alterations or improvements); (ii) Mortgages existing on
property at the time of its acquisition by the Company or a subsidiary or on
the property of a corporation at the time of the acquisition of such
corporation by the Company or a subsidiary (including acquisitions through
merger or consolidation); (iii) Mortgages to secure indebtedness on which the
interest payments are exempt from federal income tax under Section 103 of the
Internal Revenue Code of 1986 (the "Code"); (iv) in the case of a consolidated
subsidiary, Mortgages in favor of the Company or a consolidated subsidiary;
(v) Mortgages existing on the date of the Company Indenture; (vi) certain
Mortgages to governmental entities; (vii) Mortgages incurred in connection
with the borrowing of funds, if within 120 days such funds are used to repay
indebtedness in the same principal amount secured by other Mortgages on
Principal Property with an independently appraised fair market value at least
equal to the appraised fair market value of the Principal Property which
secures the new Mortgage; (viii) Mortgages incurred within 90 days (or any
longer period, not in excess of one year, as permitted by law) after
acquisition of the related property or equipment subject to such Mortgage
arising solely in connection with the transfer of tax benefits in accordance
with Section 168(f)(8) of the Code (or any similar provision); and (ix) any
extension, renewal or replacement of any Mortgage referred to in the foregoing
clauses (i) through (viii) provided the amount secured is not increased and
that such extension, renewal or replacement Mortgage is limited to
substantially the same property that secured the Mortgage extended.
Limitations on Sale and Lease-Back Transactions. The Company Indenture
provides that neither the Company nor any subsidiary will enter into any Sale
and Lease-Back Transaction with respect to any Principal Property with any
person (other than the Company or a subsidiary) unless either (i) the Company
or such subsidiary would be entitled, pursuant to the provisions described in
clauses (i) through (ix) under "Limitations on Mortgages" above, to incur
indebtedness secured by a Mortgage on the Principal Property to be leased
without equally and ratably securing the New Securities, or (ii) the Company
during or immediately after the expiration of 120 days after the effective
date of such transaction applies to the voluntary retirement of its Funded
Debt and/or the acquisition or construction of Principal Property an amount
equal to the greater of the net proceeds of the sale of the property leased in
such transaction or the fair value in the opinion of the chief financial
officer of the Company of the leased property at the time such transaction was
entered into in each case net of the principal amount of all the debt
securities delivered for cancellation within such 120 day period under the
Company Indenture.
Limitations on Subsidiary Debt and Preferred Stock. The Company Indenture
provides that the Company may not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, issue, assume or otherwise become
liable with respect to, extend the maturity of, or become responsible for the
payment of, as applicable, any Debt or Preferred Stock other than (i) Debt
outstanding on the date of the Company Indenture; (ii) Debt of a Restricted
Subsidiary which represents the assumption by such Restricted Subsidiary of
Debt of another Restricted Subsidiary; (iii) Debt or Preferred Stock of any
corporation or partnership existing at the time such corporation or
partnership becomes a subsidiary; (iv) Debt of a Restricted Subsidiary arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations or from guarantees, letters of credit, surety bonds or
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performance bonds securing any obligations of the Company or any of its
subsidiaries incurred or assumed in connection with the disposition of any
business, property or subsidiary, other than guarantees or similar credit
support by any Restricted Subsidiary of indebtedness incurred by any person
acquiring all or any portion of such business, property or subsidiary for the
purpose of financing such acquisition; (v) Debt of a Restricted Subsidiary in
respect of performance, surety and other similar bonds, bankers acceptances
and letters of credit provided by such Restricted Subsidiary in the ordinary
course of business; (vi) Debt secured by a Mortgage incurred to finance the
purchase price or cost of construction of property (or additions, substantial
repairs, alterations or substantial improvements thereto), provided that (A)
such Mortgage and the Debt secured thereby are incurred within 18 months of
the later of such acquisition or completion of construction (or such addition,
repair, alteration or improvement) and full operation thereof and (B) such
Mortgage does not relate to any property other than the property so purchased
or constructed (or added, repaired, altered or improved); (vii) Permitted
Subsidiary Refinancing Debt; (viii) Debt (including, without limitation, Debt
arising from a guarantee) of a Restricted Subsidiary to the Company or another
subsidiary, but only for so long as held or owned by the Company or another
subsidiary; or (ix) any obligation pursuant to a Sale and Lease-Back
Transaction permitted pursuant to the provisions described under "Limitations
on Sale and Lease-Back Transactions" above.
Notwithstanding the foregoing, the Company and any subsidiary may issue,
assume or guarantee indebtedness secured by Mortgages and enter into Sale and
Lease-Back Transactions that would otherwise be subject to the restrictions of
"Limitations on Mortgages" or "Limitations on Sale and Lease-Back
Transactions," and any Restricted Subsidiary may issue, assume or otherwise
become liable for any Debt or Preferred Stock that would otherwise be subject
to "Limitations on Subsidiary Debt and Preferred Stock," provided, that the
aggregate amount of all other such Debt or Preferred Stock of the Company and
its subsidiaries (not including Debt or Preferred Stock permitted pursuant to
paragraphs (i) through (ix) of "Limitations on Mortgages" or (i) through (ix)
of "Limitations on Subsidiary Debt and Preferred Stock") together with the
aggregate Attributable Debt in respect of Sale and Lease-Back Transactions
(not including Sale and Lease-Back Transactions permitted pursuant to
paragraphs (i) and (ii) of "Limitations on Sale and Lease-Back"), does not
exceed 15% of Consolidated Net Tangible Assets of the Company and its
consolidated subsidiaries.
CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS
The limitations on consolidations, mergers and asset sales under the Company
Indenture are somewhat less restrictive than those set forth in the 1992
Indenture and the 1993 Indenture. See "The Proposed Amendments" for a
description of the limitations on consolidations, mergers and asset sales set
forth in the 1992 Indenture and the 1993 Indenture. Under the Company
Indenture, the Company, without the consent of the holders of the New
Securities, may consolidate with or merge into, or transfer or lease its
assets substantially as an entirety to any corporation organized under the
laws of any domestic jurisdiction, provided, that (i) the successor
corporation assumes the Company's obligations on the New Securities and under
the Company Indenture, (ii) immediately after giving effect to the
transactions no Event of Default, and no event which with notice or passage of
time, or both, would become an Event of Default, shall have occurred and be
continuing and (iii) certain other conditions are met.
CHANGE OF CONTROL
The Company will not be required to offer to repurchase the New Securities
in the event of any change of control of the Company. In contrast, the 1992
Indenture and the 1993 Indenture currently require that an offer be made to
repurchase the Old Securities in the event of a Change of Control and a Rating
Decline (as each such term is defined in such Indenture). See "The Proposed
Amendments."
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EVENTS OF DEFAULT
The following are Events of Default under the Company Indenture with respect
to each series of New Securities:
(i) failure to pay principal of any New Security of that series when due;
(ii) failure to pay any interest on any New Security of that series when
due, continued for 30 days;
(iii) failure to perform any other covenant of the Company set forth in
the Company Indenture (other than a covenant included in the Company
Indenture solely for the benefit of a series of debt securities other than
the relevant series), continued for 60 days after written notice is given
as provided in the Company Indenture;
(iv) the entry of a decree or order for relief in respect of the Company
in an involuntary case under any applicable federal or state bankruptcy,
insolvency or similar law, or a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement adjustment or composition of or in respect of
the Company under any applicable federal or state law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for 60
consecutive days; and
(v) the commencement by the Company of a voluntary case under any
applicable federal or state bankruptcy, insolvency or similar law, or the
consent by it to the entry of an order for relief in an involuntary case
under any such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or the making by it of
an assignment for the benefit of its creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company in furtherance of any such
actions.
The Old Securities contain events of default substantially similar to those
set forth in the New Securities. However, unlike the New Securities, the Old
Securities include as an event of default the acceleration of the maturity of
any Indebtedness (as defined in the Indentures) of an Obligor or certain of
its subsidiaries in principal amount of, at least $50,000,000 in the case of
the Old 10 1/4% Notes and the Old 8 3/4% Debentures, or $25,000,000 in the
case of the Old 10 3/4% Notes, or any failure of an Obligor or certain of its
subsidiaries to pay any such Indebtedness at final maturity. In addition,
under the Old 10 3/4% Notes, unlike the New Securities, final judgments
rendered against an Obligor or certain of its subsidiaries in an amount
exceeding $25 million, constitute an event of default.
If any Event of Default with respect to a series of New Securities occurs
and is continuing, either the New Trustee or the holders of at least 25% in
aggregate principal amount of the outstanding New Securities of that series,
may declare the principal amount of all securities of that series to be due
and payable immediately. At any time after a declaration of acceleration with
respect to a series of New Securities has been made, but before a judgment or
decree based on that acceleration has been obtained, the holders of a majority
in aggregate principal amount of the New Securities of that series may, under
certain circumstances, rescind and annul such acceleration.
The Company Indenture provides that, subject to the duty of the New Trustee
during a default to act with the required standard of care, the New Trustee
will be under no obligation to exercise any of its rights or powers under the
Company Indenture at the request or direction of any of the holders of New
Securities unless such holders shall have offered a reasonable indemnity to
the New Trustee. Subject to such provisions for the indemnification of the New
Trustee, the holders of a majority in aggregate principal amount of any series
of New Securities will have the right to direct the time, method
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and place of conducting any proceeding for any remedy available to the New
Trustee, or exercising any trust or power conferred on the New Trustee, with
respect to the securities of that series.
The Company is required to furnish the New Trustee annually with a statement
as to the performance by the Company of certain of its obligations under the
Company Indenture and as to any default in such performance.
MODIFICATION AND WAIVER
Modifications of and amendments to the Company Indenture may be made by the
Company and the New Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the New Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the holder of each New
Security affected thereby, (i) change the stated maturity of the principal of,
or any installment of interest on, any New Security, (ii) reduce the principal
amount of, or reduce the amount of any installment of interest on, any New
Security, (iii) change the currency of payment of principal of, or interest
on, any New Security, (iv) impair the right to institute suit for the
enforcement of any payment on, or with respect to, any New Security, or (v)
reduce the percentage in principal amount of New Securities of that series,
the consent of whose holders is required for modification or amendment of the
Company Indenture or for waiver of compliance with certain provisions of the
Company Indenture or for waiver of certain defaults.
The holders of a majority in aggregate principal amount of the New
Securities of each series may, on behalf of all holders of New Securities of
that series, waive any past default under the Company Indenture with respect
to New Securities of that series, except a default with respect to the payment
of principal or interest or a covenant or provision that cannot be modified or
amended without the consent of the holders of each New Security affected
thereby.
DEFEASANCE
With respect to each series of New Securities, the Company, at its option,
(i) will be discharged from any and all obligations in respect of the New
Securities of that series (except for certain obligations to register the
transfer or exchange of New Securities of that series, replace stolen, lost or
mutilated New Securities of that series, maintain paying agencies and hold
moneys for payment in trust) or (ii) will not be subject to provisions of the
Company Indenture described above under "--Certain Covenants" and "--
Consolidation, Merger, Sale or Lease of Assets," in each case if the Company
deposits with the New Trustee, in trust, money or certain debt securities
issued by the government of the United States which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal and interest on
the New Securities of that series on the dates such payments are due in
accordance with the terms of such New Securities. To exercise any such option,
the Company is required, among other things, to deliver to the New Trustee an
opinion of counsel to the effect that (1) the deposit and related defeasance
would not cause the holders of the New Securities of that series to recognize
income, gain or loss for United States income tax purposes and (2) if the New
Securities of that series are then listed on any national securities exchange,
such New Securities would not be de-listed from such exchange as a result of
the exercise of such option.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Company Indenture.
"Attributable Debt" means (i) as to any capitalized lease obligations, the
indebtedness carried on the balance sheet, and (ii) as to any operating
leases, the total net minimum rent required to be paid
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under such leases during the remaining term thereof discounted at the rate of
1% per annum over the weighted average yield to maturity of all debt
securities issued and outstanding under the Company Indenture, compounded
semi-annually.
"Consolidated Net Tangible Assets" means the total amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities as disclosed on the consolidated balance
sheet of the Company (excluding any thereof that are by their terms extendible
or renewable at the option of the obligor thereon to a time more than 12
months after the time as of which the amount thereof is being computed and
excluding any deferred income taxes that are included in current liabilities),
and (ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangible assets, all as set forth on the
most recent consolidated balance sheet of the Company.
"Debt" means (i) indebtedness for borrowed money, (ii) indebtedness
(including capitalized lease obligations) for the deferred payment of the
purchase price of property or assets purchased, and (iii) guarantees or other
contingent obligations of or for borrowed money of another person or
indebtedness of another person for the deferred payment of the purchase price
of property or assets purchased; provided, however, that with respect to the
Company or a Restricted Subsidiary, as the case may be, "Debt" does not
include indebtedness owed by a Restricted Subsidiary to the Company, by a
Restricted Subsidiary to a subsidiary or by the Company to a subsidiary.
"Funded Debt" means any indebtedness for money borrowed, created, issued,
incurred, assumed or guaranteed that would be classified as long-term debt,
but in any event including all indebtedness for money borrowed, whether
secured or unsecured, maturing more than one year, or extendible at the option
of the obligor to a date more than one year, after the date of determination
thereof (excluding any amount thereof included in current liabilities).
"Permitted Subsidiary Refinancing Debt" means Debt of any subsidiary, the
proceeds of which are used to renew, extend, refinance or refund outstanding
Debt of such subsidiary, provided that such Debt is scheduled to mature no
earlier than the Debt being renewed, extended, refinanced or refunded;
provided, further, that such Debt shall be Permitted Subsidiary Refinancing
Debt only to the extent that the aggregate principal amount of such Debt does
not exceed the aggregate principal amount then outstanding under the Debt
being renewed, extended, refinanced or refunded.
"Preferred Stock" of any person means any capital stock of such person which
by its terms or by the terms of any security into which it is convertible or
exchangeable is preferred as to the payment of dividends or upon liquidation
to any class of the common stock of such person or which matures or is
mandatorily redeemable at the option of the holder thereof, in whole or in
part, on or prior to the maturity date of any outstanding debt securities
issued under the Company Indenture.
"Principal Property" means each acute-care hospital providing general
medical and surgical services (excluding equipment, personal property and
hospitals that primarily provide specialty medical services, such as
psychiatric and obstetrical and gynecological services) owned solely by the
Company and/or one or more subsidiaries and located in the United States.
"Restricted Subsidiary" means (i) any subsidiary other than an Unrestricted
Subsidiary and (ii) any subsidiary which was an Unrestricted Subsidiary but
which, subsequent to the date hereof, is designated by the Company to be a
Restricted Subsidiary; provided, however, that the Company may not designate
any such subsidiary to be a Restricted Subsidiary if the Company would thereby
breach any covenant or agreement contained in the Company Indenture (on the
assumption that any transaction to which such subsidiary was a party at the
time of such designation and which would have given rise to Debt or Preferred
Stock or constituted a Sale and Lease-Back Transaction at the time it
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was entered into had such subsidiary then been a Restricted Subsidiary was
entered into at the time of such designation).
"Unrestricted Subsidiary" means (i) any subsidiary acquired or organized
after the date of the Company Indenture, provided, however, that such
subsidiary is not a successor, directly or indirectly, to and does not,
directly or indirectly, own any equity interest in, any Restricted Subsidiary;
(ii) any subsidiary the principal business of which consists of obtaining
financing in capital markets outside the United States of America or financing
the acquisition or disposition of machinery, equipment, inventory, accounts
receivable and other real, personal and intangible property by persons
including the Company or a subsidiary; (iii) any subsidiary the principal
business of which is owning, leasing, dealing in or developing real property
for residential or office building purposes or land, buildings or related real
property owned by the Company or any subsidiary as of the date of the Company
Indenture; (iv) any Joint Venture Subsidiary; or (v) stock or other securities
of an Unrestricted Subsidiary of the character described in clauses (i)
through (iv) of this definition, unless and until, in each of the cases
specified in this paragraph, any such subsidiary shall have been designated to
be a Restricted Subsidiary pursuant to clause (ii) of the definition of
"Restricted Subsidiary."
GOVERNING LAW
The Company Indenture and the New Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
THE NEW TRUSTEE
The New Trustee under the Company Indenture is The First National Bank of
Chicago. The Company maintains normal banking relationships with the New
Trustee.
NOTICES
Notices to holders will be given by mail to addresses of such Holders as
they appear in the Security Register maintained by the Security Registrar.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
consequences of the Exchange Offers to holders of Old Securities and of the
ownership and disposition of New Securities. This summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
(including Proposed Regulations and Temporary Regulations) promulgated
thereunder, Internal Revenue Service ("IRS") rulings, official pronouncements
and judicial decisions, all as in effect on the date hereof and all of which
are subject to change, possibly with retroactive effect, or different
interpretations. This summary is applicable only to persons who hold Old
Securities as capital assets and who will hold New Securities as capital
assets. This summary does not discuss all the tax consequences that may be
relevant to a holder in light of the holder's particular circumstances, and it
is not intended to be applicable in all respects to all categories of
investors, some of whom may be subject to different rules not discussed below.
In particular, this summary does not address any special rules that may be
applicable to insurance companies, tax-exempt persons, financial institutions,
regulated investment companies, dealers in securities or currencies, persons
that hold Old Securities or New Securities as part of an integrated investment
(including a "straddle") consisting of Old Securities or New Securities and
one or more other positions, or persons whose functional currency is other
than United States dollars. In addition, this summary does not address any
state or local tax considerations that may be relevant to a holder's decision
to exchange Old Securities for New Securities pursuant to an Exchange Offer.
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<PAGE>
ALL HOLDERS OF OLD SECURITIES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE
EXCHANGE OF OLD SECURITIES FOR NEW SECURITIES AND OF THE OWNERSHIP AND
DISPOSITION OF NEW SECURITIES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR
OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF OLD SECURITIES FOR NEW SECURITIES
The exchange of Old Securities for New Securities (the "Exchange") pursuant
to an Exchange Offer will constitute a recapitalization within the meaning of
section 368(a)(1)(E) of the Code. As a result, a holder of Old Securities
whose Old Securities are accepted in an Exchange Offer will recognize gain on
the Exchange only (i) to the extent that the "principal amount" (as such term
is used in Section 354 of the Code) of New Securities received exceeds the
"principal amount" of Old Securities surrendered and (ii) to the extent of the
cash received by such holder pursuant to the Exchange (less the amount of such
cash that represents accrued interest, which will be taxable as such). Any
gain recognized by the tendering holder will be capital gain, and will be
long-term capital gain if such Old Securities were held for more than one
year. A tendering holder will not be permitted to recognize loss in respect of
the Exchange.
A tendering holder's tax basis in the New Securities will be the same as
such holder's tax basis in its Old Securities, decreased by the amount of cash
received in exchange for such Old Securities and increased by the amount of
gain recognized by the holder in respect of the Exchange. A tendering holder's
holding period for the New Securities received pursuant to the Exchange Offer
will include its holding period for the Old Securities surrendered therefor.
It is possible that the Service could take the position that a portion of
the cash received by a holder constitutes consideration for the giving of
Consents to certain amendments to the 1992 Indenture and the 1993 Indenture
(the "Amendments"). In that event, such portion likely would be treated as
ordinary income to the holder. The Company intends to treat the entire
consideration as paid to holders in exchange for their Old Securities, and no
portion as paid to holders in consideration for the giving of Consents to the
Amendments.
NEW SECURITIES
Stated Interest on New Securities. In general, payments of interest based on
the stated interest rate on New Securities will be ordinary income, taxable
when accrued, in the case of a holder utilizing the accrual method of
accounting, or when received, in the case of a holder utilizing the cash
receipts and disbursements method of accounting.
Original Issue Discount. It is possible that the New Securities will be
treated as issued with original issue discount ("OID"). If the New Securities
are treated as issued with OID, a holder generally must include in gross
income a portion of the total OID that accrues on each day the holder holds
the New Securities, calculated under a constant yield method, regardless of
such holder's method of accounting and without regard to the timing of actual
payments. The New Securities will have OID if the issue price of the New
Securities issued to a holder in exchange for Old Securities is less than the
"stated redemption price at maturity" ("SRPM") of such New Securities. Such
OID will be in an amount equal to the excess of the SRPM over the issue price.
Under a de minimis rule, if the excess of the SRPM of the New Securities over
their issue price is less than one-fourth of one percent of the SRPM
multiplied by the number of complete years to maturity, the New Securities
will not be treated as issued with OID.
The SRPM of the New Securities will equal their stated principal amount. The
issue price of the New Securities will be their fair market value on their
date of issue if a substantial amount of the New Securities are "traded on an
established market." The New Securities will be considered to be traded
59
<PAGE>
on an established market if, at any time during the 60-day period ending 30
days after the issue date of the New Securities (i) the New Securities appear
on a system of general circulation (including computer listings disseminated
to subscribing brokers, dealers or traders) that provides a reasonable basis
to determine fair market value by disseminating either recent price quotations
or actual prices of recent sales transactions or (ii) price quotations for the
New Securities are readily available from dealers, brokers or traders. The
Company expects that the New Securities will be so traded.
Premium on Senior Notes. If a holder's adjusted basis in the New Securities
immediately after the Exchange exceeds the SRPM of such New Securities (as
defined above in "Original Issue Discount"), such excess will constitute
amortizable bond premium which the holder may elect to amortize under a
constant yield method under section 171 of the Code. A holder that elects to
amortize bond premium must reduce the adjusted basis in the New Securities by
the amount so amortized. The amortizable bond premium will be treated as an
offset to interest income rather than as a separate deduction item. An
election to amortize bond premium under section 171 of the Code by a holder
will apply to all obligations owned or acquired by the holder in the current
and all subsequent taxable years and may not be revoked without the permission
of the Internal Revenue Service.
Redemption or Sale of the New Securities. In general, upon a redemption or
sale of the New Securities for cash, a holder will recognize gain or loss
equal to the difference between its adjusted basis in the New Securities
(after adjustment for accrued OID or amortized premium) and the amount of cash
received. Such gain or loss will be capital gain or loss, and will be long-
term capital gain or loss if the holder's holding period in respect of the New
Securities exceeds one year.
BACKUP WITHHOLDING
Certain holders of New Securities may be subject to backup withholding at
the rate of 31 percent with respect to the proceeds of the Exchange or
interest paid, OID accrued with respect to, or the proceeds of a sale,
exchange or redemption of the New Securities, unless the holder provides its
taxpayer identification number and certain required certifications or
otherwise establishes an exemption. Any amounts so withheld would be allowed
as a credit against the holder's federal income tax liability.
LEGAL MATTERS
Certain legal matters regarding the Exchange Offers and the New Securities
will be passed upon for the Company by Stephen T. Braun, Esq., Senior Vice
President and General Counsel of the Company. Certain legal matters in
connection with the Exchange Offers will be passed upon for the Dealer Manager
by Cleary, Gottlieb, Steen & Hamilton, New York, New York and Jenkens &
Gilchrist, a Professional Corporation, Dallas, Texas. Jenkens & Gilchrist, a
Professional Corporation, has rendered and continues to render certain legal
services to the Company.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company and Healthtrust and the supplemental consolidated financial
statements and financial statement schedule of the Company, all incorporated
by reference in this Prospectus and the Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports with respect thereto. Such financial statements and schedules have
been incorporated herein by reference in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
60
<PAGE>
SCHEDULE A
Fixed Spread Pricing Formula
For Determining the Reference Total Price
For an Issue of Old Securities
YLD = Reference Yield, equal to the Benchmark Treasury Yield for such
issue plus the applicable fixed spread for such issue, expressed as
a decimal number.
CPN = The nominal per annum rate of interest payable on such issue
expressed as a decimal number.
N = The number of regular semiannual interest payments, from (but
excluding) the Exchange Date to (and including) the relevant
redemption date (the "Redemption Date") for such issue.
S = The number of days from (and including) the most recent semiannual
interest payment date for such issue to (but excluding) the
Exchange Date. The number of days is computed using the 30/360 day
count method.
RED = The redemption price per $1,000 principal amount of Old Securities
on the Redemption Date (the "Redemption Price") for such issue.
PRICE = The Reference Total Price per $1,000 principal amount of Old
Securities for such issue. The Reference Total Price is rounded to
the nearest cent.
RED CPN
(--- - ---)
CPN 1000 YLD YLD to the power of (S/180)
PRICE = 1000 X [ --- + ------------- ] X (1 + ---)
YLD 2
YLD to the nth power
(1 + ---)
2
<PAGE>
SCHEDULE B
Example Determinations of Reference Total Prices
Demonstrating Application of
The Methodology Specified in Schedule A
THE REFERENCE TOTAL PRICES SET FORTH ON THIS SCHEDULE B ARE FOR ILLUSTRATIVE
PURPOSES ONLY AND NO REPRESENTATION IS INTENDED WITH RESPECT TO THE ACTUAL
CONSIDERATION THAT MAY BE PAID PURSUANT TO THE EXCHANGE OFFERS. THE ACTUAL
REFERENCE TOTAL PRICES MAY BE GREATER OR LESS THAN THOSE DEPICTED BELOW
DEPENDING ON THE ACTUAL BENCHMARK TREASURY YIELDS AS OF THE PRICING TIME.
<TABLE>
<CAPTION>
OLD 10 OLD 10
3/4% 1/4% OLD 8 3/4%
NOTES NOTES DEBENTURES
--------- --------- ----------
<S> <C> <C> <C>
Terms of Old Securities:
Interest Rate 10.75% 10.25% 8.75%
Maturity Date 5/1/02 4/15/04 3/15/05
Redemption Price(/1/) $1,040.00 $1,038.44 $1,000.00
Redemption Date(/1/) 5/1/97 4/15/99 3/15/01
Benchmark Treasury Security:
Interest Rate 6 1/2% 7% 7 3/4%
Maturity Date 4/30/97 4/15/99 2/15/01
Assumed Benchmark
Treasury Yield(/2/) 6.20% 6.38% 6.48%
Fixed Spread 0.15% 0.25% 0.30%
Assumed Reference Yield(/3/) 6.35% 6.63% 6.78%
Assumed Exchange Date(/4/) 6/30/95 6/30/95 6/30/95
Computation of Reference Total Price
for these Examples:
YLD 0.0620 0.0638 0.0648
CPN 0.1075 0.1025 0.0875
N 4 8 12
S 59 75 105
RED 1,040.00 1,038.44 1,000.00
Reference Total Price
for this Example(/5/) 1,128.23 1,170.80 1,117.32
</TABLE>
- --------
(1) As defined in Schedule A. These are used only for the purpose of computing
the Reference Total Price.
(2) The assumed Benchmark Treasury Yields for these examples are the yields on
the Benchmark Treasury Securities as of 4:00 p.m., New York City time, on
May 22, 1995.
(3) The assumed Reference Yields for these examples are the Reference Yields
(which shall equal the applicable Benchmark Treasury Yield plus the
applicable fixed spread) based on the assumed Benchmark Treasury Yields
for these examples.
(4) The assumed Exchange Date for these examples is the scheduled Exchange
Date for each Exchange Offer and will be the Exchange Date unless such
Exchange Offer is extended.
(5) These are the Reference Total Prices for these examples only and assume
Benchmark Treasury Yields and an Exchange Date as indicated.
<PAGE>
Questions concerning the terms of the Exchange Offers should be directed to the
Dealer Manager,
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-3738 (collect)
(800) 558-3745 (toll free)
Attention: Liability Management Group
Questions concerning tender procedures and requests for additional copies of
the documents should be directed to the Information Agent,
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
(800) 829-6554 (toll free)
Old Securities tendered, together with the requisite Letters of Transmittal and
any other documents, must be delivered to the Exchange Agent,
CHEMICAL MELLON SHAREHOLDER SERVICES
Hand Delivery: Overnight Delivery:
Reorganization Dep't Reorganization Dep't
120 Broadway, 85 Challenger Road
13th Floor Ridgefield Park, NJ 07660
New York, NY 10271
By Mail: By Facsimile:
Reorganization Dep't (201) 296-4293
P.O. Box 817,
Midtown Station Confirm By Telephone:
New York, NY 10018 (201) 296-4209
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Post-Effective Amendment Number 2 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Nashville, State of Tennessee, on the 15th day of June, 1995.
Columbia/HCA Healthcare Corporation
/s/ Stephen T. Braun
By: _________________________________
Stephen T. Braun
Senior Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment Number 2 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
* Chairman of the June 15, 1995
_____________________________________ Board
THOMAS F. FRIST, JR., M.D.
* President, Chief June 15, 1995
_____________________________________ Executive Officer
RICHARD L. SCOTT (Principal
Executive Officer)
and Director
* Senior Vice June 15, 1995
_____________________________________ President, Chief
DAVID C. COLBY Financial Officer
and Treasurer
(Principal
Financial Officer)
* Vice President and June 15, 1995
_____________________________________ Controller
RICHARD A. LECHLEITER (Principal
Accounting Officer)
* Director June 15, 1995
_____________________________________
MAGDALENA AVERHOFF, M.D.
II-1
<PAGE>
SIGNATURE TITLE DATE
* Director June 15, 1995
_____________________________________
J. DAVID GRISSOM
* Director June 15, 1995
_____________________________________
CHARLES J. KANE
* Director June 15, 1995
_____________________________________
JOHN W. LANDRUM
* Director June 15, 1995
_____________________________________
T. MICHAEL LONG
* Director June 15, 1995
_____________________________________
DARLA D. MOORE
* Director June 15, 1995
_____________________________________
RODMAN W. MOORHEAD III
* Director June 15, 1995
_____________________________________
CARL F. POLLARD
* Director June 15, 1995
_____________________________________
CARL E. REICHARDT
* Director June 15, 1995
_____________________________________
FRANK S. ROYAL, M.D.
II-2
<PAGE>
SIGNATURE TITLE DATE
* Director June 15, 1995
_____________________________________
ROBERT D. WALTER
* Director June 15, 1995
_____________________________________
WILLIAM T. YOUNG
/s/ Stephen T. Braun
*By: ________________________________
STEPHEN T. BRAUN
ATTORNEY-IN-FACT
II-3
