e424b3
The
information in this prospectus supplement is not complete and
may be changed. This prospectus is part of an effective
registration statement filed with the Securities and Exchange
Commission. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to by these
securities in any state where the offer or sale is not
permitted.
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Filed Pursuant to
Rule 424(b)(3)
Registration
No. 333-175791
Subject to Completion, dated
September 27, 2011
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 26, 2011)
$500,000,000
HCA Inc.
% Senior
Notes due 2018
HCA Inc. is offering $500,000,000 aggregate principal amount
of % senior notes due 2018,
which we refer to as the notes. The notes will bear
interest at a rate of % per annum.
HCA Inc. will pay interest on the notes semi-annually, in cash
in arrears,
on
and
of each year, beginning
on ,
2012. The notes will mature
on ,
2018.
We may redeem the notes, at any time in whole or from time to
time in part at a make-whole price plus accrued and
unpaid interest to the date of such redemption. In addition, if
we experience certain kinds of changes in control, we may be
required to repurchase the notes on the terms described in this
prospectus supplement.
The notes will be HCA Inc.s senior obligations and will
rank equally and ratably with all of its future senior
indebtedness and senior to any of its future subordinated
indebtedness. The obligations under the notes will be fully and
unconditionally guaranteed by HCA Holdings, Inc. on a senior
unsecured basis and will rank equally and ratably with HCA
Holdings, Inc.s existing and future senior indebtedness
and senior to any of its future subordinated indebtedness and
will be structurally subordinated in right of payment to all
obligations of HCA Inc.s subsidiaries. The notes will not
be guaranteed by any of our subsidiaries.
HCA Inc. intends to use the net proceeds of this offering for
general corporate purposes, which may include funding a portion
of the acquisition of the remaining ownership interest in our
HCA-HealthONE LLC joint venture currently owned by the Colorado
Health Foundation and to pay related fees and expenses.
Investing in the notes involves risks. See Risk
Factors beginning on page S-17.
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Per Note
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Total
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Price to the public
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$
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$
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Underwriting discounts and commissions
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$
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$
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Proceeds to HCA Inc. (before
expenses)(1)
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$
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$
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(1) |
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Plus accrued interest, if any
from,
from ,
2011.
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Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or determined if this prospectus supplement or the attached
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Barclays Capital, on behalf of the underwriters, expects to
deliver the notes in book entry from on or
about ,
2011.
Joint Book-Running Managers
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Barclays
Capital |
Deutsche Bank Securities |
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Goldman,
Sachs & Co. |
Morgan Stanley |
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RBC
Capital Markets |
Wells Fargo Securities |
Co-Managers
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Credit
Agricole CIB |
Credit Suisse |
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Mizuho
Securities |
SunTrust Robinson Humphrey |
Prospectus Supplement
dated ,
2011
You should rely only on the information contained and
incorporated by reference in this prospectus supplement and the
accompanying prospectus. Neither HCA Inc. nor the underwriters
has authorized anyone to provide you with any information or
represent anything about HCA Inc., its financial results or this
offering that is not contained or incorporated by reference in
this prospectus supplement or the accompanying prospectus. If
given or made, any such other information or representation
should not be relied upon as having been authorized by HCA Inc.
or the underwriters. Neither HCA Inc. nor the underwriters is
making an offer to sell these notes in any jurisdiction where
the offer or sale is not permitted. The information contained
and incorporated by reference in this prospectus supplement and
the accompanying prospectus may only be accurate on the date of
this document.
TABLE OF
CONTENTS
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Prospectus Supplement
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S-17
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S-23
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S-24
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S-26
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S-37
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S-54
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S-58
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S-60
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S-63
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S-63
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S-63
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Prospectus
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Page
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About This Prospectus
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Where You Can Find More Information
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Incorporation by Reference
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Forward-Looking Statements
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Our Company
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Risk Factors
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Use of Proceeds
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Ratio of Earnings to Fixed Charges
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Description of Debt Securities and Guarantees
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Plan of Distribution
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Experts
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S-i
ABOUT THIS
PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the terms of the offering of the
notes and adds to and supplements information contained in the
accompanying prospectus and the documents incorporated by
reference therein. The second part is the accompanying
prospectus, which we refer to as the accompanying
prospectus. The accompanying prospectus contains a
description of our debt securities and gives more general
information, some of which may not apply to the notes. The
accompanying prospectus also incorporates by reference documents
that are described under Incorporation by Reference
in that prospectus.
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, in the
accompanying prospectus or in any free writing prospectus filed
by us with the Securities and Exchange Commission. If
information in this prospectus supplement is inconsistent with
the accompanying prospectus, you should rely on this prospectus
supplement. We have not, and the underwriters have not,
authorized any other person to provide you with different
information. If anyone provides you with different or
inconsistent information, you should not rely on it. You should
not assume that the information contained or incorporated by
reference in this prospectus supplement and the accompanying
prospectus or in any such free writing prospectus is accurate as
of any date other than the respective dates thereof. Our
business, financial condition, results of operations and
prospects may have changed since those dates.
We are not, and the underwriters are not, making an offer of the
notes in any jurisdiction where the offer or sale is not
permitted.
MARKET, RANKING
AND OTHER INDUSTRY DATA
The data included or incorporated by reference in this
prospectus supplement regarding markets and ranking, including
the size of certain markets and our position and the position of
our competitors within these markets, are based on reports of
government agencies or published industry sources and estimates
based on managements knowledge and experience in the
markets in which we operate. These estimates have been based on
information obtained from our trade and business organizations
and other contacts in the markets in which we operate. We
believe these estimates to be accurate as of the date of this
prospectus supplement. However, this information may prove to be
inaccurate because of the method by which we obtained some of
the data for the estimates or because this information cannot
always be verified with complete certainty due to the limits on
the availability and reliability of raw data, the voluntary
nature of the data gathering process and other limitations and
uncertainties. As a result, you should be aware that market,
ranking and other similar industry data included or incorporated
by reference in this prospectus supplement, and estimates and
beliefs based on that data, may not be reliable. Neither we nor
the underwriters can guarantee the accuracy or completeness of
any such information contained or incorporated by reference in
this prospectus supplement.
S-ii
FORWARD-LOOKING
AND CAUTIONARY STATEMENTS
This prospectus supplement and the accompanying prospectus
contain and incorporate by reference forward-looking
statements within the meaning of the federal securities
laws, which involve risks and uncertainties. Forward-looking
statements include all statements that do not relate solely to
historical or current facts, and you can identify
forward-looking statements because they contain words such as
believes, expects, may,
will, should, seeks,
approximately, intends,
plans, estimates, projects,
continue, initiative or
anticipates or similar expressions that concern our
prospects, objectives, strategies, plans or intentions. All
statements made relating to our estimated and projected
earnings, margins, costs, expenditures, cash flows, growth rates
and financial results or to the impact of existing or proposed
laws or regulations described or incorporated by reference in
this prospectus supplement and the accompanying prospectus are
forward-looking statements. These forward-looking statements are
subject to risks and uncertainties that may change at any time,
and, therefore, our actual results may differ materially from
those expected. We derive many of our forward-looking statements
from our operating budgets and forecasts, which are based upon
many detailed assumptions. While we believe that our assumptions
are reasonable, it is very difficult to predict the impact of
known factors, and, of course, it is impossible to anticipate
all factors that could affect our actual results.
Some of the important factors that could cause actual results to
differ materially from our expectations are disclosed under
Risk Factors and elsewhere in or incorporated by
reference in this prospectus supplement and the accompanying
prospectus. All subsequent written and oral forward-looking
statements attributable to us, or persons acting on our behalf,
are expressly qualified in their entirety by these cautionary
statements.
We do not undertake any obligation to publicly update or revise
any forward-looking statement as a result of new information,
future events or otherwise, except as otherwise required by law.
S-iii
SUMMARY
This summary highlights information appearing elsewhere in
and incorporated by reference in this prospectus supplement and
the accompanying prospectus. This summary is not complete and
does not contain all of the information that you should consider
before investing in the notes. You should carefully read the
entire prospectus supplement, the accompanying prospectus and
the information incorporated herein by reference, including the
financial data and related notes and the section entitled
Risk Factors.
As used herein, unless otherwise stated or indicated by
context, references to (i) the Issuer refer to
HCA Inc. and its affiliates, (ii) HCA Holdings,
Inc. refer to HCA Holdings, Inc., parent of HCA Inc., and
its affiliates and (iii) the Company,
HCA, we, our or
us refer to HCA Inc. and its affiliates prior
to the Corporate Reorganization (as defined herein) and to
HCA Holdings, Inc. and its affiliates upon the consummation
of the Corporate Reorganization. The term affiliates
means direct and indirect subsidiaries and partnerships and
joint ventures in which such subsidiaries are partners. The
terms facilities or hospitals refer to
entities owned and operated by affiliates of HCA and the term
employees refers to employees of affiliates of
HCA.
Our
Company
We are the largest non-governmental hospital operator in the
U.S. and a leading comprehensive, integrated provider of
health care and related services. We provide these services
through a network of acute care hospitals, outpatient
facilities, clinics and other patient care delivery settings. As
of June 30, 2011, we operated a diversified portfolio of
164 hospitals (with approximately 42,000 beds) and 111
freestanding surgery centers across 20 states throughout
the U.S. and in England. As a result of our efforts to
establish significant market share in large and growing urban
markets with attractive demographic and economic profiles, we
currently have a substantial market presence in 14 of the top 25
fastest growing markets with populations greater than 500,000 in
the U.S. and currently maintain the first or second
position, based on inpatient admissions, in many of our key
markets. We believe our ability to successfully position and
grow our assets in attractive markets and execute our operating
plan has contributed to the strength of our financial
performance over the last several years. For the six months
ended June 30, 2011, we generated revenues of
$16.118 billion, net income attributable to HCA Holdings,
Inc. of $469 million and Adjusted EBITDA of
$3.010 billion.
Our patient-first strategy is to provide high quality health
care services in a cost-efficient manner. We intend to build
upon our history of profitable growth by maintaining our
dedication to quality care, increasing our presence in key
markets through organic expansion and strategic acquisitions and
joint ventures, leveraging our scale and infrastructure, and
further developing our physician and employee relationships. We
believe pursuing these core elements of our strategy helps us
develop a faster-growing, more stable and more profitable
business and increases our relevance to patients, physicians,
payers and employers.
Using our scale, significant resources and over 40 years of
operating experience, we have developed a significant management
and support infrastructure. Some of the key components of our
support infrastructure include a revenue cycle management
organization, a health care group purchasing organization
(GPO), an information technology and services
provider, a nurse staffing agency and a medical malpractice
insurance underwriter. These shared services have helped us to
maximize our cash collection efficiency, achieve savings in
purchasing through our scale, more rapidly deploy information
technology upgrades, more effectively manage our labor pool and
achieve greater stability in malpractice insurance premiums.
Collectively, these components have helped us to further enhance
our operating effectiveness, cost efficiency and overall
financial results. We have also created a subsidiary, Parallon
Business Solutions, that offers certain of these component
services to other health care companies.
Since the founding of our business in 1968 as a single-facility
hospital company, we have demonstrated an ability to
consistently innovate and sustain growth during varying economic
and
S-1
regulatory climates. Under the leadership of an experienced
senior management team, whose tenure at HCA averages over
20 years, we have established an extensive record of
providing high quality care, profitably growing our business,
making and integrating strategic acquisitions and efficiently
and strategically allocating capital spending.
On November 17, 2006, HCA Inc. was acquired by a private
investor group comprised of affiliates of or funds sponsored by
Bain Capital Partners, LLC (Bain Capital), Kohlberg
Kravis Roberts & Co. (KKR), Merrill Lynch
Global Private Equity (MLGPE), now BAML Capital
Partners (each a Sponsor), Citigroup Inc., Bank of
America Corporation (the Sponsor Assignees) and HCA
founder Dr. Thomas F. Frist, Jr. (the Frist
Entities), a group we collectively refer to as the
Investors, and by members of management and certain
other investors. We refer to the merger, the financing
transactions related to the merger and other related
transactions collectively as the Recapitalization.
Since the Recapitalization, we have achieved substantial
operational and financial progress. During this time, we have
made significant investments in expanding our service lines and
expanding our alignment with highly specialized and primary care
physicians. In addition, we have enhanced our operating
efficiencies through a number of corporate cost-saving
initiatives and an expansion of our support infrastructure. We
have made investments in information technology to optimize our
facilities and systems. We have also undertaken a number of
initiatives to improve clinical quality and patient
satisfaction. As a result of these initiatives, our financial
performance has improved significantly from the year ended
December 31, 2007, the first full year following the
Recapitalization, to the year ended December 31, 2010, with
revenues growing by $3.825 billion, net income attributable
to HCA Holdings, Inc. increasing by $333 million and
Adjusted EBITDA increasing by $1.276 billion. This
represents compounded annual growth rates on these key metrics
of 4.5%, 11.4% and 8.5%, respectively.
Our
Industry
We believe well-capitalized, comprehensive and integrated health
care delivery providers are well-positioned to benefit from the
current industry trends, some of which include:
Aging Population and Continued Growth in the Need for Health
Care Services. According to the U.S. Census
Bureau, the demographic age group of persons aged 65 and over is
expected to experience compounded annual growth of 3.0% over the
next 20 years, and constitute 19.3% of the total
U.S. population by 2030. The Centers for
Medicare & Medicaid Services (CMS)
projects continued increases in hospital services based on the
aging of the U.S. population, advances in medical
procedures, expansion of health coverage, increasing consumer
demand for expanded medical services and increased prevalence of
chronic conditions such as diabetes, heart disease and obesity.
We believe these factors will continue to drive increased
utilization of health care services and the need for
comprehensive integrated hospital networks that can provide a
wide array of essential and sophisticated health care.
Continued Evolution of Quality-Based Reimbursement Favors
Large-Scale, Comprehensive and Integrated Providers. We
believe the U.S. health care system is continuing to evolve
in ways that favor large-scale, comprehensive and integrated
providers that provide high levels of quality care.
Specifically, we believe there are a number of initiatives that
will continue to gain importance in the foreseeable future,
including introduction of value-based payment methodologies tied
to performance, quality and coordination of care, implementation
of integrated electronic health records and information, and an
increasing ability for patients and consumers to make choices
about all aspects of health care. We believe our company is well
positioned to respond to these emerging trends and has the
resources, expertise and flexibility necessary to adapt in a
timely manner to the changing health care regulatory and
reimbursement environment.
Impact of Health Reform Law. The Patient Protection
and Affordable Care Act, as amended by the Health Care and
Education Reconciliation Act of 2010 (collectively, the
Health Reform Law), will change how health care
services are covered, delivered and reimbursed. It will do so
through expanded coverage of uninsured individuals, significant
reductions in the growth of Medicare program payments,
S-2
material decreases in Medicare and Medicaid disproportionate
share hospital (DSH) payments, and the establishment
of programs where reimbursement is tied in part to quality and
integration. The Health Reform Law, as enacted, is expected to
expand health insurance coverage to approximately 32 to
34 million additional individuals through a combination of
public program expansion and private sector health insurance
reforms. We believe the expansion of private sector and Medicaid
coverage will, over time, increase our reimbursement related to
providing services to individuals who were previously uninsured.
On the other hand, the reductions in the growth in Medicare
payments and the decreases in DSH payments will adversely affect
our government reimbursement. Because of the many variables
involved, including pending court challenges, the potential for
changes to the law as a result and efforts to amend or repeal
the law, we are unable to predict the net impact of the Health
Reform Law on us; however, we believe our experienced management
team, emphasis on quality care and diverse service offerings
will enable us to capitalize on the opportunities presented by
the Health Reform Law, as well as adapt in a timely manner to
its challenges.
Our Competitive
Strengths
We believe our key competitive strengths include:
Largest Comprehensive, Integrated Health Care Delivery
System. We are the largest non-governmental hospital
operator in the U.S., providing approximately 4% to 5% of all
U.S. hospital services through our national footprint. The
scope and scale of our operations, evidenced by the types of
facilities we operate, the diverse medical specialties we offer
and the numerous patient care access points we provide enable us
to provide a comprehensive range of health care services in a
cost-effective manner. As a result, we believe the breadth of
our platform is a competitive advantage in the marketplace
enabling us to attract patients, physicians and clinical staff
while also providing significant economies of scale and
increasing our relevance with commercial payers.
Reputation for High Quality Patient-Centered
Care. Since our founding, we have maintained an
unwavering focus on patients and clinical outcomes. We believe
clinical quality influences physician and patient choices about
health care delivery. We align our quality initiatives
throughout the organization by engaging corporate, local,
physician and nurse leaders to share best practices and develop
standards for delivering high quality care. We have invested
extensively in quality of care initiatives, with an emphasis on
implementing information technology and adopting industry-wide
best practices and clinical protocols. As a result of these
efforts, we have achieved significant progress in clinical
quality. In September 2011, 77 of our facilities were named
among the top 405 hospitals in the country by The Joint
Commission, the hospital industrys primary accrediting
body. As measured by the CMS clinical core measures reported on
the CMS Hospital Compare website and based on publicly available
data for the twelve months ended September 30, 2010, our
hospitals achieved a composite score of 98.6% of the CMS core
measures versus the national average of 95.7%, making us among
the top performing major health systems in the U.S. In
addition, as required by the Health Reform Law, CMS will
establish a value-based purchasing system and will adjust
hospital payment rates based on hospital-acquired conditions and
hospital readmissions. We also believe our quality initiatives
favorably position us in a payment environment that is
increasingly performance-based.
Leading Local Market Positions in Large, Growing, Urban
Markets. Over our history, we have sought to
selectively expand and upgrade our asset base to create a
premium portfolio of assets in attractive growing markets. As a
result, we have a strong market presence in 14 of the top 25
fastest growing markets with populations greater than 500,000 in
the U.S. We currently operate in 29 markets, 19 of which
have populations of one million or more, with all but two of
these markets projecting growth above the national average from
2011 to 2016. Our inpatient market share places us first or
second in many of our key markets. We believe the strength and
stability of these market positions will
S-3
create organic growth opportunities and allow us to develop
long-term relationships with patients, physicians, large
employers and third-party payers.
Diversified Revenue Base and Payer Mix. We believe
our broad geographic footprint, varied service lines and diverse
revenue base mitigate our risks in numerous ways. Our
diversification limits our exposure to competitive dynamics and
economic conditions in any single local market, reimbursement
changes in specific service lines and disruptions with respect
to payers such as state Medicaid programs or large commercial
insurers. We have a diverse portfolio of assets with no single
facility contributing more than 2.3% of our revenues and no
single metropolitan statistical area contributing more than 8.0%
of revenues for the year ended December 31, 2010. We have
also developed a highly diversified payer base, including
approximately 3,000 managed care contracts, with no single
commercial payer representing more than 8% of revenues for the
year ended December 31, 2010. In addition, we are one of
the countrys largest providers of outpatient services,
which accounted for approximately 38% of our revenues for the
year ended December 31, 2010. We believe the geographic
diversity of our markets and the scope of our inpatient and
outpatient operations help reduce volatility in our operating
results.
Scale and Infrastructure Drive Cost Savings and
Efficiencies. Our scale allows us to leverage our
support infrastructure to achieve significant cost savings and
operating efficiencies, thereby driving margin expansion. We
strategically manage our supply chain through centralized
purchasing and supply warehouses, as well as our revenue cycle
through centralized billing, collections and health information
management functions. We also manage the provision of
information technology through a combination of centralized
systems with regional service support as well as centralize many
other clinical and corporate functions, creating economies of
scale in managing expenses and business processes. In addition
to the cost savings and operating efficiencies, this support
infrastructure simultaneously generates revenue from third
parties that utilize our services.
Well-Capitalized Portfolio of High Quality
Assets. In order to expand the range and improve the
quality of services provided at our facilities, we invested over
$7.5 billion in our facilities and information technology
systems over the five-year period ended June 30, 2011. We
believe our significant capital investments in these areas will
continue to attract new and returning patients, attract and
retain high-quality physicians, maximize cost efficiencies and
address the health care needs of our local communities.
Furthermore, we believe our platform, as well as electronic
health record infrastructure, national research and physician
management capabilities, provide a strategic advantage by
enhancing our ability to capitalize on anticipated incentives
through the Health Information Technology for Economic and
Clinical Health Act (HITECH) provisions of the
American Recovery and Reinvestment Act of 2009
(ARRA) and position us well in an environment that
increasingly emphasizes quality, transparency and coordination
of care.
Strong Operating Results and Cash Flows. Our leading
scale, diversification, favorable market positions, dedication
to clinical quality and focus on operational efficiency have
enabled us to achieve attractive historical financial
performance even during the most recent economic period. In the
six months ended June 30, 2011, we generated net income
attributable to HCA Holdings, Inc. of $469 million,
Adjusted EBITDA of $3.010 billion and cash flows from
operating activities of $1.666 billion. Our ability to
generate strong and consistent cash flows from operations has
enabled us to invest in our operations, reduce our debt, enhance
earnings per share and continue to pursue attractive growth
opportunities.
Proven and Experienced Management Team. We believe
the extensive experience and depth of our management team are a
distinct competitive advantage in the complicated and evolving
industry in which we compete. Our CEO and Chairman of the Board
of Directors, Richard M. Bracken, began his career with our
company over 29 years ago and has held various executive
positions with us over that period, including, most recently, as
our President and Chief Operating Officer. Our President, Chief
Financial Officer and Director, R. Milton Johnson, joined our
company over 28 years ago and has held various positions in
our financial operations since that time. Our Group Presidents
average
S-4
approximately 20 years of experience with our company.
Members of our senior management hold significant equity
interests in our company, further aligning their long-term
interests with those of our stockholders.
Our Growth
Strategy
We are committed to providing the communities we serve with high
quality, cost-effective health care while growing our business,
increasing our profitability and creating long-term value for
our stockholders. To achieve these objectives, we align our
efforts around the following growth agenda:
Grow Our Presence in Existing Markets. We believe we
are well positioned in a number of large and growing markets
that will allow us the opportunity to generate long-term,
attractive growth through the expansion of our presence in these
markets. We plan to continue recruiting and strategically
collaborating with the physician community and adding attractive
service lines such as cardiology, emergency services, oncology
and womens services. Since our Recapitalization, we have
invested significant capital into these markets and expect to
continue to see the benefit of this investment. Additional
components of our growth strategy include expanding our
footprint through developing various outpatient access points,
including surgery centers, rural outreach, freestanding
emergency departments and walk-in clinics.
Achieve Industry-Leading Performance in Clinical and
Satisfaction Measures. Achieving high levels of patient
safety, patient satisfaction and clinical quality are central
goals of our business model. To achieve these goals, we have
implemented a number of initiatives including infection
reduction initiatives, hospitalist programs, advanced health
information technology and evidence-based medicine programs. We
routinely analyze operational practices from our best-performing
hospitals to identify ways to implement organization-wide
performance improvements and reduce clinical variation. We
believe these initiatives will continue to improve patient care,
help us achieve cost efficiencies, grow our revenues and
favorably position us in an environment where our constituents
are increasingly focused on quality, efficacy and efficiency.
Recruit and Employ Physicians to Meet Need for High Quality
Health Services. We depend on the quality and
dedication of the health care providers and other team members
who serve at our facilities. We believe a critical component of
our growth strategy is our ability to successfully recruit and
strategically collaborate with physicians and other
professionals to provide high quality care. We attract and
retain physicians by providing high quality, convenient
facilities with advanced technology, by expanding our specialty
services and by building our outpatient operations. We believe
our continued investment in the employment, recruitment and
retention of physicians will improve the quality of care at our
facilities.
Continue to Leverage Our Scale and Market Positions to
Enhance Profitability. We believe there is significant
opportunity to continue to grow the profitability of our company
by fully leveraging the scale and scope of our franchise. We are
currently pursuing next generation performance improvement
initiatives such as contracting for services on a multistate
basis and expanding our support infrastructure for additional
clinical and support functions, such as physician credentialing,
medical transcription and electronic medical recordkeeping. We
believe our centrally managed business processes and ability to
leverage cost-saving practices across our extensive network will
enable us to continue to manage costs effectively. We have
created a subsidiary, Parallon Business Solutions, to leverage
key components of our support infrastructure, including revenue
cycle management, health care group purchasing, supply chain
management and staffing functions, by offering these services to
other hospital companies.
Selectively Pursue a Disciplined Development
Strategy. We continue to believe there are significant
growth opportunities in our markets. We will continue to provide
financial and operational resources to successfully execute on
our in-market opportunities. To complement our in-market growth
agenda, we intend to focus on selectively developing and
acquiring new hospitals, outpatient
S-5
facilities and other health care service providers. We believe
the challenges faced by the hospital industry may spur
consolidation and we believe our size, scale, national presence
and access to capital will position us well to participate in
any such consolidation. We have a strong record of successfully
acquiring and integrating hospitals and entering into joint
ventures and intend to continue leveraging this experience.
Recent
Developments
On August 1, 2011, we issued $5.000 billion aggregate
principal amount of notes, comprised of $3.000 billion of
6.50% senior secured first lien notes due 2020 (the
August 2011 first lien notes) and
$2.000 billion of 7.50% senior unsecured notes due
2022 (the August 2011 unsecured notes)
(collectively, the August notes offering). On
August 26, 2011, HCA Inc. redeemed all $3.200 billion
aggregate principal amount of its outstanding
91/4% Senior
Secured Notes due 2016 (the Cash-Pay Notes) and all
$1.578 billion aggregate principal amount of its
outstanding
95/8%/103/8% Senior
Secured Toggle Notes due 2016 (the Toggle Notes and,
together with the Cash-Pay Notes, the Redeemed
Notes) (collectively, the August redemptions).
We used the net proceeds from the August notes offering,
together with approximately $280 million of borrowings
under our asset-based revolving credit facility, to fund the
August redemptions.
On September 21, 2011, we completed the repurchase of
80,771,143 shares of HCA common stock beneficially owned by
affiliates of Bank of America Corporation, using a combination
of cash on hand and borrowing through available credit
facilities (collectively, the September stock
repurchase).
On August 2, 2011, we entered into a definitive Membership
Interest Purchase Agreement with The Colorado Health Foundation
for the purchase (or redemption) of the Foundations
remaining ownership interest in HCA-HealthONE LLC for $1.450
billion. We expect the transaction to close in the fourth
quarter of 2011.
We expect to refinance our $2.000 billion asset-based
revolving credit facility maturing on November 16, 2012
(the asset-based revolving credit facility) on or
about September 30, 2011 to increase the total size to
$2.500 billion and extend the maturity to 2016. The
asset-based revolving credit facility will be subject to certain
borrowing base limitations and we do not expect that the full
$2.500 billion will be initially available upon the
refinancing. There can be no assurance that the refinancing will
be completed on the terms or timing contemplated.
Corporate
Reorganization
On November 22, 2010, HCA Inc. reorganized by creating a
new holding company structure (the Corporate
Reorganization), pursuant to which HCA Holdings, Inc.
became our new parent company, and HCA Inc. became HCA Holdings,
Inc.s wholly-owned direct subsidiary. As part of the
Corporate Reorganization, HCA Inc.s outstanding shares of
capital stock were automatically converted, on a share for share
basis, into identical shares of HCA Holdings, Inc.s common
stock, and HCA Holdings, Inc. became a guarantor but did not
assume the debt of certain series of HCA Inc.s outstanding
secured notes and is not subject to the covenants contained in
the indentures governing such secured notes. See
Description of Other Indebtedness.
Through our predecessors, we commenced operations in 1968. HCA
Inc. was incorporated in Nevada in January 1990 and
reincorporated in Delaware in September 1993. Our principal
executive offices are located at One Park Plaza, Nashville,
Tennessee 37201, and our telephone number is
(615) 344-9551.
S-6
Corporate
Structure
The following diagram summarizes our corporate structure as of
June 30, 2011. The indebtedness figures in the diagram
below are as of June 30, 2011 and give effect to the August
notes offering, the August redemptions, the September stock
repurchase and the indebtedness incurred under the notes offered
hereby. In this prospectus supplement, where we have presented
information as adjusted to give effect to this offering, we have
assumed that the notes will not be offered at a discount. If the
notes are offered at a discount, the net proceeds to us will be
less than we have assumed.
|
|
|
(1) |
|
In connection with the Corporate
Reorganization, HCA Holdings, Inc. became a guarantor of all of
HCA Inc.s then-outstanding secured notes but is not
subject to the covenants that apply to HCA Inc. or HCA
Inc.s restricted subsidiaries under those notes.
|
|
(2) |
|
Consists of (i) a
$2.000 billion asset-based revolving credit facility (which
is expected to be increased to $2.500 billion and extended
to 2016) maturing on November 16, 2012 ($1.875 billion
outstanding at June 30, 2011, as adjusted to give effect to
the August notes offering, August redemptions and the September
stock repurchase) (ii) a $2.000 billion senior secured
revolving credit facility maturing on November 17, 2015
(the senior secured revolving credit facility)
($988 million outstanding at June 30, 2011, without
giving effect to outstanding letters of credit, as adjusted to
give effect to the September stock repurchase); (iii) a
$472 million senior secured term loan
A-1 facility
maturing on November 17, 2012; (iv) a
$586 million senior secured term loan
A-2 facility
maturing on May 2, 2016; (v) a $1.689 billion
senior secured term loan B-1 facility maturing on
November 17, 2013; (vi) a $2.000 billion senior
secured term loan B-2 facility maturing on March 31, 2017;
(vii) a $2.373 billion senior secured term loan B-3
facility maturing on May 1, 2018; and (viii) a
291 million, or $421 million-equivalent, senior
secured European term loan facility maturing on
November 17, 2013. We refer to the facilities described
under (ii) through (viii) above, collectively, as the
cash flow credit facility and, together with the
asset-based revolving credit facility, the senior secured
credit facilities. Does not give effect to amounts that
may be drawn under the revolving credit facilities to fund our
acquisition of HCA-HealthONE LLC, if consummated, or proposed
refinancing of our asset-based revolving credit facility.
|
|
(3) |
|
Consists of
(i) $1.500 billion aggregate principal amount of
81/2%
first lien notes due 2019 that HCA Inc. issued in April 2009
(the April 2009 first lien notes);
(ii) $1.250 billion aggregate principal amount of
77/8%
first lien notes due 2020 that HCA Inc. issued in August 2009
(the August 2009 first lien notes);
(iii) $1.400 billion aggregate principal amount of
71/4%
first lien notes due 2020 that HCA Inc. issued in March 2010
(the March 2010 first lien notes);
(iv) $3.000 billion aggregate principal amount of
6.50% first lien notes due 2020 (the August 2011 first
lien notes and, collectively with the April 2009 first
lien notes, the August 2009 first lien notes and the March 2010
first lien notes, the first lien notes) and
(v) $72 million of unamortized debt discounts that
reduce the existing indebtedness.
|
|
(4) |
|
Consists of
(i) $201 million aggregate principal amount of
97/8%
second lien notes due 2017, and (ii) $5 million of
unamortized debt discounts that reduce the existing
indebtedness. We refer to the notes issued in (i) as the
second lien notes.
|
|
(5) |
|
As adjusted, consists of
(i) $2.000 billion aggregate principal amount of
7.50% senior notes due 2022 that HCA Inc. issued in August
2011 (the August 2011 unsecured notes); (ii) an
aggregate principal amount of $246 million medium-term
notes with maturities ranging from 2014 to 2025 and a weighted
average interest rate of 8.28%; (iii) an aggregate
principal amount
|
S-7
|
|
|
|
|
of $886 million debentures
with maturities ranging from 2015 to 2095 and a weighted average
interest rate of 7.55%; (iv) an aggregate principal amount
of $4.694 billion senior notes with maturities ranging from
2012 to 2033 and a weighted average interest rate of 6.54%;
(v) $304 million of secured debt, which represents
capital leases and other secured debt with a weighted average
interest rate of 7.13%; and (vi) $8 million of
unamortized debt discounts that reduce the existing
indebtedness. For more information regarding our unsecured and
other indebtedness, see Description of Other
Indebtedness.
|
|
(6) |
|
The cash flow credit facility and
the first lien notes are secured by first-priority liens, and
the second lien notes and related guarantees are secured by
second-priority liens, on substantially all the capital stock of
Healthtrust, Inc. The Hospital Company and the
first-tier subsidiaries of the subsidiary guarantors (but
limited to 65% of the voting stock of any such first-tier
subsidiary that is a foreign subsidiary), subject to certain
exceptions.
|
|
(7) |
|
Includes subsidiaries which are
designated as restricted subsidiaries under HCA
Inc.s indenture dated as of December 16, 1993,
certain of their wholly owned subsidiaries formed in connection
with the asset-based revolving credit facility and certain
excluded subsidiaries (non-material subsidiaries).
|
S-8
The
Offering
The summary below describes the principal terms of the notes.
Certain of the terms and conditions described below are subject
to important limitations and exceptions. The Description
of the Notes section of this prospectus supplement and the
Description of Debt Securities and Guarantees in the
accompanying prospectus contains more detailed descriptions of
the terms and conditions of the notes.
|
|
|
Issuer |
|
HCA Inc. |
|
Senior Unsecured Notes |
|
% senior unsecured notes due
2018. |
|
Maturity Date |
|
The notes will mature
on ,
2018. |
|
Interest Rate |
|
Interest on the notes will be payable in cash and will accrue at
a rate of % per annum. |
|
Interest Payment Dates |
|
and ,
commencing
on ,
2012. Interest will accrue
from ,
2011. |
|
Ranking |
|
The notes will be the Issuers senior obligations and will: |
|
|
|
rank
senior in right of payment to any of its future subordinated
indebtedness;
|
|
|
|
rank
equally in right of payment with any of its existing and future
senior indebtedness;
|
|
|
|
be
effectively subordinated in right of payment to any of its
existing and future secured indebtedness to the extent of the
value of the collateral securing such indebtedness; and
|
|
|
|
be
structurally subordinated in right of payment to all existing
and future indebtedness and other liabilities of its
subsidiaries.
|
|
|
|
As of June 30, 2011, on an as adjusted basis after giving
effect to the August notes offering, the August redemptions, the
September stock repurchase and the notes offered hereby: |
|
|
|
the
notes would have been effectively subordinated in right of
payment to $18.059 billion of secured indebtedness; and
|
|
|
|
we
would have had $946 million of unutilized capacity under
the senior secured revolving credit facility and
$125 million of unutilized capacity under the asset-based
revolving credit facility, after giving effect to letters of
credit and borrowing base limitations, all of which would be
structurally senior to the notes offered hereby if borrowed.
|
|
Parent Guarantee |
|
The notes will be fully and unconditionally guaranteed on a
senior unsecured basis by HCA Holdings, Inc. and will: |
|
|
|
rank
senior in right of payment to all existing and future
subordinated indebtedness of HCA Holdings, Inc.;
|
|
|
|
rank
equally in right of payment with all existing and future senior
indebtedness of HCA Holdings, Inc.;
|
|
|
|
be
effectively subordinated in right of payment to all future
secured indebtedness of HCA Holdings, Inc. to the extent of the
value of the collateral securing such indebtedness; and
|
S-9
|
|
|
|
|
be
effectively subordinated in right of payment to all existing and
future indebtedness and other liabilities of any subsidiary of
HCA Holdings, Inc. (other than HCA Inc.).
|
|
|
|
The notes will not be guaranteed by any of HCA Inc.s
subsidiaries. |
|
|
|
As of June 30, 2011, on an as adjusted basis after giving
effect to the August notes offering, the August redemptions, the
September stock repurchase, the notes and related guarantee
would have been structurally subordinated to
$18.059 billion of indebtedness of HCA Inc.s
subsidiaries, all of which would have been secured. |
|
Covenants |
|
The indenture governing the notes will contain covenants
limiting the Issuers and certain of its subsidiaries
ability to: |
|
|
|
create
liens on certain assets to secure debt;
|
|
|
|
engage
in certain sale and lease-back transactions; and
|
|
|
|
consolidate,
merge, sell or otherwise dispose of all or substantially all of
its assets.
|
|
|
|
These covenants are subject to a number of important limitations
and exceptions. See Description of the Notes. |
|
Optional Redemption |
|
The Issuer may redeem the notes, at any time in whole or from
time to time in part at a make-whole price plus
accrued and unpaid interest to the date of such redemption. See
Description of the NotesOptional Redemption. |
|
Change of Control Offer |
|
Upon the occurrence of a change of control, you will have the
right, as holders of the notes, to require the Issuer to
repurchase some or all of your notes at 101% of their face
amount, plus accrued and unpaid interest to the repurchase date.
See Description of the NotesRepurchase at the Option
of HoldersChange of Control. |
|
|
|
The Issuer may not be able to pay you the required price for
notes you present to it at the time of a change of control,
because: |
|
|
|
the Issuer may not have enough funds at that time; or
|
|
|
|
the terms of our indebtedness under the senior
secured credit facilities may prevent it from making such
payment.
|
|
|
|
Your right to require the Issuer to repurchase the notes upon
the occurrence of a change of control will cease to apply to the
notes at all times during which such notes have investment grade
ratings from both Moodys Investors Service, Inc. and
Standard & Poors. See Description of the
NotesCertain CovenantsCovenant Suspension. |
|
No Prior Market |
|
The notes will be new securities for which there is currently no
market. Although the underwriters have informed the Issuer that
they intend to make a market in the notes, they are not
obligated to do so and they may discontinue market making
activities at any time without notice. Accordingly, the Issuer
cannot assure you that a liquid market for the notes will
develop or be maintained. |
|
Use of Proceeds |
|
We estimate that our net proceeds from this offering, after
deducting underwriter discounts and commissions and estimated
offering expenses, will be approximately $492 million. |
S-10
|
|
|
|
|
We intend to use the net proceeds from the notes offered hereby
for general corporate purposes, which may include funding a
portion of the acquisition of the remaining ownership interest
in our HCA-HealthONE LLC joint venture currently owned by the
Colorado Health Foundation and to pay related fees and expenses.
See Use of Proceeds and Capitalization. |
Ratio of Earnings
to Fixed Charges
The following table sets forth our historical ratios of earnings
available for fixed charges to fixed charges for the periods
indicated. This information should be read in conjunction with
the consolidated financial statements and the accompanying notes
incorporated by reference in this prospectus supplement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
Year Ended December 31,
|
|
|
2011
|
|
2010
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
Ratio of earnings to fixed
charges(1)
|
|
|
1.85
|
|
|
|
2.05
|
|
|
|
1.97
|
|
|
|
1.91
|
|
|
|
1.52
|
|
|
|
1.57
|
|
|
|
2.61
|
|
|
|
|
(1) |
|
For purposes of calculating the ratio of earnings to fixed
charges, earnings represents earnings before income tax expense,
and net income attributable to noncontrolling interests, plus
fixed charges; and fixed charges include: (a) interest
expense; (b) amortization of capitalized expenses related
to debt; and (c) the portion of rental expense which
management believes is representative of the interest component
of rent expense. |
Risk
Factors
You should consider carefully all of the information set forth
and incorporated by reference in this prospectus supplement and,
in particular, should evaluate the specific factors set forth
and incorporated by reference in the section entitled Risk
Factors for an explanation of certain risks of investing
in the notes, including risks related to our industry and
business.
S-11
Summary Financial
Data
The following table sets forth our summary financial data as of
and for the periods indicated. The financial data as of
December 31, 2010 and 2009 and for the years ended
December 31, 2010, 2009 and 2008 have been derived from our
consolidated financial statements incorporated by reference into
this prospectus supplement, which have been audited by
Ernst & Young LLP. The financial data as of
December 31, 2008 has been derived from our consolidated
financial statements audited by Ernst & Young LLP that
are not included or incorporated by reference herein.
The summary financial data as of June 30, 2011 and for the
six months ended June 30, 2011 and 2010 have been derived
from our unaudited condensed consolidated financial statements
incorporated by reference in this prospectus supplement. The
summary financial data as of June 30, 2010 has been derived
from our unaudited condensed consolidated financial statements
that are not included or incorporated by reference herein. The
unaudited financial data presented has been prepared on a basis
consistent with HCA Holdings, Inc.s audited consolidated
financial statements. In the opinion of management, such
unaudited financial data reflect all adjustments, consisting
only of normal and recurring adjustments, necessary for a fair
presentation of the results for those periods. The results of
operations for the interim periods are not necessarily
indicative of the results to be expected for the full year or
any future period.
The summary financial data should be read in conjunction with
Selected Financial Data, Managements
Discussion and Analysis of Financial Condition and Results of
Operations, our consolidated financial statements and the
related notes thereto and our unaudited condensed consolidated
financial statements and the related notes thereto incorporated
by reference into this prospectus supplement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
Years Ended December 31,
|
|
|
June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Dollars in millions)
|
|
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
30,683
|
|
|
$
|
30,052
|
|
|
$
|
28,374
|
|
|
$
|
16,118
|
|
|
$
|
15,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
12,484
|
|
|
|
11,958
|
|
|
|
11,440
|
|
|
|
6,615
|
|
|
|
6,148
|
|
Supplies
|
|
|
4,961
|
|
|
|
4,868
|
|
|
|
4,620
|
|
|
|
2,570
|
|
|
|
2,451
|
|
Other operating expenses
|
|
|
5,004
|
|
|
|
4,724
|
|
|
|
4,554
|
|
|
|
2,648
|
|
|
|
2,428
|
|
Provision for doubtful accounts
|
|
|
2,648
|
|
|
|
3,276
|
|
|
|
3,409
|
|
|
|
1,424
|
|
|
|
1,352
|
|
Equity in earnings of affiliates
|
|
|
(282
|
)
|
|
|
(246
|
)
|
|
|
(223
|
)
|
|
|
(149
|
)
|
|
|
(143
|
)
|
Depreciation and amortization
|
|
|
1,421
|
|
|
|
1,425
|
|
|
|
1,416
|
|
|
|
716
|
|
|
|
710
|
|
Interest expense
|
|
|
2,097
|
|
|
|
1,987
|
|
|
|
2,021
|
|
|
|
1,053
|
|
|
|
1,046
|
|
Losses (gains) on sales of facilities
|
|
|
(4
|
)
|
|
|
15
|
|
|
|
(97
|
)
|
|
|
1
|
|
|
|
|
|
Impairments of long-lived assets
|
|
|
123
|
|
|
|
43
|
|
|
|
64
|
|
|
|
|
|
|
|
109
|
|
Loss on retirement of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
|
|
Termination of management agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,452
|
|
|
|
28,050
|
|
|
|
27,204
|
|
|
|
15,134
|
|
|
|
14,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
2,231
|
|
|
|
2,002
|
|
|
|
1,170
|
|
|
|
984
|
|
|
|
1,199
|
|
Provision for income taxes
|
|
|
658
|
|
|
|
627
|
|
|
|
268
|
|
|
|
330
|
|
|
|
345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,573
|
|
|
|
1,375
|
|
|
|
902
|
|
|
|
654
|
|
|
|
854
|
|
Net income attributable to noncontrolling interests
|
|
|
366
|
|
|
|
321
|
|
|
|
229
|
|
|
|
185
|
|
|
|
173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to HCA Holdings, Inc.
|
|
$
|
1,207
|
|
|
$
|
1,054
|
|
|
$
|
673
|
|
|
$
|
469
|
|
|
$
|
681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
Years Ended December 31,
|
|
|
June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Dollars in millions)
|
|
|
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by operating activities
|
|
$
|
3,085
|
|
|
$
|
2,747
|
|
|
$
|
1,990
|
|
|
$
|
1,666
|
|
|
$
|
1,295
|
|
Cash flows used in investing activities
|
|
|
(1,039
|
)
|
|
|
(1,035
|
)
|
|
|
(1,467
|
)
|
|
|
(812
|
)
|
|
|
(51
|
)
|
Cash flows used in financing activities
|
|
|
(1,947
|
)
|
|
|
(1,865
|
)
|
|
|
(451
|
)
|
|
|
(726
|
)
|
|
|
(1,206
|
)
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA(1)
|
|
$
|
5,383
|
|
|
$
|
5,093
|
|
|
$
|
4,378
|
|
|
$
|
2,568
|
|
|
$
|
2,782
|
|
Adjusted
EBITDA(1)
|
|
|
5,868
|
|
|
|
5,472
|
|
|
|
4,574
|
|
|
|
3,010
|
|
|
|
3,064
|
|
Capital expenditures
|
|
|
1,325
|
|
|
|
1,317
|
|
|
|
1,600
|
|
|
|
776
|
|
|
|
536
|
|
Operating
Data:(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of hospitals at end of
period(3)
|
|
|
156
|
|
|
|
155
|
|
|
|
158
|
|
|
|
157
|
|
|
|
154
|
|
Number of freestanding outpatient surgical centers at end of
period(3)
|
|
|
97
|
|
|
|
97
|
|
|
|
97
|
|
|
|
98
|
|
|
|
98
|
|
Number of licensed beds at end of
period(4)
|
|
|
38,827
|
|
|
|
38,839
|
|
|
|
38,504
|
|
|
|
39,472
|
|
|
|
38,636
|
|
Weighted average licensed
beds(5)
|
|
|
38,655
|
|
|
|
38,825
|
|
|
|
38,422
|
|
|
|
39,209
|
|
|
|
38,647
|
|
Admissions(6)
|
|
|
1,554,400
|
|
|
|
1,556,500
|
|
|
|
1,541,800
|
|
|
|
804,400
|
|
|
|
784,100
|
|
Equivalent
admissions(7)
|
|
|
2,468,400
|
|
|
|
2,439,000
|
|
|
|
2,363,600
|
|
|
|
1,277,300
|
|
|
|
1,233,400
|
|
Average length of stay
(days)(8)
|
|
|
4.8
|
|
|
|
4.8
|
|
|
|
4.9
|
|
|
|
4.8
|
|
|
|
4.9
|
|
Average daily
census(9)
|
|
|
20,523
|
|
|
|
20,650
|
|
|
|
20,795
|
|
|
|
21,380
|
|
|
|
21,053
|
|
Occupancy(10)
|
|
|
53%
|
|
|
|
53%
|
|
|
|
54%
|
|
|
|
55%
|
|
|
|
54%
|
|
Emergency room
visits(11)
|
|
|
5,706,200
|
|
|
|
5,593,500
|
|
|
|
5,246,400
|
|
|
|
3,039,600
|
|
|
|
2,803,300
|
|
Outpatient
surgeries(12)
|
|
|
783,600
|
|
|
|
794,600
|
|
|
|
797,400
|
|
|
|
392,100
|
|
|
|
389,300
|
|
Inpatient
surgeries(13)
|
|
|
487,100
|
|
|
|
494,500
|
|
|
|
493,100
|
|
|
|
239,900
|
|
|
|
244,300
|
|
Days revenues in accounts
receivable(14)
|
|
|
46
|
|
|
|
45
|
|
|
|
49
|
|
|
|
44
|
|
|
|
45
|
|
Gross patient
revenues(15)
|
|
$
|
125,640
|
|
|
$
|
115,682
|
|
|
$
|
102,843
|
|
|
$
|
69,006
|
|
|
$
|
61,785
|
|
Outpatient revenues as a percentage of patient
revenues(16)
|
|
|
38%
|
|
|
|
38%
|
|
|
|
37%
|
|
|
|
38%
|
|
|
|
37%
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital(17)
|
|
$
|
2,650
|
|
|
$
|
2,264
|
|
|
$
|
2,391
|
|
|
$
|
2,613
|
|
|
$
|
2,395
|
|
Property, plant and equipment, net
|
|
|
11,352
|
|
|
|
11,427
|
|
|
|
11,529
|
|
|
|
11,584
|
|
|
|
11,152
|
|
Cash and cash equivalents
|
|
|
411
|
|
|
|
312
|
|
|
|
465
|
|
|
|
539
|
|
|
|
350
|
|
Total assets
|
|
|
23,852
|
|
|
|
24,131
|
|
|
|
24,280
|
|
|
|
23,877
|
|
|
|
23,420
|
|
Total debt
|
|
|
28,225
|
|
|
|
25,670
|
|
|
|
26,989
|
|
|
|
25,320
|
|
|
|
26,798
|
|
Equity securities with contingent redemption rights
|
|
|
141
|
|
|
|
147
|
|
|
|
155
|
|
|
|
|
|
|
|
144
|
|
Stockholders deficit attributable to HCA Holdings,
Inc.
|
|
|
(11,926
|
)
|
|
|
(8,986
|
)
|
|
|
(10,255
|
)
|
|
|
(8,681
|
)
|
|
|
(10,525
|
)
|
Noncontrolling interests
|
|
|
1,132
|
|
|
|
1,008
|
|
|
|
995
|
|
|
|
1,147
|
|
|
|
1,017
|
|
Total stockholders deficit
|
|
|
(10,794
|
)
|
|
|
(7,978
|
)
|
|
|
(9,260
|
)
|
|
|
(7,534
|
)
|
|
|
(9,508
|
)
|
|
|
S-13
|
|
|
(1) |
|
EBITDA, a measure used by management to evaluate operating
performance, is defined as net income attributable to HCA
Holdings, Inc. plus (i) provision for income taxes,
(ii) interest expense and (iii) depreciation and
amortization. EBITDA is not a recognized term under generally
accepted accounting principles (GAAP) and does not
purport to be an alternative to net income as a measure of
operating performance or to cash flows from operating activities
as a measure of liquidity. Additionally, EBITDA is not intended
to be a measure of free cash flow available for
managements discretionary use, as it does not consider
certain cash requirements such as interest payments, tax
payments and other debt service requirements. Management
believes EBITDA is helpful to investors and our management in
highlighting trends because EBITDA excludes the results of
decisions outside the control of operating management and that
can differ significantly from company to company depending on
long-term strategic decisions regarding capital structure, the
tax jurisdictions in which companies operate and capital
investments. Management compensates for the limitations of using
non-GAAP financial measures by using them to supplement GAAP
results to provide a more complete understanding of the factors
and trends affecting the business than GAAP results alone.
Because not all companies use identical calculations, our
presentation of EBITDA may not be comparable to similarly titled
measures of other companies. |
|
|
|
|
|
Adjusted EBITDA is defined as EBITDA, adjusted to exclude net
income attributable to noncontrolling interests, losses (gains)
on sales of facilities, impairments of long-lived assets, loss
on retirement of debt and termination of management agreement.
We believe Adjusted EBITDA is an important measure that
supplements discussions and analysis of our results of
operations. We believe it is useful to investors to provide
disclosures of our results of operations on the same basis used
by management. Management relies upon Adjusted EBITDA as the
primary measure to review and assess operating performance of
its hospital facilities and their management teams. Adjusted
EBITDA target amounts are the performance measures utilized in
our annual incentive compensation programs and are vesting
conditions for a portion of our stock option grants. Management
and investors review both the overall performance (GAAP net
income attributable to HCA Holdings, Inc.) and operating
performance (Adjusted EBITDA) of our health care facilities.
Adjusted EBITDA and the Adjusted EBITDA margin (Adjusted EBITDA
divided by revenues) are utilized by management and investors to
compare our current operating results with the corresponding
periods during the previous year and to compare our operating
results with other companies in the health care industry. It is
reasonable to expect that losses (gains) on sales of facilities
and impairments of long-lived assets will occur in future
periods, but the amounts recognized can vary significantly from
period to period, do not directly relate to the ongoing
operations of our health care facilities and complicate period
comparisons of our results of operations and operations
comparisons with other health care companies. Adjusted EBITDA is
not a measure of financial performance under accounting
principles generally accepted in the United States, and should
not be considered an alternative to net income attributable to
HCA Holdings, Inc. as a measure of operating performance or cash
flows from operating, investing and financing activities as a
measure of liquidity. Because Adjusted EBITDA is not a
measurement determined in accordance with generally accepted
accounting principles and is susceptible to varying
calculations, Adjusted EBITDA, as presented, may not be
comparable to other similarly titled measures presented by other
companies. There may be additional adjustments to Adjusted
EBITDA under our agreements governing our material debt
obligations, including the notes offered hereby. |
S-14
|
|
|
|
|
EBITDA and Adjusted EBITDA are calculated as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
Years Ended December 31,
|
|
|
June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Dollars in millions)
|
|
|
Net income attributable to HCA Holdings, Inc.
|
|
$
|
1,207
|
|
|
$
|
1,054
|
|
|
$
|
673
|
|
|
$
|
469
|
|
|
$
|
681
|
|
Provision for income taxes
|
|
|
658
|
|
|
|
627
|
|
|
|
268
|
|
|
|
330
|
|
|
|
345
|
|
Interest expense
|
|
|
2,097
|
|
|
|
1,987
|
|
|
|
2,021
|
|
|
|
1,053
|
|
|
|
1,046
|
|
Depreciation and amortization
|
|
|
1,421
|
|
|
|
1,425
|
|
|
|
1,416
|
|
|
|
716
|
|
|
|
710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
5,383
|
|
|
|
5,093
|
|
|
|
4,378
|
|
|
|
2,568
|
|
|
|
2,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling
interests(i)
|
|
|
366
|
|
|
|
321
|
|
|
|
229
|
|
|
|
185
|
|
|
|
173
|
|
Losses (gains) on sales of
facilities(ii)
|
|
|
(4
|
)
|
|
|
15
|
|
|
|
(97
|
)
|
|
|
1
|
|
|
|
|
|
Impairments of long-lived
assets(iii)
|
|
|
123
|
|
|
|
43
|
|
|
|
64
|
|
|
|
|
|
|
|
109
|
|
Loss on retirement of
debt(iv)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
|
|
Termination of management
agreement(v)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
5,868
|
|
|
$
|
5,472
|
|
|
$
|
4,574
|
|
|
$
|
3,010
|
|
|
$
|
3,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
|
Represents the add-back of net income attributable to
noncontrolling interests. |
|
(ii) |
|
Represents the elimination of losses (gains) on sales of
facilities. |
|
(iii) |
|
Represents the add-back of impairments of long-lived assets. |
|
(iv) |
|
Represents the add-back of loss on retirement of debt. |
|
(v) |
|
Represents the add-back of termination of management agreement. |
|
|
|
(2) |
|
The operating data set forth in this table includes only those
facilities that are consolidated for financial reporting
purposes. |
|
(3) |
|
Excludes facilities that are not consolidated (accounted for
using the equity method) for financial reporting purposes. |
|
(4) |
|
Licensed beds are those beds for which a facility has been
granted approval to operate from the applicable state licensing
agency. |
|
(5) |
|
Weighted average licensed beds represents the average number of
licensed beds, weighted based on periods owned. |
|
(6) |
|
Represents the total number of patients admitted to our
hospitals and is used by management and certain investors as a
general measure of inpatient volume. |
|
(7) |
|
Equivalent admissions are used by management and certain
investors as a general measure of combined inpatient and
outpatient volume. Equivalent admissions are computed by
multiplying admissions (inpatient volume) by the sum of gross
inpatient revenues and gross outpatient revenues and then
dividing the resulting amount by gross inpatient revenues. The
equivalent admissions computation equates outpatient
revenues to the volume measure (admissions) used to measure
inpatient volume, resulting in a general measure of combined
inpatient and outpatient volume. |
|
(8) |
|
Represents the average number of days admitted patients stay in
our hospitals. |
|
(9) |
|
Represents the average number of patients in our hospital beds
each day. |
|
|
|
(10) |
|
Represents the percentage of hospital licensed beds occupied by
patients. Both average daily census and occupancy rate provide
measures of the utilization of inpatient rooms. |
|
(11) |
|
Represents the number of patients treated in our emergency rooms. |
|
|
|
(12) |
|
Represents the number of surgeries performed on patients who
were not admitted to our hospitals. Pain management and
endoscopy procedures are not included in outpatient surgeries. |
S-15
|
|
|
(13) |
|
Represents the number of surgeries performed on patients who
have been admitted to our hospitals. Pain management and
endoscopy procedures are not included in inpatient surgeries. |
|
(14) |
|
Revenues per day is calculated by dividing the revenues for the
period by the days in the period. Days revenues in accounts
receivable is then calculated as accounts receivable, net of the
allowance for doubtful accounts, at the end of the period
divided by revenues per day. |
|
(15) |
|
Gross patient revenues are based upon our standard charge
listing. Gross charges/revenues typically do not reflect what
our hospital facilities are paid. Gross charges/revenues are
reduced by contractual adjustments, discounts and charity care
to determine reported revenues. |
|
(16) |
|
Represents the percentage of patient revenues related to
patients who are not admitted to our hospitals. |
|
(17) |
|
We define working capital as current assets minus current
liabilities. |
S-16
RISK
FACTORS
You should carefully consider the risk factors set forth
below as well as the other information contained or incorporated
by reference in this prospectus supplement before purchasing the
notes. This prospectus supplement contains forward-looking
statements that involve risk and uncertainties. Any of the
following risks could materially and adversely affect our
business, financial condition or results of operations.
Additional risks and uncertainties not currently known to us or
those we currently view to be immaterial may also materially and
adversely affect our business, financial condition or results of
operations. In such a case, you may lose all or part of your
original investment.
Risks Related
to the Notes
Our substantial
leverage could adversely affect our ability to raise additional
capital to fund our operations, limit our ability to react to
changes in the economy or our industry, expose us to interest
rate risk to the extent of our variable rate debt and prevent us
from meeting our obligations.
We are highly leveraged. As of June 30, 2011, on an as
adjusted basis after giving effect to the August notes offering,
the August redemptions, the September stock repurchase and the
notes offered hereby, our total indebtedness would have been
$27.825 billion. As of June 30, 2011, on an as
adjusted basis after giving effect to the August notes offering,
the August redemptions, the September stock repurchase and the
notes offered hereby, we would have had availability of
$946 million under our senior secured revolving credit
facility and $125 million under our asset-based revolving
credit facility, after giving effect to letters of credit and
borrowing base limitations. Our high degree of leverage could
have important consequences, including:
|
|
|
|
|
increasing our vulnerability to downturns or adverse changes in
general economic, industry or competitive conditions and adverse
changes in government regulations;
|
|
|
|
requiring a substantial portion of cash flow from operations to
be dedicated to the payment of principal and interest on our
indebtedness, therefore reducing our ability to use our cash
flow to fund our operations, capital expenditures and future
business opportunities;
|
|
|
|
exposing us to the risk of increased interest rates as certain
of our unhedged borrowings are at variable rates of interest;
|
|
|
|
limiting our ability to make strategic acquisitions or causing
us to make nonstrategic divestitures;
|
|
|
|
limiting our ability to obtain additional financing for working
capital, capital expenditures, product or service line
development, debt service requirements, acquisitions and general
corporate or other purposes; and
|
|
|
|
limiting our ability to adjust to changing market conditions and
placing us at a competitive disadvantage compared to our
competitors who are less highly leveraged.
|
We have the ability to incur additional indebtedness in the
future, subject to the restrictions contained in our senior
secured credit facilities and the indentures governing our
outstanding senior secured notes. If new indebtedness is added
to our current debt levels, the related risks that we now face
could intensify.
S-17
The Issuer is the
sole obligor of the notes and its parent, HCA Holdings, Inc., is
the sole guarantor of the Issuers obligations under the
notes; the notes are unsecured and the Issuers
subsidiaries do not have any obligation with respect to the
notes; the notes are structurally subordinated to all of the
debt and liabilities of the Issuers subsidiaries and will
be effectively subordinated to any of the Issuers secured
debt.
The Issuer and the guarantor of the notes, HCA Holdings, Inc.,
are holding companies that have no operations of their own and
derive all of their revenues and cash flow from their
subsidiaries. The Issuers subsidiaries are separate and
distinct legal entities and have no obligation, contingent or
otherwise, to pay amounts due under the notes or to make any
funds available to pay those amounts, whether by dividend,
distribution, loan or other payments. The notes are structurally
subordinated to all debt and liabilities of the Issuers
subsidiaries. The claims of the Issuers subsidiaries
creditors will be required to be paid before holders of the
notes have a claim (if any) against the entities and their
assets. In the event of a bankruptcy, liquidation or
reorganization or similar proceeding relating to the
Issuers subsidiaries, you will participate with all other
holders of the Issuers indebtedness in the assets
remaining after the Issuers subsidiaries have paid all of
their debt and liabilities. In any of these cases, the
Issuers subsidiaries may not have sufficient funds to make
payments to the Issuer, and you may receive less, ratably, than
the holders of debt and other liabilities of the Issuers
subsidiaries.
As of June 30, 2011, on an as adjusted basis after giving
effect to the August notes offering, the August redemptions, the
September stock repurchase and the notes offered hereby, the
aggregate amount of indebtedness of the Issuers
subsidiaries would have been $18.059 billion, all of which
would have been secured and structurally senior to the notes. In
addition, as of that date, on an as adjusted basis after giving
effect to the August notes offering, the August redemptions, the
September stock repurchase and the notes offered hereby, the
Issuers subsidiaries could have borrowed $946 million
under the Issuers senior secured revolving credit facility
and $125 million under its asset-based revolving credit
facility, after giving effect to letters of credit and borrowing
base limitations. Additionally, the indenture governing the
notes offered hereby, the indentures governing HCA Holdings,
Inc.s and the Issuers outstanding notes and the
Issuers senior secured credit facilities permit us
and/or our
subsidiaries to incur additional indebtedness, including secured
indebtedness, under certain circumstances.
We may not be
able to generate sufficient cash to service all of our
indebtedness and may not be able to refinance our indebtedness
on favorable terms. If we are unable to do so, we may be forced
to take other actions to satisfy our obligations under our
indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our
debt obligations depends on our financial condition and
operating performance, which are subject to prevailing economic
and competitive conditions and to certain financial, business
and other factors beyond our control. We cannot assure you we
will maintain a level of cash flows from operating activities
sufficient to permit us to pay the principal, premium, if any,
and interest on our indebtedness.
In addition, we conduct our operations through our subsidiaries.
Accordingly, repayment of our indebtedness is dependent on the
generation of cash flow by our subsidiaries and their ability to
make such cash available to us by dividend, debt repayment or
otherwise. Our subsidiaries will not have any obligation to pay
amounts due on the notes or our other indebtedness or to make
funds available for that purpose. Our subsidiaries may not be
able to, or may not be permitted to, make distributions to
enable us to make payments in respect of our indebtedness. The
agreements governing the current and future indebtedness of the
Issuers subsidiaries may not permit the Issuers
subsidiaries to provide the Issuer with sufficient dividends,
distributions or loans to fund scheduled interest and principal
payments on these notes when due. The terms of our senior
secured credit facilities and the indentures governing our
outstanding notes significantly restrict us and its subsidiaries
from paying dividends and otherwise transferring assets to the
Issuer. Each subsidiary is a distinct legal entity, and,
S-18
under certain circumstances, legal and contractual restrictions
may limit our ability to obtain cash from our subsidiaries.
We may find it necessary or prudent to refinance our outstanding
indebtedness with longer-maturity debt at a higher interest
rate. In March of 2010, for example, we issued
$1.400 billion in aggregate principal amount of
71/4%
first lien notes due 2020. The net proceeds of this offering was
used to prepay term loans under our cash flow credit facility,
which currently bears interest at a lower floating rate. Our
ability to refinance our indebtedness on favorable terms, or at
all, is directly affected by the current global economic and
financial conditions. In addition, our ability to incur secured
indebtedness (which would generally enable us to achieve better
pricing than the incurrence of unsecured indebtedness) depends
in part on the value of our assets, which depends, in turn, on
the strength of our cash flows and results of operations, and on
economic and market conditions and other factors.
If our cash flows and capital resources are insufficient to fund
our debt service obligations or we are unable to refinance our
indebtedness, we may be forced to reduce or delay investments
and capital expenditures, or to sell assets, seek additional
capital or restructure our indebtedness. These alternative
measures may not be successful and may not permit us to meet our
scheduled debt service obligations. If our operating results and
available cash are insufficient to meet our debt service
obligations, we could face substantial liquidity problems and
might be required to dispose of material assets or operations to
meet our debt service and other obligations. We may not be able
to consummate those dispositions, or the proceeds from the
dispositions may not be adequate to meet any debt service
obligations then due.
Our debt
agreements contain restrictions that limit our flexibility in
operating our business.
Our senior secured credit facilities and the indentures
governing our outstanding notes contain, and the indenture
governing the notes offered hereby will contain, various
covenants that limit our ability to engage in specified types of
transactions. These covenants limit our and certain of our
subsidiaries ability to, among other things:
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incur additional indebtedness or issue certain preferred shares;
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pay dividends on, repurchase or make distributions in respect of
our capital stock or make other restricted payments;
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make certain investments;
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sell or transfer assets;
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create liens;
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consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets; and
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enter into certain transactions with our affiliates.
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Under our asset-based revolving credit facility, when (and for
as long as) the combined availability under our asset-based
revolving credit facility and our senior secured revolving
credit facility is less than a specified amount for a certain
period of time or, if a payment or bankruptcy event of default
has occurred and is continuing, funds deposited into any of our
depository accounts will be transferred on a daily basis into a
blocked account with the administrative agent and applied to
prepay loans under the asset-based revolving credit facility and
to cash collateralize letters of credit issued thereunder.
Under our senior secured credit facilities, we are required to
satisfy and maintain specified financial ratios. Our ability to
meet those financial ratios can be affected by events beyond our
control, and there can be no assurance we will continue to meet
those ratios. A breach of any of these covenants could result in
a default under both the cash flow credit facility and the
asset-based revolving credit facility. Upon the occurrence of an
event of default under the senior secured credit
S-19
facilities, the lenders thereunder could elect to declare all
amounts outstanding under the senior secured credit facilities
to be immediately due and payable and terminate all commitments
to extend further credit. If we were unable to repay those
amounts, the lenders under the senior secured credit facilities
could proceed against the collateral granted to them to secure
such indebtedness. We have pledged a significant portion of our
assets under our senior secured credit facilities and that
collateral (other than certain European collateral securing our
senior secured European term loan facility) is also pledged as
collateral under our first lien notes. If any of the lenders
under the senior secured credit facilities accelerate the
repayment of borrowings, there can be no assurance there will be
sufficient assets to repay the senior secured credit facilities,
the first lien notes and the notes offered hereby.
Federal and state
fraudulent transfer laws may permit a court to void the parent
guarantee, and, if that occurs, you may not receive any payments
on the notes.
Federal and state fraudulent transfer and conveyance statutes
may apply to the issuance of the notes and the incurrence of the
guarantee by HCA Holdings, Inc. Under federal bankruptcy law and
comparable provisions of state fraudulent transfer or conveyance
laws, which may vary from state to state, the notes or guarantee
could be voided as a fraudulent transfer or conveyance if
(1) we issued the notes or incurred the guarantee with the
intent of hindering, delaying or defrauding creditors or
(2) we received less than reasonably equivalent value or
fair consideration in return for either issuing the notes or
incurring the guarantee and, in the case of (2) only, one
of the following is also true at the time thereof:
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we were insolvent or rendered insolvent by reason of the
issuance of the notes or the incurrence of the guarantee;
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the issuance of the notes or the incurrence of the guarantee
left HCA Holdings, Inc. or the Issuer with an unreasonably small
amount of capital to carry on the business;
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HCA Holdings, Inc. or the Issuer intended to, or believed that
HCA Holdings, Inc. or the Issuer would, incur debts beyond HCA
Holdings, Inc.s or the Issuers ability to pay as
they mature; or
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HCA Holdings, Inc. or the Issuer was a defendant in an action
for money damages, or had a judgment for money damages docketed
against HCA Holdings, Inc. or the Issuer if, in either case,
after final judgment, the judgment was unsatisfied.
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If a court were to find that the issuance of the notes or the
incurrence of the guarantee was a fraudulent transfer or
conveyance, the court could void the payment obligations under
the notes or the guarantee or further subordinate the notes or
the guarantee to presently existing and future indebtedness of
ours or require the holders of the notes to repay any amounts
received with respect to the guarantee. In the event of a
finding that a fraudulent transfer or conveyance occurred, you
may not receive any repayment on the notes. Further, the
voidance of the notes could result in an event of default with
respect to our and our subsidiaries other debt that could
result in an acceleration of such debt.
As a general matter, value is given for a transfer or an
obligation if, in exchange for the transfer or obligation,
property is transferred or an antecedent debt is secured or
satisfied. A debtor will generally not be considered to have
received value in connection with a debt offering if the debtor
uses the proceeds of that offering to make a dividend payment or
otherwise retire or redeem equity securities issued by the
debtor.
We cannot be certain as to the standards a court would use to
determine whether or not we were solvent at the relevant time,
or, regardless of the standard that a court uses, that the
incurrence
S-20
of the guarantee would not be further subordinated to our other
debt. Generally, however, an entity would be considered
insolvent if, at the time it incurred indebtedness:
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the sum of its debts, including contingent liabilities, was
greater than the fair saleable value of all its assets;
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the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they
become absolute and mature; or
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it could not pay its debts as they become due.
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If we default on
our obligations to pay our indebtedness, we may not be able to
make payments on the notes.
Any default under the agreements governing our indebtedness,
including a default under our senior secured credit facilities
that is not waived by the required lenders or a default under
the indentures governing certain of our existing notes, and the
remedies sought by the holders of such indebtedness, could
prevent us from paying principal, premium, if any, and interest
on the notes and substantially decrease the market value of the
notes. If we are unable to generate sufficient cash flow and are
otherwise unable to obtain funds necessary to meet required
payments of principal, premium, if any, and interest on our
indebtedness, or if we otherwise fail to comply with the various
covenants, including financial and operating covenants, in the
instruments governing our indebtedness (including covenants in
our senior secured credit facilities, the indentures governing
certain of the existing notes and the indenture governing the
notes), we could be in default under the terms of the agreements
governing such indebtedness. In the event of such default, the
holders of such indebtedness could elect to declare all the
funds borrowed thereunder to be due and payable, together with
accrued and unpaid interest, the lenders under our senior
secured credit facilities could elect to terminate their
commitments thereunder, cease making further loans and institute
foreclosure proceedings against our assets, and we could be
forced into bankruptcy or liquidation. If our operating
performance declines, we may in the future need to obtain
waivers from the required lenders under our senior secured
credit facilities to avoid being in default. If we breach our
covenants under our senior secured credit facilities and seek a
waiver, we may not be able to obtain a waiver from the required
lenders. If this occurs, we would be in default under the
instrument governing that indebtedness, the lenders could
exercise their rights, as described above, and we could be
forced into bankruptcy or liquidation.
Your ability to
transfer the notes may be limited by the absence of an active
trading market, and there is no assurance that any active
trading market will develop for the notes.
The notes are a new issue of securities for which there is no
established public market. The underwriters have advised us that
they intend to make a market in the notes as permitted by
applicable laws and regulations; however, the underwriters are
not obligated to make a market in the notes and they may
discontinue their market-making activities at any time without
notice. Therefore, we cannot assure you that an active market
for the notes will develop or, if developed, that it will
continue. Historically, the market for non investment-grade debt
has been subject to disruptions that have caused substantial
volatility in the prices of securities similar to the notes.
We cannot assure you that the market, if any, for the notes will
be free from similar disruptions or that any such disruptions
may not adversely affect the prices at which you may sell your
notes. In addition, subsequent to their initial issuance, the
notes may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar
notes, our performance and other factors.
We may not be
able to repurchase the notes upon a change of control.
Under certain circumstances, and upon the occurrence of specific
kinds of change of control events, we will be required to offer
to repurchase all outstanding notes at 101% of their principal
S-21
amount plus accrued and unpaid interest. The source of funds for
any such purchase of the notes will be our available cash or
cash generated from our subsidiaries operations or other
sources, including borrowings, sales of assets or sales of
equity. We may not be able to repurchase the notes upon a change
of control because we may not have sufficient financial
resources to purchase all of the notes that are tendered upon a
change of control. Further, we are contractually restricted
under the terms of the senior secured credit facilities from
repurchasing all of the notes tendered by holders upon a change
of control. Accordingly, we may not be able to satisfy our
obligations to purchase the notes unless it is able to refinance
or obtain waivers under the instruments governing that
indebtedness. Our failure to repurchase the notes upon a change
of control would cause a default under the indentures and a
cross-default under the instruments governing our senior secured
credit facilities and the indentures governing certain of the
notes. The instruments governing the senior secured credit
facilities also provide that a change of control will be a
default that permits lenders to accelerate the maturity of
borrowings thereunder. Any of our future debt agreements may
contain similar provisions.
S-22
USE OF
PROCEEDS
We estimate that our net proceeds from this offering, after
deducting underwriter discounts and commissions and estimated
offering expenses, will be approximately $492 million.
We intend to use the net proceeds from the notes offered hereby
for general corporate purposes, which may include funding a
portion of the acquisition of the remaining ownership interest
in our HCA-HealthONE LLC joint venture currently owned by the
Colorado Health Foundation and to pay related fees and expenses.
S-23
CAPITALIZATION
The following table sets forth the capitalization of HCA
Holdings, Inc. as of June 30, 2011:
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as adjusted to give effect to
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the issuance in August 2011 of $5.000 billion aggregate
principal amount of notes, comprised of $3.000 billion of
6.50% senior secured first lien notes due 2020 and
$2.000 billion of 7.50% senior unsecured notes due 2022
(collectively, the August notes offering);
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the redemption in August 2011 of all $3.200 billion
aggregate principal amount of its outstanding
91/4%
Senior Secured Notes due 2016 and all $1.578 billion
aggregate principal amount of its outstanding
95/8/103/8%
Senior Secured Toggle Notes due 2016 (collectively, the
August redemptions); and
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the repurchase in September 2011 of 80,771,143 shares of
HCA common stock beneficially owned by affiliates of Bank of
America Corporation using a combination of cash on hand and
borrowing through available credit facilities (collectively, the
September stock repurchase); and
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as further adjusted to give effect to this offering.
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The information in this table should be read in conjunction with
SummarySummary Financial Data, included in
this prospectus supplement and our consolidated financial
statements and related notes and condensed consolidated
financial statements and related notes incorporated by reference
herein.
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As of June 30, 2011
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As Adjusted
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for the August
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Notes Offering,
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the August Redemptions
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As Further
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and the September
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Adjusted for this
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Stock Repurchase
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Offering
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(Unaudited)
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(Dollars in millions)
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Cash and cash
equivalents(1)
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$
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539
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$
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1,031
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Senior secured credit
facilities(2)
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10,404
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10,404
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First lien
notes(3)
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7,078
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7,078
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Other secured
indebtedness(4)
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304
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304
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Second lien
notes(5)
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196
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196
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Total senior secured indebtedness
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17,982
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17,982
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Existing unsecured
indebtedness(6)
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9,343
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9,343
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Senior unsecured notes offered hereby
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500
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Total debt
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27,325
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27,825
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Stockholders deficit attributable to HCA Holdings,
Inc.
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(10,183
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(10,183
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Noncontrolling interests
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1,147
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1,147
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Total stockholders deficit
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(9,036
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(9,036
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Total capitalization
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$
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18,289
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$
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18,789
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(1) |
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As further adjusted for this offering reflects an estimated $492
million of net proceeds from this offering calculated after
deducting underwriting discounts and commissions and estimated
offering expenses. |
S-24
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(2) |
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Consists of (i) a $2.000 billion asset-based revolving
credit facility (which is expected to be increased to
$2.500 billion and extended to 2016) maturing on
November 16, 2012 (the asset-based revolving credit
facility) ($1.875 billion outstanding at
June 30, 2011, as adjusted to give effect to the August
notes offering, the August redemptions and the September stock
repurchase); (ii) a $2.000 billion senior secured
revolving credit facility maturing on November 17, 2015
(the senior secured revolving credit facility)
($988 million outstanding at June 30, 2011, without
giving effect to outstanding letters of credit, as adjusted to
give effect to the September stock repurchase); (iii) a
$472 million senior secured term loan
A-1 facility
maturing on November 17, 2012; (iv) a
$586 million senior secured term loan
A-2 facility
maturing on May 2, 2016; (v) a $1.689 billion
senior secured term loan B-1 facility maturing on
November 17, 2013; (vi) a $2.000 billion senior
secured term loan B-2 facility maturing on March 31, 2017;
(vii) a $2.373 billion senior secured term loan B-3
facility maturing on May 1, 2018; and (viii) a
291 million, or $421 million-equivalent, senior
secured European term loan facility maturing on
November 17, 2013. We refer to the facilities described
under (ii) through (viii) above, collectively, as the
cash flow credit facility and, together with the
asset-based revolving credit facility, the senior secured
credit facilities. Does not give effect to amounts that
may be drawn under the revolving credit facility to fund our
acquisition of
HCA-HealthONE®,
LLC, if consummated, or the proposed refinancing of our
asset-based revolving credit facility. See
SummaryRecent Developments. |
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(3) |
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Consists of (i) $1.500 billion aggregate principal
amount of
81/2%
first lien notes due 2019 that HCA Inc. issued in April 2009
(the April 2009 first lien notes); (ii) $1.250
billion aggregate principal amount of
77/8%
first lien notes due 2020 that HCA Inc. issued in August 2009
(the August 2009 first lien notes);
(iii) $1.400 billion aggregate principal amount of
71/4%
first lien notes due 2020 that HCA Inc. issued in March 2010
(the March 2010 first lien notes) (iv) $3.000
billion aggregate principal amount of 6.50% first line notes due
2020 (the August 2011 first lien notes and,
collectively with the April 2009 first lien notes, the August
2009 first lien notes and the March 2010 first lien notes, the
first lien notes) and (v) $72 million of
unamortized debt discounts that reduce the existing indebtedness. |
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(4) |
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Consists of capital leases and other secured debt with a
weighted average interest rate of 7.13%. |
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(5) |
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Consists of (i) $201 million aggregate principal
amount of
97/8% second
lien notes due 2017 and (ii) $5 million of unamortized
debt discounts that reduce the existing indebtedness. We refer
to these notes as the second lien notes. |
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(6) |
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Consists of HCA Inc.s (i) $2.000 billion aggregate
principal amount of 7.50% senior notes due 2022 that HCA Inc.
issued in August 2011; (ii) an aggregate principal amount
of $246 million medium-term notes with maturities ranging
from 2014 to 2025 and a weighted average interest rate of 8.28%;
(iii) an aggregate principal amount of $886 million
debentures with maturities ranging from 2015 to 2095 and a
weighted average interest rate of 7.55%; (iv) an aggregate
principal amount of $4.694 billion senior notes with
maturities ranging from 2012 to 2033 and a weighted average
interest rate of 6.54%; and (v) $8 million of
unamortized debt discounts that reduce the existing
indebtedness. Existing unsecured indebtedness also includes HCA
Holdings, Inc.s $1.525 billion aggregate principal
amount of
73/4% senior
notes due 2021. For more information regarding our unsecured and
other indebtedness, see Description of Other
Indebtedness. |
S-25
DESCRIPTION OF
OTHER INDEBTEDNESS
The summaries set forth below are qualified in their entirety by
the actual text of the applicable agreements and indentures,
each of which has been filed with the SEC and which may be
obtained on publicly available websites at the addresses set
forth under Available Information.
Senior Secured
Credit Facilities
The senior secured credit facilities provide senior secured
financing of $11.541 billion, consisting of:
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$7.541 billion-equivalent in term loan facilities,
comprised of a $472 million senior secured term loan
A-1 facility
maturing on November 17, 2012, a $586 million senior
secured term loan
A-2 facility
maturing on May 2, 2016, a $1.689 billion senior
secured term loan B-1 facility maturing on November 17,
2013, a $2.000 billion senior secured term loan B-2
facility maturing on March 31, 2017, a $2.373 billion
senior secured term loan B-3 facility maturing on May 1,
2018 and a 291 million, or
$421 million-equivalent, senior secured European term loan
facility maturing on November 17, 2013; and
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$4.000 billion in revolving credit facilities, comprised of
a $2.000 billion senior secured asset-based revolving
credit facility available in dollars maturing on
November 16, 2012 and a $2.000 billion senior secured
revolving credit facility available in dollars, euros and pounds
sterling currently maturing on November 17, 2015.
Availability under the asset-based revolving credit facility is
subject to a borrowing base of 85% of eligible accounts
receivable less customary reserves. As of September 26,
2011, our borrowing base was $1.855 billion. We expect to
refinance our $2.000 billion asset-based revolving credit
facility on or about September 30, 2011 to increase the
total size to $2.500 billion and extend the maturity to
2016. The asset-based revolving credit facility will be subject
to certain borrowing base limitations and we do not expect that
the full $2.500 billion will be initially available upon
the refinancing. There can be no assurance that the refinancing
will be completed on the terms or timing contemplated.
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We refer to these senior secured credit facilities, excluding
the asset-based revolving credit facility, as the cash
flow credit facility and, collectively with the
asset-based revolving credit facility, the senior secured
credit facilities. The asset-based revolving credit
facility is documented in a separate loan agreement from the
other senior secured credit facilities.
HCA Inc. is the primary borrower under the senior secured credit
facilities, except that a U.K. subsidiary is the borrower under
the European term loan facility. The revolving credit facilities
include capacity available for the issuance of letters of credit
and for borrowings on
same-day
notice, referred to as the swingline loans. A portion of the
letter of credit availability under the cash-flow revolving
credit facility is available in euros and pounds sterling.
Lenders under the cash flow credit facility are subject to a
loss sharing agreement pursuant to which, upon the occurrence of
certain events, including a bankruptcy event of default under
the cash flow credit facility, each such lender will
automatically be deemed to have exchanged its interest in a
particular tranche of the cash flow credit facility for a pro
rata percentage in all of the tranches of the cash flow credit
facility.
On February 16, 2007, the cash flow credit facility was
amended to reduce the applicable margins with respect to the
term borrowings thereunder. On June 20, 2007, the
asset-based revolving credit facility was amended to reduce the
applicable margin with respect to borrowings thereunder.
On March 2, 2009, the cash flow credit facility was amended
to allow for one or more future issuances of additional secured
notes, which may include notes that are secured on a pari
passu basis or on a junior basis with the obligations under
the cash flow credit facility, so long as (1) such notes do
not require, subject to certain exceptions, scheduled
repayments, payment of principal or redemption prior to the
scheduled term loan B-1 maturity date, (2) the terms of
such notes, taken as a whole, are not more restrictive than
those in the cash flow credit facility and (3) no
subsidiary of HCA
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Inc. that is not a U.S. guarantor is an obligor of such
additional secured notes, and such notes are not secured by any
European collateral securing the cash flow credit facility. The
U.S. security documents related to the cash flow credit
facility were also amended and restated in connection with the
amendment in order to give effect to the security interests to
be granted to holders of such additional secured notes.
On March 2, 2009, the asset-based revolving credit facility
was amended to allow for one or more future issuances of
additional secured notes or loans, which may include notes or
loans that are secured on a pari passu basis or on a
junior basis with the obligations under the cash flow credit
facility, so long as (1) such notes or loans do not
require, subject to certain exceptions, scheduled repayments,
payment of principal or redemption prior to the scheduled term
loan B-1 maturity date, (2) the terms of such notes or
loans, as applicable, taken as a whole, are not more restrictive
than those in the cash flow credit facility and (3) no
subsidiary of HCA Inc. that is not a U.S. guarantor is an
obligor of such additional secured notes. The amendment to the
asset-based revolving credit facility also altered the excess
facility availability requirement to include a separate minimum
facility availability requirement applicable to the asset-based
revolving credit facility and increased the applicable LIBOR and
asset-based revolving margins for all borrowings under the
asset-based revolving credit facility by 0.25% each.
On June 18, 2009, the cash flow credit facility was amended
to permit unlimited refinancings of the term loans initially
incurred in November 2006 under the cash flow credit facility
(the initial term loans), as well as any previously
incurred refinancing term loans through the incurrence of new
term loans under the cash flow credit facility
(refinancing term loans), (collectively, with the
initial term loans, the then-existing term loans),
and to permit the establishment of one or more series of
commitments under replacement cash flow revolvers under the cash
flow credit facility (replacement revolver) to
replace all or a portion of the revolving commitments initially
established in November 2006 under the cash flow credit facility
(the initial revolver) as well as any previously
issued replacement revolvers (with no more than three series of
revolving commitments to be outstanding at any time) in each
case, subject to the terms described below. The amendment to the
cash flow credit facility further permits the maturity date of
any then-existing term loan to be extended (any such loans so
extended, the extended term loans). The amendment to
the cash flow credit facility provides that:
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As to refinancing term loans, (1) the proceeds from such
refinancing term loans be used to repay in full the initial term
loans before being used to repay any previously issued
refinancing term loans; (2) the refinancing term loans
mature no earlier than the latest maturity date of any of the
initial term loans; (3) the weighted average life to
maturity for the refinancing term loans be no shorter than the
remaining weighted average life to maturity of the
tranche B term loan under the cash flow credit facility
measured at the time such refinancing term loans are incurred;
and (4) refinancing term loans will not share in mandatory
prepayments resulting from the creation or issuance of extended
term loans
and/or first
lien notes until the initial term loans are repaid in full but
will share in other mandatory prepayments such as those from
asset sales.
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As to replacement revolvers, terms of such replacement revolver
be substantially identical to the commitments being replaced,
other than with respect to maturity, size of any swingline loan
and/or
letter of credit subfacilities and pricing.
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As to extended term loans, (1) any offer to extend must be
made to all lenders under the term loan being extended, and, if
such offer is oversubscribed, the extension will be allocated
ratably to the lenders according to the respective amounts then
held by the accepting lenders; (2) each series of extended
term loans having the same interest margins, extension fees and
amortization schedule shall be a separate class of term loans;
and (3) extended term loans will not share in mandatory
prepayments resulting from the creation or issuance of
refinancing term loans
and/or first
lien notes until the
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initial term loans are repaid in full but will share in other
mandatory prepayments such as those from asset sales.
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Any refinancing term loans and any obligations under replacement
revolvers will have a pari passu claim on the collateral
securing the initial term loans and the initial revolver.
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On April 6, 2010, the cash flow credit facility was amended
to (i) extend the maturity date for $2.0 billion of
the tranche B term loans from November 17, 2013 to
March 31, 2017 and (ii) increase the ABR margin and
LIBOR margin with respect to such extended term loans to 2.25%
and 3.25%, respectively. The maturity date, interest margins and
fees, as applicable, with respect to all other loans, and all
commitments and letters of credit, outstanding under the cash
flow credit facility remain unchanged.
On November 8, 2010, an amended and restated joinder
agreement was entered into with respect to the cash flow credit
facility to establish a new replacement revolving credit series,
which will mature on November 17, 2015. Under the amended
and restated joinder agreement, these replacement revolving
credit commitments became effective upon completion of our
initial public offering.
On May 4, 2011, the cash flow credit facility and
asset-based revolving credit facility were amended and restated,
respectively, to, among other things, (i) permit HCA Inc.
and its restricted subsidiaries to issue new unsecured and
second lien notes so long as (x) HCA Inc. would be,
following such issuance, be in compliance with its maintenance
covenants under the respective credit facilities, (y) the
maturity of the new notes is later than the final maturity date
and (z) the covenants of the new notes are no more
restrictive than those under HCA Inc.s second lien notes,
(ii) allow HCA Inc. and its restricted subsidiaries to
issue new first lien notes and first lien term loans, subject to
a maximum first lien leverage ratio of 3.75 to 1.00, so long as
(x) HCA Inc. complies with the same covenant restrictions
that apply to the issuance of new unsecured and second lien
notes described above and (y) the maturity of the new first
lien debt is later than the final maturity date and
(iii) revise the change of control definition to provide
that, in addition to acquiring, on a fully diluted basis, at
least 35% of HCA Inc.s voting stock, a third party must
also acquire, on a fully diluted basis, ownership of HCA
Inc.s voting stock greater than that then held by those
equity holders of HCA Holdings, Inc. that existed prior to HCA
Holdings, Inc.s initial public offering in order to
trigger a change of control.
In addition to the amendments described above, the cash flow
credit facility was amended to (A) remove restrictions on
the prepayment of second lien, senior unsecured or subordinated
debt and (B) increase the general investment basket from
$1.5 billion to the greater of (i) $3.0 billion
or (ii) 12% of HCA Inc.s total assets.
The cash flow credit facility was also amended to
(i) extend the maturity date of $594 million of HCA
Inc.s term loan A facility from November 17, 2012 to
May 2, 2016 and increases the ABR margin and LIBOR margin
with respect to such extended term loans to 1.50% and 2.50%,
respectively and (ii) extend the maturity date of
$537 million of HCA Inc.s term loan A facility from
November 17, 2012 to May 1, 2018 and
$1.836 billion of HCA Inc.s term loan B-1 facility
from November 17, 2013 to May 1, 2018 and increase the
ABR margin and LIBOR margin with respect to such extended term
loans to 2.25% and 3.25%, respectively.
Interest Rates
and Fees
Borrowings under the senior secured credit facilities bear
interest at a rate equal to, at HCA Inc.s option, either
(a) LIBOR for deposits in the applicable currency plus an
applicable margin or (b) the higher of (1) the prime
rate of Bank of America, N.A. and (2) the federal funds
effective rate plus 0.50%, plus an applicable margin. The
applicable margins in effect for borrowings as of June 30,
2011 are (i) under the asset-based revolving credit
facility, 0.25% with respect to base rate borrowings and 1.25%
with respect to LIBOR borrowings (expected to increase to 0.50%
and 1.50%, respectively, after the proposed refinancing),
(ii) under the senior secured revolving credit facility,
0.50% with respect to base rate borrowings and 1.50% with
respect to LIBOR borrowings, (iii) under
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the term loan
A-1
facility, 0.25% with respect to base rate borrowings and 1.25%
with respect to LIBOR borrowings, (iv) under the term loan
A-2
facility, 1.50% with respect to base rate borrowings and 2.50%
with respect to LIBOR borrowings, (v) under the term loan
B-1 facility, 1.25% with respect to base rate borrowings and
2.25% with respect to LIBOR borrowings, (vi) under the term
loan B-2 facility and term loan B-3 facility, 2.25% with respect
to base rate borrowings and 3.25% with respect to LIBOR
borrowings, and (vii) under the European term loan
facility, 2.00% with respect to LIBOR borrowings. Certain of the
applicable margins may be reduced or increased depending on HCA
Inc.s leverage ratios.
In addition to paying interest on outstanding principal under
the senior secured credit facilities, HCA Inc. is required to
pay a commitment fee to the lenders under the revolving credit
facilities in respect of the unutilized commitments thereunder.
The commitment fee rate as of June 30, 2011 is 0.375% per
annum for the revolving credit facility and 0.25% for the
asset-based revolving credit facility. The commitment fee rates
may fluctuate due to changes in specified leverage ratios. HCA
Inc. must also pay customary letter of credit fees.
Prepayments
The cash flow credit facility requires HCA Inc. to prepay
outstanding term loans, subject to certain exceptions, with:
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50% (which percentage will be reduced to 25% if HCA Inc.s
total leverage ratio is 5.50x or less and to 0% if HCA
Inc.s total leverage ratio is 5.00x or less) of HCA
Inc.s annual excess cash flow;
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100% of the compensation for any casualty event, proceeds from
permitted sale-leasebacks and the net cash proceeds of all
nonordinary course asset sales or other dispositions of
property, other than the Receivables Collateral, as defined
below, if HCA Inc. does not (1) reinvest or commit to
reinvest those proceeds in assets to be used in our business or
to make certain other permitted investments within
15 months as long as, in the case of any such commitment to
reinvest or make certain other permitted investments, such
investment is completed within such
15-month
period or, if later, within 180 days after such commitment
is made or (2) apply such proceeds within 15 months to
repay debt of HCA Inc. that was outstanding on the effective
date of the Recapitalization scheduled to mature prior to the
earliest final maturity of the senior secured credit facilities
then outstanding; and
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100% of the net cash proceeds of any incurrence of debt, other
than proceeds from the receivables facilities and other debt
permitted under the senior secured credit facilities.
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The foregoing mandatory prepayments are applied among the term
loan facilities (1) during the first three years after the
effective date of the Recapitalization, pro rata to such
facilities based on the respective aggregate amounts of unpaid
principal installments thereof due during such period, with
amounts allocated to each facility being applied to the
remaining installments thereof in direct order of maturity and
(2) thereafter, pro rata to such facilities, with amounts
allocated to each facility being applied pro rata among the term
loan A-1
facility, term loan
A-2
facility, the term loan B-1 facility, the term loan B-2
facility, term loan B-3 facility and the European term loan
facility based upon the applicable remaining repayment amounts
due thereunder. Notwithstanding the foregoing, (i) proceeds
of asset sales by foreign subsidiaries are applied solely to
prepay European term loans until such term loans have been
repaid in full and (ii) HCA Inc. is not required to prepay
loans under the term loan A facility or the term loan B facility
with net cash proceeds of asset sales or with excess cash flow,
in each case attributable to foreign subsidiaries, to the extent
that the repatriation of such amounts is prohibited or delayed
by applicable local law or would result in material adverse tax
consequences.
The asset-based revolving credit facility requires HCA Inc. to
prepay outstanding loans if borrowings exceed the borrowing base.
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HCA Inc. may voluntarily repay outstanding loans under the
senior secured credit facilities at any time without premium or
penalty, other than customary breakage costs with
respect to LIBOR loans.
Amortization
HCA Inc. is required to repay the loans under the term loan
facilities as follows:
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the term loan
A-1 facility
amortizes in quarterly installments such that the aggregate
amount of the original funded principal amount of such facility
repaid pursuant to such amortization payments in each year, with
the quarter ending June 30, 2011, is equal to
$15 million in the first quarter, $57 million in the
following two quarters, $215 million in the following three
quarters and with the balance being payable on the final
maturity date of such term loans;
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the term loan
A-2 facility
amortizes in equal quarterly installments that commenced on
June 30, 2011 in aggregate annual amounts equal to 1.25% of
the amount outstanding, on the restatement effective date of
such facility, with the balance being payable on the final
maturity date of such term loans;
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each of the term loan B-1 facility and the European term loan
facility currently has no remaining amortization payments,with
the balance being payable on the final maturity date of such
term loans;
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the term loan B-2 facility amortizes in equal quarterly
installments commencing December 31, 2013 in aggregate
annual amounts equal to $5 million, with the balance
payable on the final maturity date of such term loans; and
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the term loan B-3 facility amortizes in equal quarterly
installments commencing December 31, 2013 in aggregate
annual amounts equal to 0.25% of the amount outstanding, on the
restatement effective date of such facility, with the balance
being payable on the final maturity date of such term loans.
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Principal amounts outstanding under the revolving credit
facilities are due and payable in full at maturity.
Guarantee and
Security
All obligations under the senior secured credit facilities are
unconditionally guaranteed by substantially all existing and
future, direct and indirect, wholly-owned material domestic
subsidiaries that are unrestricted subsidiaries under the 1993
Indenture (except for certain special purpose subsidiaries that
only guarantee and pledge their assets under the asset-based
revolving credit facility), and the obligations under the
European term loan facility are also unconditionally guaranteed
by HCA Inc. and each of its existing and future wholly-owned
material subsidiaries formed under the laws of England and
Wales, subject, in each of the foregoing cases, to any
applicable legal, regulatory or contractual constraints and to
the requirement that such guarantee does not cause adverse tax
consequences.
All obligations under the asset-based revolving credit facility,
and the guarantees of those obligations, are secured, subject to
permitted liens and other exceptions, by a first-priority lien
on substantially all of the receivables of the borrowers and
each guarantor under such asset-based revolving credit facility
(the Receivables Collateral). All obligations under
the cash flow credit facility and the guarantees of such
obligations, are secured, subject to permitted liens and other
exceptions, by:
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a first-priority lien on the capital stock owned by HCA Inc. or
by any U.S. guarantor in each of their respective
first-tier subsidiaries (limited, in the case of foreign
subsidiaries, to 65% of the voting stock of such subsidiaries);
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a first-priority lien on substantially all present and future
assets of HCA Inc. and of each U.S. guarantor other than
(i) Principal Properties (as defined in the
1993 Indenture), except for certain Principal
Properties the aggregate amount of indebtedness secured
thereby in respect of the cash flow credit facility and the
first lien notes and any future first lien obligations, taken as
a whole, do not exceed 10% of Consolidated Net Tangible
Assets (as defined under the 1993 Indenture),
(ii) certain other real properties and (iii) deposit
accounts, other bank or securities accounts, cash, leaseholds,
motor-vehicles and certain other exceptions (such collateral
under this and the preceding bullet, the Non-Receivables
Collateral); and
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a second-priority lien on certain of the Receivables Collateral
(such portion of the Receivables Collateral, the Shared
Receivables Collateral; the Receivables Collateral that
does not secure such cash flow credit facility on a
second-priority basis is referred to as the Separate
Receivables Collateral).
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The obligations of the borrowers and the guarantors under the
European term loan facility are also secured by substantially
all present and future assets of the European subsidiary
borrower and each European guarantor (the European
Collateral), subject to permitted liens and other
exceptions (including, without limitation, exceptions for
deposit accounts, other bank or securities accounts, cash,
leaseholds, motor-vehicles and certain other exceptions) and
subject to such security interests otherwise being permitted by
applicable law and contract and not resulting in adverse tax
consequences. Neither our first lien notes nor our second lien
notes are secured by any of the European Collateral.
Certain
Covenants and Events of Default
The senior secured credit facilities contain a number of
covenants that, among other things, restrict, subject to certain
exceptions, HCA Inc.s ability and the ability of its
restricted subsidiaries to:
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incur additional indebtedness;
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create liens;
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enter into sale and leaseback transactions;
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engage in mergers or consolidations;
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sell or transfer assets;
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pay dividends and distributions or repurchase capital stock;
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make investments, loans or advances;
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with respect to the asset-based revolving credit facility,
prepay certain subordinated indebtedness, the second lien notes
and certain other indebtedness existing on the effective date of
the Recapitalization (Retained Indebtedness),
subject to certain exceptions;
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make certain acquisitions;
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engage in certain transactions with affiliates;
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make certain material amendments to agreements governing certain
subordinated indebtedness, the second lien notes or Retained
Indebtedness; and
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change lines of business.
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S-31
In addition, the senior secured credit facilities require the
following financial covenants to be maintained:
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in the case of the asset-based revolving credit facility, a
minimum interest coverage ratio (applicable only when
availability under such facility is less than 10% of the
borrowing base thereunder); and
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in the case of the other senior secured credit facilities, a
maximum total leverage ratio.
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The senior secured credit facilities also contain certain
customary affirmative covenants and events of default, including
a change of control.
Senior Secured
Notes
In connection with the Corporate Reorganization, HCA Holdings,
Inc. became a guarantor of HCA Inc.s senior secured notes
described below but is not subject to the covenants that apply
to HCA Inc. or HCA Inc.s restricted subsidiaries under
those notes.
Overview of
Senior Secured First Lien Notes
As of June 30, 2011, on an as adjusted basis after giving
effect to the August notes offering and the August redemptions,
HCA Inc. had $7.150 billion aggregate principal amount of
senior secured first lien notes consisting of:
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$1.500 billion aggregate principal amount of
81/2% senior
secured notes due 2019 issued by HCA Inc. on April 22, 2009
at a price of 96.755% of their face value, resulting in
$1.451 billion of gross proceeds;
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$1.250 billion aggregate principal amount of
77/8% senior
secured notes due 2020 issued by HCA Inc. on August 11,
2009 at a price of 98.254% of their face value, resulting in
$1.228 billion of gross proceeds;
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$1.400 billion aggregate principal amount of
71/4% senior
secured first lien notes due 2020 issued by HCA Inc. on
March 10, 2010 at a price of 99.095% of their face value,
resulting in $1.387 billion of gross proceeds; and
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$3.000 billion aggregate principal amount of
6.50% senior secured first lien notes due 2020 issued by
HCA Inc. on August 1, 2011 at a price of 100% of their face
value, resulting in $3.000 billion of gross proceeds (the
August 2011 first lien notes).
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We refer to these notes issued on April 22, 2009,
August 11, 2009, March 10, 2010, and August 1,
2011 as the first lien notes and the indentures
governing the first lien notes as the first lien
indentures.
The first lien notes and the related guarantees are secured by
first-priority liens, subject to permitted liens, on HCA
Inc.s subsidiary guarantors assets, subject to
certain exceptions, that secure HCA Inc.s cash flow credit
facility on a first-priority basis and are secured by
second-priority liens, subject to permitted liens, on HCA
Inc.s subsidiary guarantors assets that secure HCA
Inc.s asset-based revolving credit facility on a
first-priority basis and HCA Inc.s cash flow credit
facility on a second-priority basis.
Overview of
Senior Secured Second Lien Notes
As of June 30, 2011, on an as adjusted basis after giving
effect to the August notes offering and the August redemptions,
HCA Inc. had senior secured second lien notes consisting of
$201 million aggregate principal amount of
97/8% senior
secured notes due 2017.
S-32
We refer to these notes as the second lien notes
and, together with the first lien notes, the secured
notes. We refer to the indenture governing the second lien
notes as the second lien indenture and, together
with the first lien indentures, the indentures governing
the secured notes.
These second lien notes and the related guarantees are secured
by second-priority liens, subject to permitted liens, on HCA
Inc.s subsidiary guarantors assets, subject to
certain exceptions, that secure the cash flow credit facility on
a first-priority basis and are secured by third-priority liens,
subject to permitted liens, on HCA Inc.s and its
subsidiary guarantors assets that secure the asset-based
revolving credit facility on a first-priority basis and the cash
flow credit facility on a second-priority basis.
Optional
Redemption
The indentures governing the secured notes permit HCA Inc. to
redeem some or all of the secured notes at any time at
redemption prices described or as set forth in the respective
indenture.
Change of
Control
In addition, the indentures governing the secured notes provide
that, upon the occurrence of a change of control as defined
therein, each holder of secured notes has the right to require
us to repurchase some or all of such holders secured notes
at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the
repurchase date.
Covenants
The indentures governing the secured notes contain covenants
limiting, among other things, HCA Inc.s ability and the
ability of its restricted subsidiaries to, subject to certain
exceptions:
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incur additional debt or issue certain preferred stock (other
than the August 2011 first lien notes);
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engage in certain sale lease-back transactions (only the August
2011 first lien notes)
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pay dividends on or make certain distributions of capital stock
or make other restricted payments (other than the August 2011
first lien notes);
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create certain liens or encumbrances;
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sell certain assets;
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enter into certain transactions with affiliates (other than the
August 2011 first lien notes);
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make certain investments (other than the August 2011 first lien
notes); and
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consolidate, merge, sell or otherwise dispose of all or
substantially all of HCA Inc.s assets.
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The extent of such restrictions varies by series. The indentures
governing certain of the secured notes also contain a covenant
limiting HCA Inc.s ability to prepay certain series of
unsecured notes based on the maturity of those unsecured notes.
In particular, the indenture governing the first lien notes
issued in April 2009 permits HCA Inc. to prepay only those
unsecured notes maturing on or prior to April 15, 2019, the
indenture governing the first lien notes issued in August 2009
permits HCA Inc. to prepay only those unsecured notes maturing
on or prior to February 15, 2020 and the indenture
governing the notes issued in February 2009 permits HCA Inc. to
prepay only those unsecured notes maturing on or prior to
November 15, 2016.
Events of
Default
The indentures governing the secured notes also provide for
events of default which, if any of them occurs, would permit or
require the principal of and accrued interest on the secured
notes to become or to be declared due and payable.
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Other Secured
Indebtedness
As of June 30, 2011, HCA Inc. had approximately
$304 million of capital leases and other secured debt
outstanding.
Under the lease with HRT of Roanoke, Inc., effective
December 20, 2005, HCA Inc. makes annual payments for rent
and additional expenses for the use of premises in Roanoke and
Salem, Virginia. The rent payments will increase each year
beginning January 1, 2007 by the lesser of 3% or the change
in the Consumer Price Index. The lease is for a fixed term of
12 years with the option to extend the lease for another
ten years.
Under the lease with Medical City Dallas Limited, effective
March 18, 2004, HCA Inc. makes annual payments for rent for
the use of premises that are a part of a complex known as
Medical City Dallas located in Dallas, Texas. The
rent payment is adjusted yearly based on the fair market value
of the premises and a capitalization rate. The initial term is
240 months with the option to extend for two more terms of
240 months each.
Unsecured
Indebtedness
Overview
As of June 30, 2011, on an as adjusted basis after giving
effect to the August notes offering and the August redemptions,
HCA Inc. had outstanding an aggregate principal amount of
$7.580 billion of senior notes and debentures, consisting
of the following series:
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$402,499,000 aggregate principal amount of 6.95% Senior
Notes due 2012;
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$500,000,000 aggregate principal amount of 6.30% Senior
Notes due 2012;
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$500,000,000 aggregate principal amount of 6.25% Senior
Notes due 2013;
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$500,000,000 aggregate principal amount of 6.75% Senior
Notes due 2013;
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$500,000,000 aggregate principal amount of 5.75% Senior
Notes due 2014;
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$150,000,000 aggregate principal amount of 7.19% Debentures
due 2015;
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$750,000,000 aggregate principal amount of 6.375% Senior
Notes due 2015;
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$1,000,000,000 aggregate principal amount of 6.50% Senior
Notes due 2016;
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$2,000,000,000 aggregate principal amount of 7.50% Senior
Notes due 2022;
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$135,645,000 aggregate principal amount of 7.50% Debentures
due 2023;
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$150,000,000 aggregate principal amount of 8.36% Debentures
due 2024;
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$291,436,000 aggregate principal amount of 7.69% Senior
Notes due 2025;
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$150,000,000 aggregate principal amount of 7.05% Debentures
due 2027;
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$250,000,000 aggregate principal amount of 7.50% Senior
Notes due 2033;
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$100,000,000 aggregate principal amount of 7.75% Debentures
due 2036; and
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$200,000,000 aggregate principal amount of 7.50% Debentures
due 2095.
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As of June 30, 2011, on an as adjusted basis after giving
effect to the August notes offering and the August redemptions,
HCA Inc. also had outstanding $121,110,000 aggregate principal
amount of 9.00% Medium Term Notes due 2014 and $125,000,000
aggregate principal amount of 7.58% Medium Term Notes due 2025.
All of HCA Inc.s outstanding series of senior notes,
debentures and medium term notes listed above were issued under
an indenture, which we refer to as the 1993
indenture, with the exception
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of the $2,000,000,000 aggregate principal amount of
7.50% senior notes due 2022 (the August 2011
unsecured notes), which were issued in the August notes
offering under a separate indenture (the new
indenture) with terms similar to the 1993 indenture. We
refer to the 1993 indenture and the new indenture as the
indentures, collectively.
Optional
Redemption
If permitted by the respective indenture, HCA Inc. is permitted
to redeem some or all of that series of unsecured notes at any
time at redemption prices described or as set forth in such
supplemental indenture.
Covenants
The indentures contain covenants limiting, among other things,
HCA Inc.s ability
and/or the
ability of HCA Inc.s restricted subsidiaries to
(subject to certain exceptions):
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assume or guarantee indebtedness or obligation secured by
mortgages, liens, pledges or other encumbrances;
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enter into sale and lease-back transactions with respect to any
Principal Property (as such term is defined in the
1993 indenture);
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create, incur, issue, assume or otherwise become liable with
respect to, extend the maturity of, or become responsible for
the payment of, any debt or preferred stock (other than the
August 2011 unsecured notes); and
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consolidate, merge, sell or otherwise dispose of all or
substantially all of HCA Inc.s assets.
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In addition, the Indentures provide that the aggregate amount of
all other indebtedness of HCA Inc. secured by mortgages on
Principal Properties (as such term is defined in the
1993 indenture) together with the aggregate principal amount of
all indebtedness of restricted subsidiaries (as such term is
defined in the 1993 indenture) and the attributable debt in
respect of sale-leasebacks of Principal Properties, may not
exceed 15% of the consolidated net tangible assets of HCA Inc.
and its consolidated subsidiaries, subject to exceptions for
certain permitted mortgages and debt.
Events of
Default
The indentures contain certain events of default, which, if any
of them occurs, would permit or require the principal of and
accrued interest on such series to become or to be declared due
and payable.
Change of
Control
In addition, the new indenture provides that, upon the
occurrence of a change of control as defined therein, each
holder of the notes has the right to require us to repurchase
some or all of such holders secured notes at a purchase
price in cash equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the repurchase date.
Unsecured
Indebtedness of HCA Holdings, Inc.
Overview
On November 23, 2010, HCA Holdings, Inc. issued
$1.525 billion aggregate principal amount of
73/4% senior
notes due 2021 at a price of 100% of their face value, resulting
in $1.525 billion of gross proceeds. We refer to these
notes as the outstanding 2021 notes and the
indenture governing the outstanding 2021 notes as the 2021
notes indenture.
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Ranking
The outstanding 2021 notes are HCA Holdings, Inc.s senior
unsecured obligations and rank equally in right of payment with
all of its future unsecured and unsubordinated indebtedness,
rank senior in right of payment to any of its future
subordinated indebtedness, and are structurally subordinated in
right of payment to indebtedness of HCA Holdings, Inc.s
subsidiaries, including HCA Inc. The outstanding 2021 notes are
not guaranteed by any of HCA Holdings, Inc.s subsidiaries,
including HCA Inc. HCA Holdings, Inc.s future secured
indebtedness and other future secured obligations will be
effectively senior to the outstanding 2021 notes to the extent
of the value of the assets securing such other indebtedness and
other obligations.
Optional
Redemption
The 2021 notes indenture permits HCA Holdings, Inc. to redeem
some or all of the outstanding 2021 notes at any time at
redemption prices described or set forth in the respective
indenture. In particular, in the event of an equity offering,
HCA Holdings, Inc. may, until November 15, 2013, redeem up
to 35% of the principal amount of the outstanding 2021 notes at
a redemption price equal to 107.750% of their face value, using
the net cash proceeds raised in the equity offering.
Change of
Control
Upon the occurrence of a change of control, which is defined in
the 2021 notes indenture, each holder of the outstanding 2021
notes has the right to require HCA Holdings, Inc. to repurchase
some or all of such holders notes at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the repurchase date.
Covenants
The 2021 notes indenture contains covenants limiting, among
other things, HCA Holdings, Inc.s ability and the
ability of its restricted subsidiaries to (subject to certain
exceptions):
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create liens on certain assets to secure debt;
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enter into certain sale and lease-back transactions; and
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consolidate, merge, sell or otherwise dispose of all or
substantially all of HCA Holdings, Inc.s assets.
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Events of
Default
The 2021 notes indenture contains certain events of default,
which, if any of them occurs, would permit or require the
principal of and accrued interest on the outstanding 2021 notes
to become or to be declared due and payable.
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DESCRIPTION OF
THE NOTES
General
The following description of the particular terms of
the % Senior Unsecured Notes
due 2018, which we refer to in this description as the
Notes, supplements, and to the extent
inconsistent therewith replaces, the description of the general
terms and provisions of the debt securities set forth under
Description of Debt Securities and Guarantees in the
attached prospectus. In this description of the notes, all
references to we, us or our
and the Company are to HCA Inc. only (the
Issuer) and not to HCA Holdings, Inc.
(Holdings) or any of its Subsidiaries.
References in this description of the notes to
Holdings or the Parent Guarantor refer
only to Holdings and not to its Subsidiaries or the Issuer.
The Issuer will issue the Notes under an indenture, dated as of
August 1, 2011 among the Issuer, Holdings and Law Debenture
Trust Company of New York, as Trustee
and Deutsche Bank Trust Company Americas, as Paying Agent,
Registrar and Transfer Agent, as supplemented by a supplemental
indenture. The supplemental indenture will set forth certain
specific terms applicable to the Notes, and references to the
Indenture in this description mean the
Indenture as so amended and supplemented by the supplemental
indenture. This description is intended to be an overview of the
material provisions of the Notes and the Indenture. This summary
is not complete and is qualified in its entirety by reference to
the Indenture. You should carefully read the summary below, the
description of the general terms and provisions of our debt
securities set forth in the accompanying base prospectus under
Description of Debt Securities and Guarantees and
the provisions of the Indenture that may be important to you
before investing in the Notes. Capitalized terms defined in the
accompanying base prospectus or in the Indenture have the same
meanings when used in this description unless updated herein.
The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended. You may request
copies of the Indenture at the address set forth under the
heading Summary. A form of the indenture has been
filed as an exhibit to the registration statement of which this
prospectus supplement is a part and can be obtained as indicated
under Available Information.
Principal,
Maturity and Interest
The Issuer will issue $500 million of the Notes in this
offering. The Notes will mature
on ,
2018. The Notes will bear interest at the rate
of % per annum, computed on the
basis of a
360-day year
of twelve
30-day
months, commencing on the Issue Date. Interest will be payable
twice a year
on and ,
beginning
on ,
2012. Interest payable on any Note that is punctually paid or
duly provided for on any interest payment date shall be paid to
the person in whose name such Note is registered at the close of
business
on and ,
as the case may be, preceding such interest payment date.
The Issuer may issue additional Notes, from time to time after
this offering under the Indenture (any such Notes,
Additional Notes). The Notes offered by the
Issuer and any Additional Notes subsequently issued under the
Indenture will be treated as a single class for all purposes
under the Indenture, including waivers, amendments, redemptions
and offers to purchase. Unless the context requires otherwise,
references to Notes for all purposes of the
Indenture and this Description of the Notes include
any Additional Notes that are actually issued.
The Notes will be issued in book-entry form only.
Parent
Guarantee
We are a Subsidiary of Holdings. Holdings will, as primary
obligor and not merely as surety, irrevocably and fully and
unconditionally guarantee (the Parent Guarantee,
and Holdings in such capacity, the Parent
Guarantor), on an unsecured senior basis, the punctual
payment when due, whether at maturity, by acceleration or
otherwise, of all monetary obligations of the Issuer under the
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Indenture and the Notes, whether for principal of or interest on
the Notes, expenses, indemnification or otherwise (all such
obligations guaranteed by the Parent Guarantor being herein
called the Parent Guaranteed Obligations).
The Parent Guarantee shall be a continuing guarantee and shall
(i) subject to the next two paragraphs, remain in full
force and effect until payment in full of the principal amount
of all outstanding Notes (whether by payment at maturity,
purchase, redemption, defeasance, retirement or other
acquisition) and all other applicable Parent Guaranteed
Obligations of the Parent Guarantor then due and owing,
(ii) be binding upon the Parent Guarantor and
(iii) inure to the benefit of and be enforceable by the
Trustee, the Holders and their permitted successors, transferees
and assigns.
The Parent Guarantor will automatically and unconditionally be
released from all obligations under its Parent Guarantee, and
its Parent Guarantee will thereupon terminate and be discharged
and of no further force of effect, (i) upon any merger or
consolidation of such Parent Guarantor with the Issuer,
(ii) upon legal or covenant defeasance of the Issuers
obligations under, or satisfaction and discharge of, the
Indenture, or (iii) subject to customary contingent
reinstatement provisions, upon payment in full of the aggregate
principal amount of all Notes then outstanding and all other
applicable Parent Guaranteed Obligations of the Parent Guarantor
then due and owing.
Upon any such occurrence specified in the preceding paragraph,
the Trustee shall execute, upon request by the Issuer, any
documents reasonably required in order to evidence such release,
discharge and termination in respect of the Parent Guarantee.
Neither the Issuer nor the Parent Guarantor shall be required to
make a notation on the Notes to reflect the Parent Guarantee or
any such release, termination or discharge.
Ranking of Notes
and Guarantee
The Notes are:
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unsecured senior obligations of the Issuer;
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equal in right of payment to any future senior Indebtedness of
the Issuer;
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senior in right of payment to any future Subordinated
Indebtedness of the Issuer;
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structurally subordinated in right of payment to all
Indebtedness of the Issuers Subsidiaries; and
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guaranteed on a senior unsecured basis by the Parent Guarantor.
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The Indebtedness evidenced by the Notes will be unsecured and
will rank equally with any other unsecured and unsubordinated
indebtedness the Issuer may incur in the future. The Notes will
not be guaranteed by any of the Issuers Subsidiaries. The
Issuers future secured Indebtedness and other future
secured obligations will be effectively senior to the Notes to
the extent of the value of the assets securing such other
secured Indebtedness and other obligations.
The Issuer is a holding company for its Subsidiaries, with no
material operations of its own and only limited assets.
Accordingly, the Issuer is dependent upon the distribution of
the earnings of its Subsidiaries, whether in the form of
dividends, advances or payments on account of intercompany
obligations, to service its debt obligations. Additionally,
claims of such Subsidiaries creditors, including trade
creditors and claims of preferred stockholders (if any) of such
Subsidiaries, generally will have priority with respect to the
assets and earnings of such Subsidiaries over the claims of the
Issuers creditors, including Holders of the Notes. The
Notes, therefore, will be structurally subordinated to creditors
(including trade creditors) and preferred stockholders (if any)
of our Subsidiaries. As of June 30, 2011, on an as adjusted
basis after giving effect to (i) our issuance in August
2011 of $5.000 billion aggregate principal amount of notes,
comprised of $3.000 billion of 6.50% senior secured first
lien notes due 2020 and $2.000 billion of 7.50% senior
unsecured notes due 2022, (ii) our redemption in August 2011 of
all $3.200 billion aggregate principal amount of its
outstanding
91/4%
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Senior Secured Notes due 2016 and all $1.578 billion
aggregate principal amount of its outstanding
95/8/103/8%
senior secured toggle notes due 2016, (iii) our repurchase in
September 2011 of 80,771,143 shares of HCA common stock
beneficially owned by affiliates of Bank of America Corporation
using a combination of cash on hand and borrowing through
available credit facilities and (iv) the notes offered
hereby, Subsidiaries of the Issuer would have had Indebtedness
of $18.059 billion outstanding, all of which would have
been secured.
The Indenture limits the Issuers ability and that of
certain of our Subsidiaries under certain circumstances to
secure Indebtedness by Mortgages on our Principal Properties and
to enter into Sale and Lease-Back Transactions. In a liquidation
or reorganization of any of our Subsidiaries, the right of
Holders of the Notes to participate in any distribution is
subject to the prior claims of creditors of that Subsidiary,
except to the extent that we are a creditor.
The Parent Guarantee (as described below) is:
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the unsecured obligation of the Parent Guarantor;
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equal in right of payment to all of the Parent Guarantors
existing and future indebtedness that is not subordinated in
right of payment to its Parent Guarantee (including the Parent
Guarantors
73/4%
senior notes due 2021 and the guarantee given by the Parent
Guarantor in favor of the 6.50% senior secured first lien notes
due 2020);
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senior in right of payment to any future Subordinated
Indebtedness of the Parent Guarantor;
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effectively subordinated in right of payment to any of the
Parent Guarantors future indebtedness that is secured by
Liens on its assets to the extent of the value of the assets
securing such indebtedness; and
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structurally subordinated in right of payment to all
Indebtedness of the Parent Guarantors Subsidiaries (other
than the Issuer).
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Mandatory
Redemption; Offers to Purchase; Open Market Purchases
The Issuer will not be required to make any mandatory redemption
or sinking fund payments with respect to the Notes. However,
under certain circumstances, the Issuer may be required to offer
to purchase Notes as described under the caption
Repurchase at the Option of Holders. The
Issuer may at any time and from time to time purchase Notes in
the open market or otherwise.
Optional
Redemption
The Notes will be redeemable, at our option, at any time in
whole or from time to time in part, at a redemption, or
make-whole, price equal to the greater of:
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100% of the aggregate principal amount of the Notes to be
redeemed, and
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an amount equal to sum of the present value of the remaining
scheduled payments of principal of and interest on the Notes to
be redeemed (excluding accrued and unpaid interest to the
redemption date and subject to the right of Holders on the
relevant record date to receive interest due on the relevant
interest payment date) discounted from their scheduled date of
payment to the redemption date on a semi-annual basis (assuming
a 360-day
year consisting of twelve
30-day
months) using a discount rate equal to the Treasury Rate plus
50 basis points
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plus, in each of the above cases, accrued and unpaid interest,
if any, to such redemption date.
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Any notice of any redemption may be given prior to the
redemption thereof, and any such redemption or notice may, at
the Issuers discretion, be subject to one or more
conditions precedent,
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including, but not limited to, completion of an equity offering
or other corporate transaction. Notes called for redemption will
become due on the date fixed for redemption. Notices of
redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of
the Notes to be redeemed at its registered address. The notice
of redemption for the Notes will state, among other things, the
amount of Notes to be redeemed, if less than all of the
outstanding Notes are to be redeemed, the redemption date, the
redemption price (or the method of calculating it) and each
place that payment will be made upon presentation and surrender
of Notes to be redeemed.
Unless we default in payment of the redemption price, interest
will cease to accrue on any Notes that have been called for
redemption on the redemption date. If the Issuer redeems less
than all of the outstanding Notes, the Registrar and Paying
Agent shall select the Notes to be redeemed in the manner
described under Repurchase at the Option of
HoldersSelection and Notice.
For purposes of determining the optional redemption price, the
following definitions are applicable:
Comparable Treasury Issue means, the United
States Treasury security selected by an Independent Investment
Banker as having a maturity comparable to the remaining term
(Remaining Life) of a Note being redeemed
that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to
the Remaining Life of such Notes.
Comparable Treasury Price means, with respect
to any redemption date for any Note: (1) the average of the
Reference Treasury Dealer Quotations for that redemption date,
after excluding the highest and lowest of four such Reference
Treasury Dealer Quotations; or (2) if the Independent
Investment Banker is given fewer than four Reference Treasury
Dealer Quotations, the average of all quotations obtained by the
Independent Investment Banker.
Independent Investment Banker means one of
the Reference Treasury Dealers, to be appointed by the Issuer.
Reference Treasury Dealer Quotations means,
with respect to each Reference Treasury Dealer and any
redemption date for any Note, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for
the Comparable Treasury Issue, expressed in each case as a
percentage of its principal amount, quoted in writing to the
Independent Investment Banker by such Reference Treasury Dealer
at 3:00 p.m., New York City time, on the third Business Day
preceding such redemption date.
Treasury Rate means, at the time of
computation, (1) the semi-annual equivalent yield to
maturity of the United States Treasury Securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15(519) which has become
publicly available at least two Business Days prior to the
redemption date or, if such Statistical Release is no longer
published, any publicly available source of similar market data)
for the maturity corresponding to the Comparable Treasury Issue;
provided, however, that if no maturity is within
three months before or after the maturity date for the notes,
yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue will be
determined and the Treasury Rate will be interpolated or
extrapolated from those yields on a straight line basis,
rounding to the nearest month; or (2) if that release, or
any successor release, is not published during the week
preceding the calculation date or does not contain such yields,
the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a
price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date. The Treasury Rate will
be calculated on the third Business Day preceding the redemption
date.
Except as set forth above, the Notes will not be redeemable by
us prior to maturity.
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Denominations,
Registration and Transfer
The Issuer will issue the Notes in registered form and in
denominations of $2,000 or any integral multiple of $1,000 in
excess thereof. We have appointed Deutsche Bank Trust Company
Americas as security registrar.
Repurchase at the
Option of Holders
Change of
Control
The Notes will provide that if a Change of Control occurs,
unless the Issuer has previously or concurrently mailed a
redemption notice with respect to all the outstanding Notes as
described under Optional Redemption, the
Issuer will make an offer to purchase all of the Notes pursuant
to the offer described below (the Change of Control
Offer) at a price in cash (the Change of
Control Payment) equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase, subject to the right of Holders of
the Notes of record on the relevant record date to receive
interest due on the relevant interest payment date. Within
30 days following any Change of Control, the Issuer will
send notice of such Change of Control Offer by first-class mail,
with a copy to the Trustee and the Registrar, to each Holder of
Notes to the address of such Holder appearing in the security
register with a copy to the Trustee and the Registrar or
otherwise in accordance with the procedures of DTC, with the
following information:
(1) that a Change of Control Offer is being made pursuant
to the covenant entitled Change of Control and that
all Notes properly tendered pursuant to such Change of Control
Offer will be accepted for payment by the Issuer;
(2) the purchase price and the purchase date, which will be
no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the Change of Control
Payment Date);
(3) that any Note not properly tendered will remain
outstanding and continue to accrue interest;
(4) that unless the Issuer defaults in the payment of the
Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue
interest on the Change of Control Payment Date;
(5) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled Option of
Holder to Elect Purchase on the reverse of such Notes
completed, to the paying agent specified in the notice at the
address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their
tendered Notes and their election to require the Issuer to
purchase such Notes; provided that the paying agent
receives, not later than the close of business on the
30th day following the date of the Change of Control
notice, a telegram, facsimile transmission or letter setting
forth the name of the Holder of the Notes, the principal amount
of Notes tendered for purchase, and a statement that such Holder
is withdrawing its tendered Notes and its election to have such
Notes purchased;
(7) that Holders tendering less than all of their Notes
will be issued new Notes and such new Notes will be equal in
principal amount to the unpurchased portion of the Notes
surrendered. The unpurchased portion of the Notes must be equal
to $2,000 or an integral multiple of $1,000 in excess
thereof; and
(8) the other instructions, as determined by us, consistent
with the covenant described hereunder, that a Holder must follow.
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The Issuer will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the provisions of the Indenture, the Issuer will comply with the
applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the
Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the
extent permitted by law,
(1) accept for payment all Notes issued by it or portions
thereof properly tendered pursuant to the Change of Control
Offer;
(2) deposit with the paying agent an amount equal to the
aggregate Change of Control Payment in respect of all Notes or
portions thereof so tendered; and
(3) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an
Officers Certificate to the Trustee stating that such
Notes or portions thereof have been tendered to and purchased by
the Issuer.
Existing indebtedness of the Issuer limits, and future
indebtedness of the Issuer and its Subsidiaries may prohibit or
limit, the Issuer from purchasing any Notes as a result of a
Change of Control. In the event a Change of Control occurs at a
time when the Issuer is prohibited from purchasing the Notes, we
could seek the consent of our lenders and noteholders to permit
the purchase of the Notes or could attempt to refinance the
borrowings that contain such prohibition. If we do not obtain
such consent or repay such borrowings, we will remain prohibited
from purchasing the Notes. In such case, our failure to purchase
tendered Notes would constitute an Event of Default under the
Indenture.
The Issuers ability to pay cash to the Holders of the
Notes following the occurrence of a Change of Control may be
limited by its then-existing financial resources. Therefore,
sufficient funds may not be available when necessary to make any
required repurchases.
The Change of Control purchase feature of the Notes may in
certain circumstances make more difficult or discourage a sale
or takeover of us and, thus, the removal of incumbent
management. The Change of Control purchase feature is a result
of negotiations between the Underwriters and us. After the Issue
Date, we have no present intention to engage in a transaction
involving a Change of Control, although it is possible that we
could decide to do so in the future. Subject to the limitations
discussed below, we could, in the future, enter into certain
transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control
under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect our
capital structure or credit ratings. Such restrictions in the
Indenture can be waived only with the consent of the Holders of
a majority in principal amount of the Notes then outstanding.
Except for the limitations contained in such covenants, however,
the Indenture will not contain any covenants or provisions that
may afford Holders of the Notes protection in the event of a
highly leveraged transaction.
The Issuer will not be required to make a Change of Control
Offer following a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by us and
purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer. Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in
advance of a Change of Control, conditional upon such Change of
Control, if a definitive agreement is in place for the Change of
Control at the time of making of the Change of Control Offer.
The definition of Change of Control includes a
disposition of all or substantially all of the assets of the
Issuer to any Person. Although there is a limited body of case
law interpreting the phrase substantially all, there
is no precise established definition of the phrase under
applicable law. Accordingly, in certain circumstances there may
be a degree of uncertainty as to whether a particular
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transaction would involve a disposition of all or
substantially all of the assets of the Issuer. As a
result, it may be unclear as to whether a Change of Control has
occurred and whether a Holder of Notes may require the Issuer to
make an offer to repurchase the Notes as described above.
The provisions under the Indenture relating to the Issuers
obligation to make an offer to repurchase the Notes as a result
of a Change of Control may be waived or modified with the
written consent of the Holders of a majority in principal amount
of the Notes.
Selection and
Notice
If the Issuer is redeeming less than all of the Notes issued by
it at any time, the Registrar and Paying Agent will select the
Notes to be redeemed (a) if the Notes are listed on any
national securities exchange, in compliance with the
requirements of the principal national securities exchange on
which the Notes are listed, (b) on a pro rata basis to the
extent practicable or (c) by lot or such other similar
method in accordance with the procedures of DTC.
Notices of purchase or redemption shall be mailed by first-class
mail, postage prepaid, at least 30 but not more than
60 days before the purchase or redemption date to each
Holder of Notes at such Holders registered address or
otherwise in accordance with the procedures of DTC, except that
redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a
defeasance of the Notes or a satisfaction and discharge of the
Indenture. If any Note is to be purchased or redeemed in part
only, any notice of purchase or redemption that relates to such
Note shall state the portion of the principal amount thereof
that has been or is to be purchased or redeemed.
The Issuer will issue a new Note in a principal amount equal to
the unredeemed portion of the original Note in the name of the
Holder upon cancellation of the original Note. Notes called for
redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on Notes or
portions thereof called for redemption.
Certain
Covenants
Set forth below are summaries of certain covenants contained in
the Indenture.
Covenant
Suspension
If on any date following the Issue Date (i) the Notes have
Investment Grade Ratings from both Rating Agencies and
(ii) no Default has occurred and is continuing under the
Indenture, the Issuer and the Subsidiaries will not be subject
to the Repurchase at the Option of
HoldersChange of Control covenant (the
Suspended Covenant).
In the event that the Issuer and the Subsidiaries are not
subject to the Suspended Covenant under the Indenture for any
period of time as a result of the foregoing, and on any
subsequent date one or both of the Rating Agencies
(a) withdraw their Investment Grade Rating or downgrade the
rating assigned to the Notes below an Investment Grade Rating
and/or
(b) the Issuer or any of its Affiliates enters into an
agreement to effect a transaction that would result in a Change
of Control and one or more of the Rating Agencies indicate that
if consummated, such transaction (alone or together with any
related recapitalization or refinancing transactions) would
cause such Rating Agency to withdraw its Investment Grade Rating
or downgrade the ratings assigned to the Notes below an
Investment Grade Rating, then the Issuer and the Subsidiaries
will thereafter again be subject to the Suspended Covenant under
the Indenture with respect to future events, including, without
limitation, a proposed transaction described in clause (b)
above.
In the event of any such reinstatement, no action taken or
omitted to be taken by the Issuer or any of its Subsidiaries
prior to such reinstatement will give rise to a Default or Event
of Default under the Indenture with respect to Notes.
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There can be no assurance that the Notes will ever achieve or
maintain Investment Grade Ratings.
Limitations on
Mortgages
Nothing in the Indenture or in the Notes shall in any way
restrict or prevent the Issuer, the Parent Guarantor or any
Subsidiary from incurring any Indebtedness, provided,
however, that the Indenture will provide that neither the
Issuer nor any of its Subsidiaries will issue, assume or
guarantee any indebtedness or obligation secured by Mortgages
upon any Principal Property, unless the Notes shall be secured
equally and ratably with (or prior to) such Indebtedness. This
restriction will not apply to:
(a) Mortgages securing all or any part of the purchase
price of property acquired or cost of construction of property
or cost of additions, substantial repairs, alterations or
improvements or property, if the Indebtedness and the related
Mortgages are incurred within 18 months of the later of the
acquisition or completion of construction and full operation or
additions, repairs, alterations or improvements;
(b) Mortgages existing on property at the time of its
acquisition by the Issuer or a Subsidiary or on the property of
a Person at the time of the acquisition of such Person by the
Issuer or a Subsidiary (including acquisitions through merger or
consolidation);
(c) Mortgages to secure Indebtedness on which the interest
payments to holders of the related indebtedness are excludable
from gross income for federal income tax purposes under
Section 103 of the Code;
(d) Mortgages in favor of the Issuer or any Subsidiary;
(e) Mortgages existing on the date of the Indenture;
(f) Mortgages in favor of a government or governmental
entity that (i) secure Indebtedness which is guaranteed by
the government or governmental entity, (ii) secure
Indebtedness incurred to finance all or some of the purchase
price or cost of construction of goods, products or facilities
produced under contract or subcontract for the government or
governmental entity, or (iii) secure Indebtedness incurred
to finance all or some of the purchase price or cost of
construction of the property subject to the Mortgage;
(g) Mortgages incurred in connection with the borrowing of
funds where such funds are used to repay within 120 days
after entering into such Mortgage, Indebtedness in the same
principal amount secured by other Mortgages on Principal
Property with at least the same appraised fair market value; and
(h) any extension, renewal or replacement of any Mortgage
referred to in clauses (a) through (g) above, provided
the amount secured is not increased and such extension, renewal
or replacement Mortgage relates to the same property.
Limitations on
Sale and Lease-Back
The Indenture will provide that neither the Issuer nor any
Subsidiary will enter into any Sale and Lease-Back Transaction
with respect to any Principal Property with another person
(other than with the Issuer or a Subsidiary) unless either:
(a) the Issuer or such Subsidiary could incur indebtedness
secured by a mortgage on the property to be leased without
equally and ratably securing the Notes; or
(b) within 120 days, the Issuer applies the greater of
the net proceeds of the sale of the leased property or the fair
value of the leased property, net of all Notes delivered under
the Indenture, to the voluntary retirement of our Funded Debt
and/or the
acquisition or construction of a Principal Property.
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Exempted
Transactions
Notwithstanding the foregoing provisions described above under
Limitation on Mortgages and
Limitations on Sale and Lease-back if the
aggregate outstanding principal amount of all Indebtedness of
the Issuer and its Subsidiaries that is subject to and not
otherwise permitted under these restrictions does not exceed 15%
of the Consolidated Net Tangible Assets of the Issuer and its
Subsidiaries, then:
(a) the Issuer or any of its Subsidiaries may issue, assume
or guarantee Indebtedness secured by Mortgages; and
(b) the Issuer or any of its Subsidiaries may enter into
any Sale and Lease-Back Transaction.
Events of
Default
Under the Indenture, an Event of Default
applicable to the Notes of any series means:
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failure to pay the principal or any premium on the Notes when
due;
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failure to pay any interest on the Notes when due, and such
default continues for a period of 30 days;
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failure to deposit any sinking fund payment in respect of the
Notes when due;
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failure to perform, or the breach of, any of our other
applicable covenants or warranties in the Indenture, and such
default continues for a period of 60 days after written
notice by Holders of at least 10% in principal amount of the
outstanding Notes; or
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events in bankruptcy, insolvency or reorganization.
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If any Event of Default with respect to the Notes occurs and is
continuing, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the outstanding Notes may declare
the principal amount of all the Notes to be due and payable
immediately. The Holders may, under certain circumstances,
rescind and annul this acceleration prior to obtaining a
judgment or decree.
Other than the duties of the Trustee during a default to act
with the required standard of care, the Trustee is not obligated
to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders unless the
Holders shall have offered to the Trustee indemnity reasonably
satisfactory to it. Subject to these indemnification provisions,
the Holders of a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Notes.
We will furnish the Trustee annually with a statement as to our
performance of certain obligations under the Indenture and as to
any default in our performance.
Modification and
Waiver
Without Holder
Consent
Without the consent of any Holders, the Issuer, the Parent
Guarantor and the Trustee, may enter into supplemental
indentures for any of the following purposes:
(1) to evidence the succession of another corporation to
the Issuer and the assumption by such successor of the covenants
of the Issuer in compliance with the requirements set forth in
the Indenture; or
(2) to add to the covenants for the benefit of the Holders
or to surrender any right or power herein conferred upon the
Issuer; or
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(3) to add any additional Events of Default; or
(4) to change or eliminate any of the provisions of the
Indenture, provided that any such change or elimination
shall become effective only when there are no outstanding Notes
of any series created prior to the execution of such
supplemental indenture that is entitled to the benefit of such
provision and as to which such supplemental indenture would
apply; or
(5) to secure the Notes; or
(6) to supplement any of the provisions of the Indenture to
such extent necessary to permit or facilitate the defeasance and
discharge of the Notes, provided that any such action
does not adversely affect the interests of the Holders of the
Notes in any material respect; or
(7) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee and to add to or
change any of the provisions of the Indenture necessary to
provide for or facilitate the administration of the trusts by
more than one Trustee; or
(8) to cure any ambiguity, to correct or supplement any
provision of the Indenture which may be defective or
inconsistent with any other provision; or
(9) to change any place or places where the principal of
and premium, if any, and interest, if any, on the Notes shall be
payable, the Notes may be surrendered for registration or
transfer, the Notes may be surrendered for exchange, and notices
and demands to or upon the Issuer may be served.
With Holder
Consent
The Issuer, the Parent Guarantor and the Trustee may modify and
amend the Indenture with the consent of the Holders of a
majority in aggregate principal amount of the outstanding Notes;
however, we must have the consent of the Holder of each
outstanding Note affected to:
(1) change the stated maturity of the principal of, or
installment of interest, if any, on, the Notes, or reduce the
principal amount thereof or the interest thereon or any premium
payable upon redemption thereof;
(2) change the currency in which the principal of (and
premium, if any) or interest on such Notes are denominated or
payable, or reduce the amount of the principal of a Discount
Security that would be due and payable upon a declaration of
acceleration of the maturity thereof;
(3) adversely affect the right of repayment or repurchase,
if any, at the option of the Holder after such obligation
arises, or reduce the amount of, or postpone the date fixed for,
any payment under any sinking fund or impair the right to
institute suit for the enforcement of any payment on or after
the Stated Maturity thereof (or, in the case of redemption, on
or after the redemption date);
(4) reduce the percentage of Holders whose consent is
required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or
certain defaults; or
(5) modify the provisions that require Holder consent to
modify or amend the Indenture or that permit Holders to waive
compliance with certain provisions of the Indenture or certain
defaults.
The Holders of a majority in aggregate principal amount of the
outstanding Notes may, on behalf of all Holders, waive any past
default under the Indenture with respect to Notes. However, such
Holders may not waive a past default in the payment of
principal, premium or interest, or any sinking fund installment
with respect to the Notes, or waive a covenant or provision that
cannot be modified or amended, without the consent of the
Holders of each outstanding Note affected.
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Consolidation,
Merger, Sale or Lease of Assets
The Issuer or the Parent Guarantor, as applicable, may
consolidate with or merge into, or transfer or lease all or
substantially all of our assets to another Person (whether or
not the Issuer or the Parent Guarantor, as applicable, is the
surviving corporation) without the consent of the Holders of the
Notes under the Indenture if:
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In the case of the Issuer, the successor entity assumes the
Issuers obligations on the Notes and under the Indenture,
as if such successor were an original party to the Indenture;
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in the case of the Parent Guarantor, the successor entity
assumes the Parent Guarantors obligations under the
Indenture and the Parent Guarantee, as if such successor were an
original party to the Indenture and such Parent Guarantee;
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after giving effect to the transaction, 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;
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if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the
Issuer or the Parent Guarantor, as applicable, would become
subject to a mortgage, pledge, lien, security interest or other
encumbrance that would not be permitted by the Indenture, the
Issuer or the Parent Guarantor, as applicable, or such successor
corporation or Person, as the case may be, shall take such steps
as shall be necessary effectively to secure all the Notes or the
Parent Guarantee, as applicable, equally and ratably with (or
prior to) all indebtedness secured thereby; and
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the Issuer or the Parent Guarantor, as the case may be, has
delivered to the Trustee an Officers Certificate and an
Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental indenture
comply with this covenant and that all conditions precedent
provided for relating to such transaction have been complied
with.
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Defeasance
We may be discharged from our obligations under the Notes, and
we will not be subject to the limitations in the Indenture
discussed in the above sections, if we deposit with the Trustee
trust money or U.S. government obligations that are
sufficient to pay all principal, premium and interest on the
Notes. We would deliver to the Trustee an opinion of counsel to
the effect that the deposit and related defeasance would not
(1) cause the Holders of the Notes to recognize income,
gain or loss for United States income tax purposes or
(2) result in the delisting of the Notes from any national
securities exchange (if so listed).
Notices
Notices to Holders will be mailed to the addresses of the
Holders listed in the security register.
Governing
Law
We will construe the Indenture and the Notes in accordance with
the laws of the State of New York.
Concerning the
Trustee
The Trustee has normal banking relationships with us.
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Certain
Definitions
Affiliate of any specified Person means any
other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person. For purposes of this definition, control
(including, with correlative meanings, the terms
controlling, controlled by and
under common control with), as used with respect to
any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
Affiliated Entity means any Person which
(i) does not transact any substantial portion of its
business or regularly maintain any substantial portion of its
operating assets within the continental limits of the
United States of America, (ii) is principally engaged
in the business of financing (including, without limitation, the
purchase, holding, sale or discounting of or lending upon any
notes, contracts, leases or other forms of obligations) the sale
or lease of merchandise, equipment or services (1) by the
Issuer, (2) by a Subsidiary (whether such sales or leases
have been made before or after the date which such Person became
a Subsidiary), (3) by another Affiliated Entity or
(4) by any Person prior to the time which substantially all
its assets have heretofore been or shall hereafter have been
acquired by the Issuer, (iii) is principally engaged in the
business of owning, leasing, dealing in or developing real
property, (iv) is principally engaged in the holding of
stock in,
and/or the
financing of operations of, an Affiliated Entity, or (v) is
principally engaged in the business of (1) offering health
benefit products or (2) insuring against professional and
general liability risks of the Issuer.
Business Day means each day which is not a
Legal Holiday.
Capitalized Lease Obligation means, at the
time any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time
be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance
with GAAP.
Capital Stock means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
Cash Equivalents means:
(1) United States dollars;
(2) euros or any national currency of any participating
member state of the EMU or such local currencies held by the
Company and its Subsidiaries from time to time in the ordinary
course of business;
(3) securities issued or directly and fully and
unconditionally guaranteed or insured by the
U.S. government (or any agency or instrumentality thereof
the securities of which are unconditionally guaranteed as a full
faith and credit obligation of the U.S. government) with
maturities of 24 months or less from the date of
acquisition;
(4) certificates of deposit, time deposits and eurodollar
time deposits with maturities of one year or less from the date
of acquisition, bankers acceptances with maturities not
exceeding one year and overnight bank deposits, in each case
with any commercial bank having capital and surplus of not less
than $500.0 million in the case of U.S. banks and
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$100.0 million (or the U.S. dollar equivalent as of
the date of determination) in the case of
non-U.S. banks;
(5) repurchase obligations for underlying securities of the
types described in clauses (3) and (4) entered into
with any financial institution meeting the qualifications
specified in clause (4) above;
(6) commercial paper rated at least
P-1 by
Moodys or at least
A-1 by
S&P and in each case maturing within 24 months after
the date of creation thereof;
(7) marketable short-term money market and similar
securities having a rating of at least
P-2 or
A-2 from
either Moodys or S&P, respectively (or, if at any
time neither Moodys nor S&P shall be rating such
obligations, an equivalent rating from another Rating Agency)
and in each case maturing within 24 months after the date
of creation thereof;
(8) investment funds investing 95% of their assets in
securities of the types described in clauses (1) through
(7) above;
(9) readily marketable direct obligations issued by any
state, commonwealth or territory of the United States or any
political subdivision or taxing authority thereof having an
Investment Grade Rating from either Moodys or S&P
with maturities of 24 months or less from the date of
acquisition;
(10) Indebtedness or Preferred Stock issued by Persons with
a rating of A or higher from S&P or A2 or higher from
Moodys with maturities of 24 months or less from the
date of acquisition; and
(11) Investments with average maturities of 24 months
or less from the date of acquisition in money market funds rated
AAA- (or the equivalent thereof) or better by S&P or Aaa3
(or the equivalent thereof) or better by Moodys.
Notwithstanding the foregoing, Cash Equivalents shall include
amounts denominated in currencies other than those set forth in
clauses (1) and (2) above; provided that such
amounts are converted into any currency listed in
clauses (1) and (2) as promptly as practicable and in
any event within ten Business Days following the receipt of such
amounts.
Change of Control means the occurrence of any
of the following:
(1) the sale, lease or transfer, in one or a series of
related transactions, of all or substantially all of the assets
of the Issuer and its Subsidiaries, taken as a whole, to any
Person other than a Permitted Holder; or
(2) the Issuer becomes aware (by way of a report or any
other filing pursuant to Section 13(d) of the Exchange Act,
proxy, vote, written notice or otherwise) of the acquisition by
any Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the
meaning of Rule
13d-5(b)(1)
under the Exchange Act), other than the Permitted Holders, in a
single transaction or in a related series of transactions, by
way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of
Rule 13d-3
under the Exchange Act, or any successor provision) of 50% or
more of the total voting power of the Voting Stock of the Issuer
or any of its direct or indirect parent companies holding
directly or indirectly 100% of the total voting power of the
Voting Stock of the Issuer.
Code means the Internal Revenue Code of 1986,
as amended, or any successor thereto.
Consolidated Net Tangible Assets means, with
respect to any Person, the total amount of assets (less
applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities as
disclosed on the consolidated balance sheet of such Person
(excluding any thereof
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which 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
further excluding any deferred income taxes that are included in
current liabilities) and (b) 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 Issuer and computed in
accordance with generally accepted accounting principles.
Contingent Obligations means, with respect to
any Person, any obligation of such Person guaranteeing any
leases, dividends or other obligations that do not constitute
Indebtedness (primary obligations) of any other
Person (the primary obligor) in any manner, whether
directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent,
(1) to purchase any such primary obligation or any property
constituting direct or indirect security therefor,
(2) to advance or supply funds
(a) for the purchase or payment of any such primary
obligation, or
(b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, or
(3) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment
of such primary obligation against loss in respect thereof.
Default means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
EMU means the economic and monetary union as
contemplated in the Treaty on European Union.
Equity Interests means Capital Stock and all
warrants, options or other rights to acquire Capital Stock, but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock.
Exchange Act means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
Frist Entities means Dr. Thomas F.
Frist, Jr., any Person controlled by Dr. Frist and any
charitable organization selected by Dr. Frist that holds
Equity Interests of the Issuer on November 17, 2006.
Funded Debt means any Indebtedness for money
borrowed, created, issued, incurred, assumed or guaranteed that
would, in accordance with generally accepted accounting
principles, 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).
GAAP means generally accepted accounting
principles in the United States which were in effect on
November 17, 2006.
Hedging Obligations means, with respect to
any Person, the obligations of such Person under any interest
rate swap agreement, interest rate cap agreement, interest rate
collar agreement, commodity swap agreement, commodity cap
agreement, commodity collar agreement, foreign exchange
contract, currency swap agreement or similar agreement providing
for the transfer or mitigation of interest rate or currency
risks either generally or under specific contingencies.
Holder means the Person in whose name a Note
is registered on the registrars books.
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Indebtedness means, with respect to any
Person, without duplication:
(1) any indebtedness (including principal and premium) of
such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers acceptances
(or, without duplication, reimbursement agreements in respect
thereof);
(c) representing the balance deferred and unpaid of the
purchase price of any property (including Capitalized Lease
Obligations), except (i) any such balance that constitutes
a trade payable or similar obligation to a trade creditor, in
each case accrued in the ordinary course of business and
(ii) any earn-out obligations until such obligation becomes
a liability on the balance sheet of such Person in accordance
with GAAP; or
(d) representing any Hedging Obligations;
if and to the extent that any of the foregoing Indebtedness
(other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with
GAAP;
(2) to the extent not otherwise included, any obligation by
such Person to be liable for, or to pay, as obligor, guarantor
or otherwise on, the obligations of the type referred to in
clause (1) of a third Person (whether or not such items
would appear upon the balance sheet of the such obligor or
guarantor), other than by endorsement of negotiable instruments
for collection in the ordinary course of business; and
(3) to the extent not otherwise included, the obligations
of the type referred to in clause (1) of a third Person
secured by a Lien on any asset owned by such first Person,
whether or not such Indebtedness is assumed by such first Person;
provided, however, that notwithstanding the
foregoing, Indebtedness shall be deemed not to include
(a) Contingent Obligations incurred in the ordinary course
of business or (b) obligations under or in respect of
Receivables Facilities.
Investment Grade Rating means a rating equal
to or higher than Baa3 (or the equivalent) by Moodys and
BBB- (or the equivalent) by S&P, or an equivalent rating by
any other Rating Agency.
Investments means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding
accounts receivable, trade credit, advances to customers,
commissions, travel and similar advances to officers and
employees, in each case made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities issued by any
other Person and investments that are required by GAAP to be
classified on the balance sheet (excluding the footnotes) of the
Issuer in the same manner as the other investments included in
this definition to the extent such transactions involve the
transfer of cash or other property.
Investors means Bain Capital Partners, LLC,
Kohlberg Kravis Roberts & Co. L.P., BAML Capital
Partners, the successor organization to both Merrill Lynch
Global Private Equity, Inc. and Merrill Lynch Global Partners,
Inc., and each of their respective Affiliates but not including,
however, any portfolio companies of any of the foregoing.
Issue Date
means ,
2011.
Legal Holiday means a Saturday, a Sunday or a
day on which commercial banking institutions are not required to
be open in the State of New York.
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Lien means, with respect to any asset, any
mortgage, lien (statutory or otherwise), pledge, hypothecation,
charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction;
that in no event shall an operating lease be deemed to
constitute a Lien.
Moodys means Moodys Investors
Service, Inc. and any successor to its rating agency business.
Mortgages means mortgages, liens, pledges or
other encumbrances.
Obligations means any principal, interest
(including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable state, federal or foreign law), premium, penalties,
fees, indemnifications, reimbursements (including reimbursement
obligations with respect to letters of credit and bankers
acceptances), damages and other liabilities, and guarantees of
payment of such principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities,
payable under the documentation governing any Indebtedness.
Officer means the Chairman of the Board, the
Chief Executive Officer, the President, any Executive Vice
President, Senior Vice President or Vice President, the
Treasurer or the Secretary of the Issuer, the Parent Guarantor
or a Subsidiary, as applicable.
Officers Certificate means a
certificate signed on behalf of the Issuer by an Officer of the
Issuer, on behalf of the Parent Guarantor by an Officer of the
Parent Guarantor or on behalf of a Subsidiary by an Officer of
such Subsidiary, as applicable, that meets the requirements set
forth in the Indenture.
Opinion of Counsel means a written opinion
from legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Issuer or the Trustee.
Permitted Holders means each of the
Investors, the Frist Entities, members of management of the
Issuer (or its direct or indirect parent), Citigroup Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
successor by merger to Banc of America Securities LLC (which
institutions were assignees of certain equity commitments of the
Investors as of November 17, 2006), and each of their
respective Affiliates or successors, that are holders of Equity
Interests of the Issuer (or any of its direct or indirect parent
companies) and any group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act or any successor provision) of which any of the foregoing
are members; provided that, in the case of such group and
without giving effect to the existence of such group or any
other group, such Investors, Frist Entities, members of
management and assignees of the equity commitments of the
Investors, collectively, have beneficial ownership of more than
50% of the total voting power of the Voting Stock of the Issuer
or any of its direct or indirect parent companies.
Person means any individual, corporation,
limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
Preferred Stock means any Equity Interest
with preferential rights of payment of dividends or upon
liquidation, dissolution or winding up.
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 Issuer
and/or one
or more of its Subsidiaries and located in the United States of
America.
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Rating Agencies means Moodys and
S&P or if Moodys or S&P or both shall not make a
rating on the Notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be,
selected by the Issuer which shall be substituted for
Moodys or S&P or both, as the case may be.
Receivables Facility means any of one or more
receivables financing facilities as amended, supplemented,
modified, extended, renewed, restated or refunded from time to
time, the Obligations of which are non-recourse (except for
customary representations, warranties, covenants and indemnities
made in connection with such facilities) to the Issuer or any of
its Subsidiaries (other than a Receivables Subsidiary) pursuant
to which the Issuer or any of its Subsidiaries purports to sell
its accounts receivable to either (a) a Person that is not
a Subsidiary or (b) a Receivables Subsidiary that in turn
funds such purchase by purporting to sell its accounts
receivable to a Person that is not a Subsidiary or by borrowing
from such a Person or from another Receivables Subsidiary that
in turn funds itself by borrowing from such a Person.
Receivables Subsidiary means any Subsidiary
formed for the purpose of facilitating or entering into one or
more Receivables Facilities, and in each case engages only in
activities reasonably related or incidental thereto.
S&P means Standard &
Poors, a division of The McGraw-Hill Companies, Inc., and
any successor to its rating agency business.
Sale and Lease-Back Transaction means any
arrangement providing for the leasing by the Issuer or any of
its Subsidiaries for a period of more than three years of any
Principal Property, which property has been or is to be sold or
transferred by the Issuer or such Subsidiary to a third Person
in contemplation of such leasing.
SEC means the U.S. Securities and
Exchange Commission.
Subordinated Indebtedness means, with respect
to the Notes, (1) any Indebtedness of the Issuer which is
by its terms subordinated in right of payment to the Notes, and
(2) any Indebtedness of the Parent Guarantor which is by
its terms subordinated in right of payment to the Parent
Guarantee.
Subsidiary means, with respect to any Person:
(1) any corporation, association, or other business entity
(other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that
Person or a combination thereof or is consolidated under GAAP
with such Person at such time; and
(2) any partnership, joint venture, limited liability
company or similar entity of which more than 50% of the equity
ownership, whether in the form of membership, general, special
or limited partnership interests or otherwise, is owned or
controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person or a combination
thereof or is consolidated under GAAP with such Person at such
time;
provided, however, that for purposes of
Certain CovenantsLimitation on
Mortgages, Certain CovenantsLimitations
on Sale and Lease-Back and Certain
CovenantsExempted Transactions, any Person that is
an Affiliated Entity shall not be considered a Subsidiary.
Underwriters means Barclays Capital Inc. and
the other underwriters party to the underwriting agreement
related to the Notes.
Voting Stock of any Person as of any date
means the Capital Stock of such Person that is at the time
entitled to vote in the election of the board of directors of
such Person.
S-53
CERTAIN UNITED
STATES FEDERAL TAX CONSEQUENCES
The following is a summary of certain United States federal
income and, in the case of
non-U.S. holders
(as defined below), estate tax consequences of the purchase,
ownership and disposition of the notes as of the date of this
prospectus supplement. Unless otherwise stated, this summary
deals only with notes held as capital assets by persons who
purchase the notes for cash upon original issuance at their
issue price, which will be the first price at which
a substantial amount of that particular offering is sold to the
investors (excluding sales to bond houses, brokers or similar
persons or organizations acting in the capacity of underwriter,
placement agent or wholesaler).
As used herein, a U.S. holder means a
beneficial owner of the notes that is for United States federal
income tax purposes any of the following:
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an individual who is a citizen or resident of the United States;
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a corporation (or any other entity treated as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof or
the District of Columbia;
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an estate the income of which is subject to United States
federal income taxation regardless of its source; or
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a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more United States
persons have the authority to control all substantial decisions
of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a
United States person.
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Except as modified for estate tax purposes, the term
non-U.S. holder
means a beneficial owner of the notes (other than an entity
treated as a partnership for United States federal income tax
purposes) that is not a U.S. holder.
If any entity classified as a partnership for United States
federal income tax purposes holds notes, the tax treatment of a
partner will generally depend upon the status of the partner and
the activities of the partnership. If you are a partnership or a
partner in a partnership holding notes, you should consult your
own tax advisors.
This summary does not represent a detailed description of the
United States federal income tax consequences applicable to you
if you are a person subject to special tax treatment under the
United States federal income tax laws, including, without
limitation:
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a dealer in securities or currencies;
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a financial institution;
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a regulated investment company;
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a real estate investment trust;
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a tax-exempt organization;
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an insurance company;
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a person holding the notes as part of a hedging, integrated,
conversion or constructive sale transaction or a straddle;
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a trader in securities that has elected the
mark-to-market
method of accounting for your securities;
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a person liable for alternative minimum tax;
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a partnership or other pass-through entity for United States
federal income tax purposes (or an investor in such entities);
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S-54
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a U.S. holder whose functional currency is not
the U.S. dollar;
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a controlled foreign corporation;
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a passive foreign investment company; or
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a United States expatriate.
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This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), United States Treasury
regulations, administrative rulings and judicial decisions as of
the date hereof. Those authorities may be changed, possibly on a
retroactive basis, so as to result in United States federal
income and estate tax consequences different from those
summarized below. We have not and will not seek any rulings from
the Internal Revenue Service (IRS) regarding the
matters discussed below. There can be no assurance that the IRS
will not take positions concerning the tax consequences of the
purchase, ownership or disposition of the notes that are
different from those discussed below.
This summary does not represent a detailed description of the
United States federal income and estate tax consequences to you
in light of your particular circumstances and does not address
the effects of any state, local or
non-United
States tax laws. It is not intended to be, and should not be
construed to be, legal or tax advice to any particular purchaser
of notes. If you are considering the purchase of notes, you
should consult your own tax advisors concerning the particular
United States federal income and estate tax consequences to you
of the ownership of the notes, as well as the consequences to
you arising under other United States federal tax laws
(including the gift tax and the recently enacted Medicare tax on
certain investment income) and under the laws of any other
taxing jurisdiction.
Certain Tax
Consequences to U.S. Holders
The following is a summary of certain United States federal
income tax consequences that will apply to U.S. holders of
the notes.
Stated Interest. Stated interest on the notes
generally will be taxable to a U.S. holder as ordinary
income at the time it is received or accrued, depending on the
holders method of accounting for United States federal
income tax purposes.
Sale, Exchange, Retirement, or Other Disposition of
Notes. Upon the sale, exchange, retirement, redemption,
or other taxable disposition of a note, you generally will
recognize gain or loss equal to the difference between the
amount realized upon the sale, exchange, retirement, redemption
or other disposition (less an amount equal to any accrued and
unpaid stated interest, which will be taxable as interest income
as discussed above) and the adjusted tax basis of the note. Your
adjusted tax basis in a note will, in general, be your cost for
that note. Any gain or loss will be capital gain or loss.
Capital gains of noncorporate holders derived in respect of
capital assets held for more than one year are eligible for
reduced rates of taxation. The deductibility of capital losses
is subject to limitations.
Certain Tax
Consequences to
Non-U.S.
Holders
The following is a summary of certain United States federal
income and estate tax consequences that will apply to
non-U.S. holders
of the notes.
United States Federal Withholding Tax. The 30%
United States federal withholding tax will not apply to any
payment of interest on the notes under the portfolio
interest rule, provided that:
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interest paid on the notes is not effectively connected with
your conduct of a trade or business in the United States;
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you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and applicable United States
Treasury regulations;
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S-55
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you are not a controlled foreign corporation that is related to
us actually or constructively through stock ownership;
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you are not a bank whose receipt of interest on the notes is
described in Section 881(c)(3)(A) of the Code; and
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either (a) you provide your name and address on an IRS
Form W-8BEN
(or other applicable form), and certify, under penalties of
perjury, that you are not a United States person as defined
under the Code or (b) you hold your notes through certain
foreign intermediaries and satisfy the certification
requirements of applicable United States Treasury regulations.
Special certification rules apply to
non-U.S. holders
that are pass-through entities rather than corporations or
individuals.
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If you cannot satisfy the requirements described above, payments
of interest made to you will be subject to the 30% United States
federal withholding tax, unless you provide us with a properly
executed:
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IRS
Form W-8BEN
(or other applicable form) certifying an exemption from or
reduction in withholding under the benefit of an applicable
income tax treaty; or
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IRS
Form W-8ECI
(or other applicable form) certifying interest paid on the notes
is not subject to withholding tax because it is effectively
connected with your conduct of a trade or business in the United
States (as discussed below under United States
Federal Income Tax).
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The 30% United States federal withholding tax generally will not
apply to any payment of principal or gain that you realize on
the sale, exchange, retirement, redemption or other disposition
of a note.
United States Federal Income Tax. If you are engaged
in a trade or business in the United States and interest on the
notes is effectively connected with the conduct of that trade or
business (and, if required by an applicable income tax treaty,
is attributable to a United States permanent establishment),
then you will be subject to United States federal income tax on
that interest on a net income basis in generally the same manner
as if you were a United States person as defined under the Code.
In addition, if you are a foreign corporation, you may be
subject to a branch profits tax equal to 30% (or a lower
applicable income tax treaty rate) of your effectively connected
earnings and profits, subject to adjustments. If interest
received with respect to the notes is effectively connected
income (whether or not a treaty applies), the 30% withholding
tax described above will not apply, provided the certification
requirements discussed above in United States
Federal Withholding Tax are satisfied.
Subject to the discussion of backup withholding below, any gain
realized on the disposition of a note generally will not be
subject to United States federal income tax unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment), in which case you will be taxed in the
same manner as discussed above with respect to effectively
connected interest; or
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you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met, in which case you will be
subject to a flat 30% United States federal income tax on any
gain recognized (except as otherwise provided by an applicable
income tax treaty), which may be offset by certain United States
source losses.
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United States Federal Estate Tax. If you are an
individual who is neither a citizen nor a resident of the United
States (as specifically defined for estate tax purposes), your
estate will not be subject to United States federal estate tax
on notes beneficially owned by you (or treated as so owned) at
the time of your death, provided that any interest payment to
you on the notes would be eligible for
S-56
exemption from the 30% United States federal withholding tax
under the portfolio interest rule described above
under United States Federal Withholding Tax
without regard to the statement requirement described in the
fifth bullet point of that section.
Information
Reporting and Backup Withholding
U.S. Holders. In general, information reporting
requirements will apply to certain payments of interest on the
notes and the proceeds of the sale or other disposition
(including a retirement or redemption) of a note paid to you
(unless you are an exempt recipient such as a corporation).
Backup withholding (currently at a rate of 28%, increasing to
31% in 2013) may apply to such payments if you fail to
provide a taxpayer identification number or a certification that
you are not subject to backup withholding or if you are subject
to backup withholding because you previously failed to report in
full dividend and interest income.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be allowed as a
refund or a credit against your United States federal income tax
liability provided the required information is timely furnished
to the IRS.
Non-U.S.
Holders. Generally, we must report to the IRS and to
you the amount of interest paid to you and the amount of tax, if
any, withheld with respect to those payments. Copies of the
information returns reporting such interest payments and any
withholding may also be made available to the tax authorities in
the country in which you reside under the provisions of an
applicable income tax treaty.
In general, you will not be subject to backup withholding with
respect to payments of interest on the notes that we make to you
provided that we do not have actual knowledge or reason to know
that you are a United States person as defined under the Code,
and we have received from you the required certification that
you are a
non-U.S. holder
described above in the fifth bullet point under
Certain Tax Consequences to
Non-U.S. HoldersUnited
States Federal Withholding Tax.
Information reporting and, depending on the circumstances,
backup withholding will apply to the proceeds of a sale or other
disposition (including a retirement or redemption) of notes
within the United States or conducted through certain United
States-related financial intermediaries, unless you certify to
the payer under penalties of perjury that you are a
non-U.S. holder
(and the payer does not have actual knowledge or reason to know
that you are a United States person as defined under the Code),
or you otherwise establish an exemption.
Backup withholding is not an additional tax and any amounts
withheld under the backup withholding rules may be allowed as a
refund or a credit against your United States federal income tax
liability provided the required information is timely furnished
to the IRS.
S-57
CERTAIN ERISA
CONSIDERATIONS
The following is a summary of certain considerations associated
with the purchase of the notes by employee benefit plans that
are subject to Title I of ERISA, plans, individual
retirement accounts and other arrangements that are subject to
Section 4975 of the Code or provisions under any federal,
state, local,
non-U.S. or
other laws, rules or regulations that are similar to such
provisions of ERISA or the Code (collectively, Similar
Laws), and entities whose underlying assets are considered
to include plan assets of any such plan, account or
arrangement (each, a Plan).
General Fiduciary
Matters
ERISA and the Code impose certain duties on persons who are
fiduciaries of a Plan subject to Title I of ERISA or
Section 4975 of the Code (an ERISA Plan) and
prohibit certain transactions involving the assets of an ERISA
Plan and its fiduciaries or other interested parties. Under
ERISA and the Code, any person who exercises any discretionary
authority or control over the administration of such an ERISA
Plan or the management or disposition of the assets of such an
ERISA Plan, or who renders investment advice for a fee or other
compensation to such an ERISA Plan, is generally considered to
be a fiduciary of the ERISA Plan.
In considering an investment in the notes of a portion of the
assets of any Plan, a fiduciary should determine whether the
investment is in accordance with the documents and instruments
governing the Plan and the applicable provisions of ERISA, the
Code and any Similar Law relating to a fiduciarys duties
to the Plan including, without limitation, the prudence,
diversification, delegation of control and prohibited
transaction provisions of ERISA, the Code and any other
applicable Similar Laws.
Prohibited
Transaction Issues
Section 406 of ERISA and Section 4975 of the Code
prohibit ERISA Plans from engaging in specified transactions
involving plan assets with persons or entities who are
parties in interest, within the meaning of ERISA, or
disqualified persons, within the meaning of
Section 4975 of the Code, unless an exemption is available.
A party in interest or disqualified person who engages in a
non-exempt prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code. In
addition, the fiduciary of the ERISA Plan that engages in such a
non-exempt prohibited transaction may be subject to penalties
and liabilities under ERISA and the Code. The acquisition
and/or
holding of notes by an ERISA Plan with respect to which we or
the underwriters are considered a party in interest or
disqualified person may constitute or result in a direct or
indirect prohibited transaction under Section 406 of ERISA
and/or
Section 4975 of the Code, unless the investment is acquired
and is held in accordance with an applicable statutory, class or
individual prohibited transaction exemption. In this regard, the
United States Department of Labor has issued prohibited
transaction class exemptions (PTCEs) that may apply
to the acquisition and holding of the notes. These class
exemptions include, without limitation,
PTCE 84-14
respecting transactions determined by independent qualified
professional asset managers,
PTCE 90-1,
respecting insurance company pooled separate accounts,
PTCE 91-38,
respecting bank collective investment funds,
PTCE 95-60
respecting life insurance company general accounts and
PTCE 96-23
respecting transactions determined by in-house asset managers,
although there can be no assurance that all of the conditions of
any such exemptions will be satisfied.
In addition to the foregoing, the Pension Protection Act of 2006
provides a statutory exemption (Section 408(b)(17) of ERISA
and Section 4975(d)(20) of the Code) for transactions
between an ERISA Plan and a person that is a party in interest
and/or a
disqualified person (other than a fiduciary or an affiliate
that, directly or indirectly, has or exercises discretionary
authority or control or renders investment advice with respect
to the assets involved in the transaction) solely by reason of
providing services to the Plan or by relationship to a service
provider, provided that the ERISA Plan fiduciary has made a
determination that there is adequate consideration for the
transaction.
S-58
Because of the foregoing, the notes should not be purchased or
held by any person investing plan assets of any
Plan, unless such purchase and holding will not constitute a
non-exempt prohibited transaction under ERISA and the Code or a
similar violation of any applicable Similar Laws.
Representation
Accordingly, by acceptance of a note, or any interest therein,
each purchaser and subsequent transferee will be deemed to have
represented and warranted that either (i) no portion of the
assets used by such purchaser or transferee to acquire or hold
the notes constitutes assets of any Plan or (ii) the
acquisition and holding of the notes by such purchaser or
transferee will not constitute a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975
of the Code or similar violation under any applicable Similar
Laws.
The foregoing discussion is general in nature and is not
intended to be all-inclusive. Due to the complexity of these
rules and the penalties that may be imposed upon persons
involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons
considering acquiring the notes on behalf of, or with the assets
of, any Plan, consult with their counsel regarding the potential
applicability of ERISA, Section 4975 of the Code and any
Similar Laws to such investment and whether an exemption would
be applicable to the purchase and holding of the notes.
S-59
UNDERWRITING
Subject to the terms and conditions in the underwriting
agreement between us and the underwriters, for whom Barclays
Capital Inc., Deutsche Bank Securities Inc., Goldman, Sachs
& Co., Morgan Stanley & Co. LLC, RBC Capital Markets,
LLC and Wells Fargo Securities, LLC are acting as
representatives, we have agreed to sell to each underwriter, and
each underwriter has agreed to purchase from us, the principal
amount of notes that appears opposite its name in the table
below:
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Underwriter
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Principal Amount of Notes
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Barclays Capital Inc.
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$
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Deutsche Bank Securities Inc.
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$
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Goldman, Sachs & Co.
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$
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Morgan Stanley & Co. LLC
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$
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RBC Capital Markets, LLC
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$
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Wells Fargo Securities, LLC
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$
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Credit Agricole Securities (USA) Inc.
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$
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Credit Suisse Securities (USA) LLC
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$
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Mizuho Securities USA Inc.
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$
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SunTrust Robinson Humphrey, Inc.
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$
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Total
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$
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500,000,000
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The obligations of the underwriters under the underwriting
agreement, including the agreement to purchase notes from us are
several and not joint. The underwriting agreement provides that
the underwriters will have agreed to purchase all of the notes
if any of them are purchased.
The underwriters initially propose to offer the notes to the
public at the public offering price that appears on the cover
page of this prospectus supplement. The underwriters may offer
the notes to selected dealers at the public offering price minus
a concession of up to % of the
principal amount. In addition, the underwriters may allow, and
those selected dealers may reallow, a concession of up
to % of the principal amount to
certain other dealers. After the initial offering, the
underwriters may change the public offering price and any other
selling terms. The underwriters may offer and sell notes through
certain of their affiliates. The offering of the notes by the
underwriters is subject to receipt and acceptance and subject to
the underwriters right to reject any order in whole or in
part.
The underwriting discounts and commissions to be paid to the
underwriters in connection with this offering (expressed as a
percentage of the principal amount of the notes) are equal
to % per note.
In the underwriting agreement, we have agreed that:
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We will not offer or sell any of our debt securities (other than
the notes) for a period of 30 days after the date of this
prospectus supplement without the prior consent of Barclays
Capital Inc.
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We will pay our expenses related to the offering.
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We will indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act, or
contribute to payments that the underwriters may be required to
make in respect of those liabilities.
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The underwriters also may impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because a particular
underwriter or its affiliates have repurchased notes sold by or
for the account of such other underwriter in stabilizing or
short covering transactions.
S-60
The notes are a new issue of securities with no established
trading market. We do not intend to apply for the notes to be
listed on any securities exchange or to arrange for the notes to
be quoted on any quotation system. The underwriters have advised
us that they intend to make a market in the notes. However, they
are not obligated to do so and they may discontinue any market
making at any time in their sole discretion. Therefore, we
cannot assure you that a liquid trading market will develop for
the notes, that you will be able to sell your notes at a
particular time or that the prices that you receive when you
sell will be favorable.
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), with effect from and
including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the Relevant
Implementation Date), each underwriter has not made and
will not make an offer of notes to the public in that Relevant
Member State other than:
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to any legal entity which is a qualified investor as defined in
the Prospectus Directive;
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to fewer than 100 or, if the Relevant Member State has
implemented the relevant provision of the 2010 PD Amending
Directive, 150, natural or legal persons (other than qualified
investors as defined in the Prospectus Directive), as permitted
under the Prospectus Directive, subject to obtaining the prior
consent of the relevant dealer or dealers nominated by the
Company for any such offer; or
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in any other circumstances falling within Article 3(2) of
the Prospectus Directive,
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provided that no such offer of notes shall require the Company
or any underwriter to publish a prospectus pursuant to
Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an
offer of notes to the public in relation to any
notes in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the notes to be offered so as to enable an
investor to decide to purchase or subscribe the notes, as the
same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State, the
expression Prospectus Directive means Directive
2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive, to the extent implemented in the Relevant
Member State), and includes any relevant implementing measure in
the Relevant Member State and the expression 2010 PD
Amending Directive means Directive 2010/73/EU.
Each underwriter has only communicated or caused to be
communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the United
Kingdom Financial Services and Markets Act 2000 (the
FSMA)) received by it in connection with the issue
or sale of the notes in circumstances in which
Section 21(1) of the FSMA does not apply to the Issuer or
HCA Holdings, Inc.; and each underwriter has complied and will
comply with all applicable provisions of the FSMA with respect
to anything done by it in relation to the notes in, from or
otherwise involving the United Kingdom.
In connection with the offering of the notes, the underwriters
may engage in over allotments, stabilizing transactions and
syndicate covering transactions in accordance with
Regulation M under the Securities Exchange Act of 1934 (the
Exchange Act). Over allotment involves sales in
excess of the offering size, which creates a short position for
the underwriter. Stabilizing transactions involve bids to
purchase the notes in the open market for the purpose of
pegging, fixing or maintaining the price of the notes, as
applicable. Syndicate covering transactions involve purchases of
the notes in the open market after the distribution has been
completed in order to cover short positions. Stabilizing
transactions and syndicate covering transactions may have the
effect of preventing or retarding a decline in the market price
of the notes or cause the price of the notes to be higher than
it would otherwise be in the absence of those transactions. If
any of the underwriters engages in stabilizing or syndicate
covering transactions, it may discontinue them at any time.
S-61
The underwriters and their respective affiliates are full
service financial institutions engaged in various activities,
which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment
research, principal investment, hedging, financing and brokerage
activities. Certain of the underwriters and their respective
affiliates have, from time to time, performed, and may in the
future perform, various financial advisory, investment banking,
commercial banking and other services for us for which they
received or will receive customary fees and expenses. In
addition, certain of the underwriters or their affiliates have
in the past sold or leased, and may in the future sell or lease,
equipment to us in the ordinary course of business. Furthermore,
certain of the underwriters and their respective affiliates may,
from time to time, enter into arms-length transactions with us
in the ordinary course of their business. If any of the
underwriters or their affiliates has a lending relationship with
us, certain of those underwriters or their affiliates routinely
hedge, and certain other of those underwriters or their
affiliates may hedge, their credit exposure to us consistent
with their customary risk management policies. Typically, these
underwriters and their affiliates would hedge such exposure by
entering into transactions which consist of either the purchase
of credit default swaps or the creation of short positions in
our securities, including potentially the notes offered hereby.
Any such credit default swaps or short positions could adversely
affect future trading prices of the notes offered hereby.
In the ordinary course of their various business activities, the
underwriters and their respective affiliates may make or hold a
broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial
instruments (including bank loans) for their own account and for
the accounts of their customers, and such investment and
securities activities may involve securities
and/or
instruments of the issuer. The underwriters and their respective
affiliates may also make investment recommendations
and/or
publish or express independent research views in respect of such
securities or instruments and may at any time hold, or recommend
to clients that they acquire, long
and/or short
positions in such securities and instruments. Affiliates of
certain of the underwriters that are lenders
and/or
agents under our senior secured credit facilities received fees
in connection with the amendments to the senior secured credit
facilities. Certain of the underwriters also acted as
underwriters or initial purchasers in connection with the
issuance of our outstanding notes or our initial public offering
and received customary placement fees in connection therewith.
S-62
LEGAL
MATTERS
Certain legal matters in connection with the offering will be
passed upon for us by Simpson Thacher & Bartlett
LLP, New York, New York, and certain regulatory matters will be
passed upon for us by Bass, Berry & Sims PLC,
Nashville, Tennessee. Certain legal matters in connection with
the offering will be passed upon for the underwriters by Cahill
Gordon & Reindel
llp, New York, New
York. An investment vehicle comprised of several partners of
Simpson Thacher & Bartlett LLP, members of their
families, related persons and others own interests representing
less than 1% of the capital commitments of the KKR Millennium
Fund, L.P. and KKR 2006 Fund L.P.
EXPERTS
The consolidated financial statements of HCA Holdings, Inc.
included in HCA Holdings, Inc.s Current Report on
Form 8-K
dated July 26, 2011, and the effectiveness of HCA Holdings,
Inc.s internal control over financial reporting as of
December 31, 2010, have been audited by Ernst &
Young LLP, independent registered public accounting firm, as set
forth in its reports thereon, included therein, and incorporated
herein by reference. Such consolidated financial statements and
HCA Holdings, Inc. managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2010 are incorporated herein by reference in
reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
AVAILABLE
INFORMATION
HCA Holdings, Inc. files certain reports with the SEC, including
annual reports on
Form 10-K,
quarterly reports on
Form 10-Q
and current reports on
Form 8-K.
You may read and copy any materials filed with the SEC at the
SECs Public Reference Room at 100 F Street,
N.E., Washington, DC 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
HCA Holdings, Inc. is an electronic filer, and the SEC maintains
an Internet site at
http://www.sec.gov
that contains the reports and other information filed
electronically. Our website address is www.hcahealthcare.com.
Please note that our website address is provided as an inactive
textual reference only. We make available free of charge,
through our website, HCA Holdings, Inc.s annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and all amendments to those reports, together with all other
materials HCA Holdings, Inc. files with or furnish to the SEC,
as soon as reasonably practicable after such material is
electronically filed with or furnished to the SEC. The
information provided on or accessible through our website is not
part of this prospectus supplement, and is therefore not
incorporated by reference unless such information is
specifically referenced elsewhere in this prospectus supplement.
You should rely only upon the information provided or
incorporated by reference in this prospectus supplement. We have
not authorized anyone to provide you with different information.
You should not assume that the information provided or
incorporated by reference in this prospectus supplement is
accurate as of any date other than the date of this prospectus
supplement.
This prospectus supplement contains or incorporates by reference
summaries of certain agreements, including the indenture
governing the notes offered hereby, HCA Inc.s senior
secured credit facilities and certain other agreements. The
descriptions of these agreements contained or incorporated by
reference in this prospectus supplement do not purport to be
complete and are subject to, or qualified in their entirety by
reference to, the definitive agreements. Copies of the
definitive agreements will be made available without charge to
you in response to a written or oral request to us.
S-63
PROSPECTUS
HCA Holdings, Inc.
HCA Inc.
Debt Securities
HCA Holdings, Inc. may, from time to time, offer to sell debt
securities, which may or may not be guaranteed by one or more of
the subsidiaries identified in this prospectus.
HCA Inc. may, from time to time, offer to sell debt securities,
which would be guaranteed by HCA Holdings, Inc. and may or may
not be guaranteed by one or more of the subsidiaries identified
in this prospectus.
This prospectus describes some of the general terms that may
apply to these debt securities. We will provide the specific
terms of these debt securities in prospectus supplements to this
prospectus.
We may offer and sell these debt securities to or through one or
more underwriters, dealers and agents or directly to purchasers,
on a continuous or delayed basis.
Investing in our debt securities involves risks. You should
consider the risk factors described in any accompanying
prospectus supplement or any documents we incorporate by
reference.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
This prospectus is dated July 26, 2011
You should rely only on the information contained or
incorporated by reference in this prospectus, in any
accompanying prospectus supplement or in any free writing
prospectus filed by us with the Securities and Exchange
Commission (the SEC). We have not authorized any
other person to provide you with different information. If
anyone provides you with different or inconsistent information,
you should not rely on it. You should not assume that the
information contained or incorporated by reference in this
prospectus and any prospectus supplement or in any such free
writing prospectus is accurate as of any date other than the
respective dates thereof. Our business, financial condition,
results of operations and prospects may have changed since those
dates.
TABLE OF
CONTENTS
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ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the SEC under the Securities Act of 1933, as amended
(the Securities Act), utilizing a shelf
registration process. Under this shelf registration process, we
may, from time to time, sell in one or more offerings any of our
debt securities described in this prospectus.
This prospectus provides you with a general description of the
debt securities that we may offer. Each time we sell debt
securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering,
including the specific amounts, prices and terms of the
securities offered. The prospectus supplement may also add,
update or change information contained in this prospectus.
You should carefully read both this prospectus and any
prospectus supplement, together with additional information
described under the heading Where You Can Find More
Information and Incorporation By Reference.
As used herein, unless otherwise stated or indicated by context,
references to (i) HCA Holdings, Inc. refer to HCA
Holdings, Inc., parent of HCA Inc., and its affiliates and
(ii) the Company, HCA,
we, our or us refer to HCA
Inc. and its affiliates prior to the Corporate Reorganization
(as defined herein) and to HCA Holdings, Inc. and its affiliates
upon the consummation of the Corporate Reorganization. The term
affiliates means direct and indirect subsidiaries
and partnerships and joint ventures in which such subsidiaries
are partners. The terms facilities or
hospitals refer to entities owned and operated by
affiliates of HCA and the term employees refers to
employees of affiliates of HCA. With respect to debt securities,
the term issuer means either HCA Holdings, Inc. or
HCA Inc. depending on which registrant is offering the debt
securities. The term issuers is a collective
reference to HCA Holdings, Inc. and HCA Inc.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. The public may read and copy
any materials filed with the SEC at the SECs Public
Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC
at
1-800-SEC-0330.
Also, the SEC maintains an Internet web site that contains
reports, proxy and information statements, and other information
regarding issuers, including us, that file electronically with
the SEC. The public can obtain any documents that we file
electronically with the SEC at
http://www.sec.gov.
We also make available, free of charge, on or through our
Internet web site
(http://www.hcahealthcare.com)
our Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
Proxy Statements on Schedule 14A and, if applicable
amendments to those reports filed or furnished pursuant to
Section 13(a) of the Securities Exchange Act of 1934, as
amended (the Exchange Act), as soon as reasonably
practicable after we electronically file such material with, or
furnish it to, the SEC. Please note, however, that we have not
incorporated any other information by reference from our
Internet web site, other than the documents listed under the
heading Incorporation by Reference.
We have filed with the SEC a registration statement on
Form S-3
relating to the debt securities covered by this prospectus. This
prospectus is a part of the registration statement and does not
contain all the information in the registration statement.
Whenever a reference is made in this prospectus to a contract or
other document of ours, the reference is only a summary and you
should refer to the exhibits that are a part of the registration
statement for a copy of the contract or other document. You may
review a copy of the registration statement and the documents
incorporated by reference herein at the SECs Public
Reference Room in Washington, D.C., as well as through the
SECs Internet web site referenced above.
INCORPORATION
BY REFERENCE
The SEC allows us to incorporate by reference information into
this prospectus. This means that we can disclose important
information to you by referring you to another document. Any
information referred to in this way is considered part of this
prospectus from the date we file that document. Any reports
filed by us with the SEC after the date of this prospectus and
before the date that the offering of the debt securities by
1
means of this prospectus is terminated will automatically update
and, where applicable, supersede any information contained in
this prospectus or incorporated by reference in this prospectus.
This prospectus incorporates by reference the documents listed
below that HCA Holdings, Inc. has previously filed with the SEC.
These documents contain important information about us. Any
information referred to in this way is considered part of this
prospectus from the date HCA Holdings, Inc. filed that document.
We incorporate by reference the documents listed below:
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HCA Holdings, Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2010
(SEC File No. 001-11239);
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HCA Holdings, Inc.s Quarterly Report on
Form 10-Q
for the period ended March 31, 2011
(SEC File No. 001-11239);
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HCA Holdings, Inc.s Current Reports on
Form 8-K,
filed on February 11, 2011, March 16, 2011,
April 5, 2011, May 4, 2011, May 9, 2011,
July 12, 2011 and July 26, 2011 (other than
information furnished pursuant to Item 2.02 or
Item 7.01 of any Current Report on
Form 8-K,
unless expressly stated otherwise therein); and
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All documents filed by HCA Holdings, Inc. under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this prospectus supplement and before the
termination of the offering to which this prospectus supplement
relates (other than information furnished pursuant to
Item 2.02 or Item 7.01 of any Current Report on Form
8-K, unless
expressly stated otherwise therein).
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In reviewing any agreements incorporated by reference, please
remember that they are included to provide you with information
regarding the terms of such agreements and are not intended to
provide any other factual or disclosure information about HCA
Inc. or HCA Holdings, Inc. The agreements may contain
representations and warranties by HCA Inc. or HCA Holdings, Inc.
which should not in all instances be treated as categorical
statements of fact, but rather as a way of allocating the risk
to one of the parties if those statements prove to be
inaccurate. The representations and warranties were made only as
of the date of the relevant agreement or such other date or
dates as may be specified in such agreement and are subject to
more recent developments. Accordingly, these representations and
warranties alone may not describe the actual state of affairs as
of the date they were made or at any other time.
We will provide without charge to each person to whom this
prospectus is delivered, upon his or her written or oral
request, a copy of any or all documents referred to above which
have been or may be incorporated by reference into this
prospectus, excluding exhibits to those documents unless they
are specifically incorporated by reference into those documents.
You may request copies of those documents, at no cost, by
writing or calling us at the following address or telephone
number:
Corporate Secretary
HCA Holdings, Inc.
One Park Plaza
Nashville, Tennessee 37203
(615) 344-9551
FORWARD-LOOKING
STATEMENTS
Some of the information included or incorporated by reference in
this prospectus and the applicable prospectus supplement contain
forward-looking statements. Forward-looking
statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of
words like may, believe,
will, expect, project,
estimate, anticipate, plan,
initiative or continue. These
forward-looking statements are based on our current plans and
expectations and are subject to a number of known and unknown
uncertainties and risks, many of which are beyond our control,
which could significantly affect current
2
plans and expectations and our future financial position and
results of operations. These factors include, but are not
limited to:
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the impact of our substantial indebtedness and the ability to
refinance such indebtedness on acceptable terms;
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the effects related to the enactment and implementation of the
Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act (collectively, the
Health Reform Law), the possible enactment of
additional federal or state health care reforms and possible
changes to the Health Reform Law and other federal, state or
local laws or regulations affecting the health care industry;
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increases in the amount and risk of collectibility of uninsured
accounts and deductibles and copayment amounts for insured
accounts;
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the ability to achieve operating and financial targets, and
attain expected levels of patient volumes and control the costs
of providing services;
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possible changes in the Medicare, Medicaid and other state
programs, including Medicaid supplemental payments pursuant to
upper payment limit (UPL) programs, that may impact
reimbursements to health care providers and insurers;
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the highly competitive nature of the health care business;
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changes in revenue mix, including potential declines in the
population covered under managed care agreements and the ability
to enter into and renew managed care provider agreements on
acceptable terms;
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the efforts of insurers, health care providers and others to
contain health care costs;
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the outcome of our continuing efforts to monitor, maintain and
comply with appropriate laws, regulations, policies and
procedures;
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increases in wages and the ability to attract and retain
qualified management and personnel, including affiliated
physicians, nurses and medical and technical support personnel;
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the availability and terms of capital to fund the expansion of
our business and improvements to our existing facilities;
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changes in accounting practices;
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changes in general economic conditions nationally and regionally
in our markets;
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future divestitures which may result in charges and possible
impairments of long-lived assets;
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changes in business strategy or development plans;
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delays in receiving payments for services provided;
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the outcome of pending and any future tax audits, appeals and
litigation associated with our tax positions;
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potential adverse impact of known and unknown government
investigations, litigation and other claims that may be made
against us;
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our ability to demonstrate meaningful use of certified
electronic health record technology and recognize revenues for
the related Medicare or Medicaid incentive payments; and
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other risk factors described in this prospectus.
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All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are
expressly qualified in their entirety by these cautionary
statements.
We caution you that the important factors discussed above may
not contain all of the material factors that are important to
you. The forward-looking statements included in this prospectus
are made only as of the date hereof. We undertake no obligation
to publicly update or revise any forward-looking statement as a
result of new information, future events or otherwise, except as
otherwise required by law.
3
OUR
COMPANY
We are the largest non-governmental hospital operator in the
U.S. and a leading comprehensive, integrated provider of
health care and related services. We provide these services
through a network of acute care hospitals, outpatient
facilities, clinics and other patient care delivery settings. As
of March 31, 2011, we operated a diversified portfolio of
163 hospitals (with approximately 41,000 beds) and 107
freestanding surgery centers across 20 states throughout
the U.S. and in England. As a result of our efforts to
establish significant market share in large and growing urban
markets with attractive demographic and economic profiles, we
currently have a substantial market presence in 14 of the top 25
fastest growing markets with populations greater than 500,000 in
the U.S. and currently maintain the first or second
position, based on inpatient admissions, in many of our key
markets. We believe our ability to successfully position and
grow our assets in attractive markets and execute our operating
plan has contributed to the strength of our financial
performance over the last several years. For the three months
ended March 31, 2011, we generated revenues of
$8.055 billion, net income attributable to HCA Holdings,
Inc. of $240 million and Adjusted EBITDA of
$1.590 billion.
Our patient-first strategy is to provide high quality health
care services in a cost-efficient manner. We intend to build
upon our history of profitable growth by maintaining our
dedication to quality care, increasing our presence in key
markets through organic expansion and strategic acquisitions and
joint ventures, leveraging our scale and infrastructure, and
further developing our physician and employee relationships. We
believe pursuing these core elements of our strategy helps us
develop a faster-growing, more stable and more profitable
business and increases our relevance to patients, physicians,
payers and employers.
Using our scale, significant resources and over 40 years of
operating experience, we have developed a significant management
and support infrastructure. Some of the key components of our
support infrastructure include a revenue cycle management
organization, a health care group purchasing organization, an
information technology and services provider, a nurse staffing
agency and a medical malpractice insurance underwriter. These
shared services have helped us to maximize our cash collection
efficiency, achieve savings in purchasing through our scale,
more rapidly deploy information technology upgrades, more
effectively manage our labor pool and achieve greater stability
in malpractice insurance premiums. Collectively, these
components have helped us to further enhance our operating
effectiveness, cost efficiency and overall financial results. We
have also created a subsidiary that offers certain of these
component services to other health care companies.
Since the founding of our business in 1968 as a single-facility
hospital company, we have demonstrated an ability to
consistently innovate and sustain growth during varying economic
and regulatory climates. Under the leadership of an experienced
senior management team, whose tenure at HCA averages over
20 years, we have established an extensive record of
providing high quality care, profitably growing our business,
making and integrating strategic acquisitions and efficiently
and strategically allocating capital spending.
On November 17, 2006, HCA Inc. was acquired by a private
investor group comprised of affiliates of or funds sponsored by
Bain Capital Partners, LLC (Bain Capital), Kohlberg
Kravis Roberts & Co. (KKR), Merrill Lynch
Global Private Equity (MLGPE), now BAML Capital
Partners (each a Sponsor), Citigroup Inc., Bank of
America Corporation (the Sponsor Assignees) and HCA
founder Dr. Thomas F. Frist, Jr. (the Frist
Entities), a group we collectively refer to as the
Investors, and by members of management and certain
other investors. We refer to the merger, the financing
transactions related to the merger and other related
transactions collectively as the Recapitalization.
On November 22, 2010, HCA Inc. reorganized by creating a
new holding company structure (the Corporate
Reorganization), pursuant to which HCA Holdings, Inc.
became the parent company of HCA Inc., and HCA Inc. became HCA
Holdings, Inc.s wholly-owned direct subsidiary. As part of
the Corporate Reorganization, HCA Inc.s outstanding shares
of capital stock were automatically converted, on a share for
share basis, into identical shares of HCA Holdings, Inc.s
common stock, and HCA Holdings, Inc. became a guarantor but did
not assume the debt of HCA Inc.s outstanding secured notes.
4
RISK
FACTORS
Our business is subject to numerous risks, including those that
are generally associated with operating in the health care
industry. You should carefully consider and evaluate all of the
information included and incorporated by reference in this
prospectus, including the risk factors incorporated by reference
to our Annual Report on
Form 10-K
for the year ended December 31, 2010, as well as any risk
factors we may describe in any subsequent periodic reports or
information we file with the SEC. It is possible that our
business, financial condition, liquidity or results of
operations could be materially adversely affected by any of
these risks.
USE OF
PROCEEDS
Except as otherwise set forth in a prospectus supplement, we
intend to use the net proceeds from sales of the debt securities
for general corporate purposes, which may include the following:
refunding, repurchasing, retiring upon maturity or redeeming
existing debt; funding for working capital; capital
expenditures; repurchases of our capital stock; and strategic
investments and acquisitions.
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratio of our
earnings to our fixed charges for the periods indicated.
The following table sets forth our historical ratios of earnings
available for fixed charges to fixed charges for the periods
indicated. This information should be read in conjunction with
the consolidated financial statements and the accompanying notes
incorporated by reference in this prospectus.
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Three Months Ended
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Year Ended December 31,
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March 31,
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March 31,
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2011
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2010
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2010
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2009
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2008
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2007
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2006
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Ratio of earnings to fixed charges(1)
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1.89
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2.21
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1.97
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1.91
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1.52
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1.57
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2.61
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For purposes of calculating the ratio of earnings to fixed
charges, earnings represents earnings before income tax expense,
and net income attributable to noncontrolling interests, plus
fixed charges; and fixed charges include: (a) interest
expense; (b) amortization of capitalized expenses related
to debt; and (c) the portion of rental expense which
management believes is representative of the interest component
of rent expense. |
5
DESCRIPTION
OF DEBT SECURITIES AND GUARANTEES
Please note that in this section entitled Description of
Debt Securities and Guarantees, references to HCA
Holdings, Inc. refer only to HCA Holdings, Inc. and not to any
of its subsidiaries. References to HCA Inc. refer only to HCA
Inc. and not to any of its subsidiaries. The term
issuer means either HCA Holdings, Inc.
or HCA Inc., depending on which registrant is offering the debt
securities and the term issuers is a collective
reference to HCA Holdings, Inc. and HCA Inc.
HCA Holdings, Inc. may issue debt securities. The debt
securities will be HCA Holdings, Inc.s unsubordinated and,
unless otherwise expressly stated in the applicable prospectus
supplement, unsecured obligations and may be issued in one or
more series. HCA Inc. may also issue debt securities. The debt
securities will be HCA Inc.s unsubordinated and, unless
otherwise expressly stated in the applicable prospectus
supplement, unsecured obligations and may be issued in one or
more series. The debt securities of any series of the applicable
issuer may have the benefit of guarantees (each, a
Guarantee), by one or more of its subsidiaries
(each, a Guarantor). In the case of HCA Inc., the
debt securities will be guaranteed by HCA Holdings, Inc., its
direct parent. The Guarantees will be the unsubordinated and,
unless otherwise expressly stated in the applicable prospectus
supplement, unsecured obligations of the respective Guarantors.
If so indicated in the applicable prospectus supplement, the
issuers may issue debt securities that are secured by specified
collateral or that have the benefit of one or more Guarantees
that are secured by specified collateral. Unless otherwise
expressly stated or the context otherwise requires, as used in
this section, the term guaranteed debt
securities means any debt securities that, as described in
the prospectus supplement relating thereto, are guaranteed by
one or more Guarantors pursuant to the applicable indenture (as
defined below); the term secured debt securities
means any debt securities that, as described in the prospectus
supplement relating thereto, are secured by collateral; the term
unsecured debt securities means any debt securities
that are not secured debt securities; and the term debt
securities includes both unsecured debt securities and
secured debt securities and both guaranteed and unguaranteed
debt securities.
The debt securities issued by HCA Holdings, Inc. will be issued
under one or more indentures, each to be entered into by HCA
Holdings, Inc., one or more Guarantors, a trustee, registrar,
paying agent and transfer agent
and/or a
collateral agent, as applicable. The debt securities issued by
HCA Inc. will be issued under one or more indentures, each to be
entered into by HCA Inc., HCA Holdings, Inc., one or more
Guarantors, a trustee, registrar, paying agent and transfer
agent and/or
a collateral agent, as applicable. The trustee registrar, paying
agent, transfer agent, collateral agent, calculation agent
and/or foreign currency agent (collectively, the
agents), as applicable, shall be named in the
applicable prospectus supplement. Unless otherwise expressly
stated in the applicable prospectus supplement, the issuers may
issue both secured and unsecured debt securities under their
respective indentures. Unless otherwise expressly stated or the
context otherwise requires, references in this section to the
indenture and the trustee refer to the
applicable indenture pursuant to which any particular series of
debt securities is issued and to the trustee under that
indenture. The terms of any series of debt securities and, if
applicable, any Guarantees of the debt securities of such series
will be those specified in or pursuant to the applicable
indenture and in the certificates evidencing that series of debt
securities and those made part of the indenture by the
Trust Indenture Act of 1939, as amended, or the
Trust Indenture Act of 1939.
The following summary of selected provisions of the indentures,
the debt securities and the Guarantees is not complete, and the
summary of selected terms of a particular series of debt
securities and, if applicable, the Guarantees of the debt
securities of that series included in the applicable prospectus
supplement also will not be complete. You should review the form
of applicable indenture, the form of any applicable supplemental
indenture and the form of certificate evidencing the applicable
debt securities, which forms have been or will be filed as
exhibits to the registration statement of which this prospectus
is a part or as exhibits to documents which have been or will be
incorporated by reference in this prospectus. To obtain a copy
of the form of indenture, the form of any such supplemental
indenture or the form of certificate for any debt securities,
see Where You Can Find More Information in this
prospectus. The following summary and the summary in the
applicable prospectus supplement are qualified in their entirety
by reference to all of the provisions of the applicable
indenture, any supplemental indenture and the certificates
evidencing the applicable debt securities, which provisions,
including defined terms, are incorporated by reference in this
prospectus. Capitalized terms used in this section and not
defined have the meanings assigned to those terms in the
indenture.
6
The following description of debt securities describes general
terms and provisions of a series of debt securities and, if
applicable, the Guarantees of the debt securities of that series
to which any prospectus supplement may relate. The debt
securities may be issued from time to time in one or more
series. The particular terms of each series that is offered by a
prospectus supplement, including the issuer of the debt
securities, will be described in the applicable prospectus
supplement. If any particular terms of the debt securities or,
if applicable, any Guarantees of the debt securities of that
series or the applicable indenture described in a prospectus
supplement differ from any of the terms described in this
prospectus, the terms described in the applicable prospectus
supplement will supersede the terms described in this prospectus.
General
The indentures provide that the debt securities may be issued
without limit as to aggregate principal amount, in one or more
series, and in any currency or currency units, in each case as
established from time to time in or under the authority granted
by a resolution of the applicable Board of Directors or as
established in one or more supplemental indentures. All debt
securities of one series need not be issued at the same time,
and may vary as to interest rate, maturity and other provisions
and, unless otherwise provided, a series may be
reopened, without the consent of the holders of the
debt securities of that series, for issuance of additional debt
securities of that series ranking equally with debt securities
of that series and otherwise similar in all respects except for
issue date and issue price. Please read the applicable
prospectus supplement relating to the series of debt securities
being offered for specific terms including, where applicable:
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the title of the series of debt securities;
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any limit on the aggregate principal amount of debt securities
of the series;
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the price or prices at which debt securities of the series will
be issued;
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the person to whom any interest on a debt security of the series
shall be payable, if other than the person in whose name that
debt security is registered on the applicable record date;
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the date or dates on which the applicable issuer will pay the
principal of and premium, if any, on debt securities of the
series, or the method or methods, if any, used to determine
those dates;
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the rate or rates, which may be fixed or variable, at which debt
securities of the series will bear interest, if any, or the
method or methods, if any, used to determine those rates;
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the basis used to calculate interest, if any, on the debt
securities of the series if other than a
360-day year
of twelve
30-day
months;
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the date or dates, if any, from which interest on the debt
securities of the series will begin to accrue, or the method or
methods, if any, used to determine those dates;
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the dates on which the interest, if any, on the debt securities
of the series will be payable and the record dates for the
payment of interest;
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the place or places where amounts due on the debt securities of
the series will be payable and where the debt securities of the
series may be surrendered for registration of transfer and
exchange, if other than the corporate trust office of the
applicable trustee;
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the terms and conditions, if any, upon which the applicable
issuer may, at its option, redeem debt securities of the series;
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the terms and conditions, if any, upon which the applicable
issuer will repurchase or repay debt securities of the series at
the option of the holders of debt securities of the series;
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the terms of any sinking fund or analogous provision;
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if other than U.S. dollars, the currency in which the
purchase price for the debt securities of the series will be
payable, the currency in which payments on the debt securities
of the series will be payable,
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and the ability, if any, of the applicable issuer or the holders
of debt securities of the series to have payments made in any
other currency or currencies;
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any addition to, or modification or deletion of, any covenant or
Event of Default with respect to debt securities of the series;
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whether any debt securities of the series will be issued in
temporary or permanent global form (global debt
securities) and, if so, the identity of the depositary for
the global debt securities if other than The Depository
Trust Company (DTC);
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if and under what circumstances the applicable issuer will pay
additional amounts (Additional Amounts) on the debt
securities of the series in respect of specified taxes,
assessments or other governmental charges and, if so, whether
the applicable issuer will have the option to redeem the debt
securities of the series rather than pay the Additional Amounts;
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the extent to which, or the manner in which, any interest
payable on a temporary global debt security will be paid, if
other than in the manner provided in the indenture;
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the portion of the principal amount of the debt securities of
the series which will be payable upon acceleration if other than
the full principal amount;
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the authorized denominations in which the debt securities of the
series will be issued, if other than denominations of $2,000 and
any integral multiples of $1,000;
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the terms, if any, upon which debt securities of the series may
be exchangeable for other property;
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if the amount of payments on the debt securities of the series
may be determined with reference to an index, formula or other
method or methods and the method used to determine those amounts;
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whether the debt securities of the series will be guaranteed by
any Guarantors and, if so, the names of the Guarantors of the
debt securities of the series and a description of the
Guarantees;
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if the debt securities of the series or, if applicable, any
Guarantees of those debt securities will be secured by any
collateral and, if so, a general description of the collateral
and of some of the terms of any related security, pledge or
other agreements;
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any listing of the debt securities on any securities exchange;
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any other terms of the debt securities of the series and, if
applicable, any Guarantees of the debt securities (whether or
not such other terms are consistent or inconsistent with any
other terms of the indenture); and
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the appointment of any agents, if other than the applicable
trustee.
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As used in this prospectus and any prospectus supplement
relating to the offering of debt securities of any series,
references to the principal of and premium, if any, and
interest, if any, on the debt securities of the series include
the payment of Additional Amounts, if any, required by the debt
securities of the series to be paid in that context.
Debt securities may be issued as original issue discount
securities to be sold at a substantial discount below their
principal amount. In the event of an acceleration of the
maturity of any original issue discount security, the amount
payable to the holder upon acceleration will be determined in
the manner described in the applicable prospectus supplement.
Certain U.S. federal income tax considerations applicable
to original issue discount securities will be described in the
applicable prospectus supplement.
If the purchase price of any debt securities is payable in a
foreign currency or if the principal of, or premium, if any, or
interest, if any, on any debt securities is payable in a foreign
currency, the specific terms of those debt securities and the
applicable foreign currency will be specified in the prospectus
supplement relating to those debt securities.
8
The terms of the debt securities of any series may differ from
the terms of the debt securities of any other series, and the
terms of particular debt securities within any series may differ
from each other. Unless otherwise expressly provided in the
prospectus supplement relating to any series of debt securities,
the applicable issuer may, without the consent of the holders of
the debt securities of any series, reopen an existing series of
debt securities and issue additional debt securities of that
series.
Unless otherwise described in a prospectus supplement relating
to any series of debt securities and except to the limited
extent set forth below under Merger,
Consolidation and Sale of Assets, the indentures do not
contain any provisions that would limit the issuers
ability or the ability of any of the respective issuers
subsidiaries to incur indebtedness or other liabilities or that
would afford holders of debt securities protection in the event
of a business combination, takeover, recapitalization or highly
leveraged or similar transaction involving the applicable
issuer. Accordingly, an issuer and its subsidiaries may in the
future enter into transactions that could increase the amount of
its consolidated indebtedness and other liabilities or otherwise
adversely affect its capital structure or credit rating without
the consent of the holders of the debt securities of any series.
Registration,
Transfer and Payment
Unless otherwise indicated in the applicable prospectus
supplement, each series of debt securities will be issued in
registered form only, without coupons.
Unless otherwise indicated in the applicable prospectus
supplement, registered debt securities will be issued in
denominations of $2,000 and any integral multiple of $1,000 in
excess thereof.
Unless otherwise indicated in the applicable prospectus
supplement, the debt securities will be payable and may be
surrendered for registration of transfer or exchange and, if
applicable, for conversion into or exchange for other securities
or property, at an office or agency maintained by HCA Holdings,
Inc. or HCA Inc., as applicable, in the United States of
America. However, the applicable issuer, at its option, may make
payments of interest on any registered debt security by check
mailed to the address of the person entitled to receive that
payment or by wire transfer to an account maintained by the
payee with a bank located in the United States of America.
Unless otherwise indicated in the applicable prospectus
supplement, no service charge shall be made for any registration
of transfer or exchange, redemption or repayment of debt
securities, or for any conversion or exchange of debt securities
for other securities or property, but the applicable issuer may
require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with that
transaction.
Unless otherwise indicated in the applicable prospectus
supplement, the issuer will not be required to:
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issue, register the transfer of or exchange debt securities of
any series during a period beginning at the opening of business
15 days before any selection of debt securities of that
series of like tenor and terms to be redeemed and ending at the
close of business on the day of that selection;
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register the transfer of or exchange any registered debt
security, or portion of any registered debt security, selected
for redemption, except the unredeemed portion of any registered
debt security being redeemed in part; or
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issue, register the transfer of or exchange a debt security
which has been surrendered for repayment at the option of the
holder, except the portion, if any, of the debt security not to
be repaid.
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Ranking
of Debt Securities
The unsecured debt securities of each series of each issuer will
be unsecured, unsubordinated obligations of the applicable
issuer and will rank on a parity in right of payment with all of
such issuers other unsecured and unsubordinated
indebtedness. The secured debt securities of each series of each
issuer will be unsubordinated obligations of the applicable
issuer and will rank on a parity in right of payment with all
other unsecured and unsubordinated indebtedness of the
applicable issuer, except that the secured debt securities of
9
any series will effectively rank senior to unsecured and
unsubordinated indebtedness of the applicable issuer in respect
of claims against the collateral that is pledged to secure those
secured debt securities.
The debt securities will be the exclusive obligations of the
applicable issuer. Each issuer is a holding company, and
substantially all of its respective consolidated assets are held
and substantially all of its respective consolidated revenues
are generated by its subsidiaries. Accordingly, the
issuers cash flow and ability to service its indebtedness,
including the debt securities, depend on the results of
operations of its respective subsidiaries and upon the ability
of its respective subsidiaries to provide cash to the applicable
issuer, whether in the form of dividends, loans or otherwise, to
pay amounts due on such issuers obligations, including the
debt securities. The subsidiaries of each issuer are separate
and distinct legal entities and have no obligation, contingent
or otherwise, to make payments on the debt securities (except,
in the case of any subsidiary that has guaranteed any debt
securities, its obligations under its Guarantee of those debt
securities for so long as that Guarantee remains in effect) or
to make any funds available to the applicable issuer. Certain
debt and security agreements entered into by certain of the
issuers subsidiaries contain various restrictions,
including restrictions on payments and loans by subsidiaries to
the applicable issuer and the transfer by the subsidiaries to
the applicable issuer of assets pledged as collateral under such
agreements. In addition, dividends, loans or other distributions
from subsidiaries to the applicable issuer may be subject to
additional contractual and other restrictions, are dependent
upon the results of operations of such subsidiaries and are
subject to other business considerations.
The unsecured debt securities of the applicable issuer will be
effectively subordinated to all of the existing and future
secured indebtedness of such issuer to the extent of the value
of the collateral securing that indebtedness. Consequently, in
the event of a bankruptcy, liquidation, dissolution,
reorganization or similar proceeding with respect to the
applicable issuer, the holders of such issuers secured
indebtedness will be entitled to proceed directly against the
collateral that secures that secured indebtedness, and such
collateral will not be available for satisfaction of any amounts
owed by the applicable issuer under its unsecured indebtedness,
including the unsecured debt securities, until that secured
indebtedness is satisfied in full. Unless otherwise provided in
the applicable prospectus supplement, the indentures will not
limit the issuers ability to incur secured indebtedness.
The unsecured debt securities of the issuers (other than any
unsecured debt securities that have been guaranteed by any of
such issuers subsidiaries for so long as the Guarantees of
those debt securities remain in effect) will be effectively
subordinated to all existing and future liabilities and
preferred equity of the applicable issuers subsidiaries.
These liabilities may include indebtedness, trade payables,
other guarantees, lease obligations, swaps and letter of credit
obligations. Therefore, the issuers rights and the rights
of the issuers creditors, including the holders of
unsecured debt securities, to participate in the assets of any
subsidiary upon that subsidiarys bankruptcy, liquidation,
dissolution, reorganization or similar circumstances will be
subject (except in the case of any subsidiary that has
guaranteed any unsecured debt securities for so long as its
Guarantee of those debt securities remains in effect) to the
prior claims of the subsidiarys creditors, except to the
extent that an issuer may itself be a creditor with recognized
claims against the subsidiary. However, even if an issuer is a
creditor of one or more of its subsidiaries, its claims would
still be effectively subordinate to any security interest in, or
mortgages or other liens on, the assets of the subsidiary and
would be subordinate to any indebtedness of the subsidiary
senior to that held by the applicable issuer. Unless otherwise
provided in the applicable prospectus supplement, the indentures
will not limit the ability of any of the respective
issuers subsidiaries to incur additional secured or
unsecured indebtedness, guarantees or other liabilities.
Guarantees
The debt securities of any series of each issuer may be
guaranteed by one or more of its subsidiaries and, in the case
of HCA Inc., the debt securities will be guaranteed by HCA
Holdings, Inc. The Guarantors of any series of guaranteed debt
securities of each issuer may differ from the Guarantors of any
other series of guaranteed debt securities of each issuer. In
the event HCA Holdings, Inc. or HCA Inc., as applicable, issues
a series of guaranteed debt securities, the specific Guarantors
of the debt securities of that series will be identified in the
applicable prospectus supplement.
10
If HCA Holdings, Inc. or HCA Inc., as applicable, issues a
series of guaranteed debt securities, a description of some of
the terms of Guarantees of those debt securities will be set
forth in the applicable prospectus supplement. Unless otherwise
provided in the prospectus supplement relating to a series of
guaranteed debt securities, each Guarantor of the debt
securities of such series will unconditionally guarantee the due
and punctual payment of the principal of, and premium, if any,
and interest, if any, on and any other amounts payable with
respect to, each debt security of such series and the due and
punctual performance of all of the applicable issuers
other obligations under the applicable indenture with respect to
the debt securities of such series, all in accordance with the
terms of such debt securities and the applicable indenture.
Notwithstanding the foregoing, unless otherwise provided in the
prospectus supplement relating to a series of guaranteed debt
securities, the applicable indenture will contain provisions to
the effect that the obligations of each Guarantor under its
Guarantees and such indenture shall be limited to the maximum
amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor, result in the obligations
of such Guarantor under such Guarantees and such indenture not
constituting a fraudulent conveyance or fraudulent transfer
under applicable law. However, there can be no assurance that,
notwithstanding such limitation, a court would not determine
that a Guarantee constituted a fraudulent conveyance or
fraudulent transfer under applicable law. If that were to occur,
the court could void the applicable Guarantors obligations
under that Guarantee, subordinate that Guarantee to other debt
and other liabilities of that Guarantor or take other action
detrimental to holders of the debt securities of the applicable
series, including directing the holders to return any payments
received from the applicable Guarantor.
The applicable prospectus supplement relating to any series of
guaranteed debt securities will specify other terms of the
applicable Guarantees, which may include provisions that allow a
Guarantor to be released from its obligations under its
Guarantee under specified circumstances or that provide for one
or more Guarantees to be secured by specified collateral.
Unless otherwise expressly stated in the applicable prospectus
supplement, each Guarantee will be the unsubordinated and
unsecured obligation of the applicable Guarantor and will rank
on a parity in right of payment with all other unsecured and
unsubordinated indebtedness and guarantees of such Guarantor.
Each Guarantee (other than a secured Guarantee) will be
effectively subordinated to all existing and future secured
indebtedness and secured guarantees of the applicable Guarantor
to the extent of the value of the collateral securing that
indebtedness and those guarantees. Consequently, in the event of
a bankruptcy, liquidation, dissolution, reorganization or
similar proceeding with respect to any Guarantor that has
provided an unsecured Guarantee of any debt securities, the
holders of that Guarantors secured indebtedness and
secured guarantees will be entitled to proceed directly against
the collateral that secures that secured indebtedness or those
secured guarantees, as the case may be, and such collateral will
not be available for satisfaction of any amount owed by such
Guarantor under its unsecured indebtedness and unsecured
guarantees, including its unsecured Guarantees of any debt
securities, until that secured debt and those secured guarantees
are satisfied in full. Unless otherwise provided in the
applicable prospectus supplement, the indentures will not limit
the ability of any Guarantor to incur secured indebtedness or
issue secured guarantees.
Unless otherwise expressly stated in the applicable prospectus
supplement, each secured Guarantee will be an unsubordinated
obligation of the applicable Guarantor and will rank on a parity
in right of payment with all other unsecured and unsubordinated
indebtedness and guarantees of such Guarantor, except that such
secured Guarantee will effectively rank senior to such
Guarantors unsecured and unsubordinated indebtedness and
guarantees in respect of claims against the collateral securing
that secured Guarantee.
Book-entry
Debt Securities
The debt securities of a series may be issued in whole or in
part in the form of one or more global debt securities. Global
debt securities will be deposited with, or on behalf of, a
depositary which, unless otherwise specified in the applicable
prospectus supplement relating to the series, will be DTC.
Global debt securities may be issued in either temporary or
permanent form. Unless and until it is exchanged in whole or in
part for individual certificates evidencing debt securities, a
global debt security may not be transferred except as a
11
whole by the depositary to its nominee or by the nominee to the
depositary, or by the depositary or its nominee to a successor
depositary or to a nominee of the successor depositary.
HCA Holdings, Inc. and HCA Inc. anticipate that global debt
securities will be deposited with, or on behalf of, DTC and that
global debt securities will be registered in the name of
DTCs nominee, Cede & Co. All interests in global
debt securities deposited with, or on behalf of, DTC will be
subject to the operations and procedures of DTC and, in the case
of any interests in global debt securities held through
Euroclear Bank S.A./N.V. (Euroclear) or Clearstream
Banking, société anonyme (Clearstream,
Luxembourg), the operations and procedures of Euroclear or
Clearstream, Luxembourg, as the case may be, HCA Holdings, Inc.
and HCA Inc. also anticipate that the following provisions will
apply to the depository arrangements with respect to global debt
securities. Additional or differing terms of the depository
arrangements may be described in the applicable prospectus
supplement.
DTC has advised the issuers that it is:
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a limited-purpose trust company organized under the New York
Banking Law;
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a banking organization within the meaning of the New
York Banking Law;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the New
York Uniform Commercial Code; and
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a clearing agency registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of
1934.
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DTC holds securities that its participants deposit with DTC. DTC
also facilitates the settlement among its participants of
securities transactions, including transfers and pledges, in
deposited securities through electronic computerized book-entry
changes in participants accounts, which eliminates the
need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks,
trust companies, clearing corporations and other organizations.
Access to the DTC system is also available to others, sometimes
referred to in this prospectus as indirect participants, that
clear transactions through or maintain a custodial relationship
with a direct participant either directly or indirectly.
Indirect participants include securities brokers and dealers,
banks and trust companies. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of debt securities within the DTC system must be made
by or through direct participants, which will receive a credit
for the debt securities on DTCs records. The ownership
interest of the actual purchaser or beneficial owner of a debt
security is, in turn, recorded on the direct and indirect
participants records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial
owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of
their holdings, from the direct or indirect participants through
which they purchased the debt securities. Transfers of ownership
interests in debt securities are to be accomplished by entries
made on the books of participants acting on behalf of beneficial
owners. Beneficial owners will not receive certificates
representing their ownership interests in the debt securities,
except under the limited circumstances described below.
To facilitate subsequent transfers, all debt securities
deposited by participants with DTC will be registered in the
name of DTCs nominee, Cede & Co. The deposit of
debt securities with DTC and their registration in the name of
Cede & Co. will not change the beneficial ownership of
the debt securities. DTC has no knowledge of the actual
beneficial owners of the debt securities. DTCs records
reflect only the identity of the direct participants to whose
accounts the debt securities are credited. Those participants
may or may not be the beneficial owners. The participants are
responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants
and by direct and indirect participants to beneficial owners
will be governed by arrangements among them, subject to any
legal requirements in effect from time to time. Redemption
notices
12
shall be sent to DTC or its nominee. If less than all of the
debt securities of a series are being redeemed, DTC will reduce
the amount of the interest of each direct participant in the
debt securities under its procedures.
In any case where a vote may be required with respect to the
debt securities of any series, neither DTC nor Cede &
Co. will give consents for or vote the global debt securities.
Under its usual procedures, DTC will mail an omnibus proxy to
HCA Holdings, Inc. or HCA Inc., as applicable, after the record
date. The omnibus proxy assigns the consenting or voting rights
of Cede & Co. to those direct participants to whose
accounts the debt securities are credited on the record date
identified in a listing attached to the omnibus proxy. Principal
and premium, if any, and interest, if any, on the global debt
securities will be paid to Cede & Co., as nominee of
DTC. DTCs practice is to credit direct participants
accounts on the relevant payment date unless DTC has reason to
believe that it will not receive payments on the payment date.
Payments by direct and indirect participants to beneficial
owners will be governed by standing instructions and customary
practices, as is the case with securities held for the account
of customers in bearer form or registered in street
name. Those payments will be the responsibility of
DTCs direct and indirect participants and not of DTC, HCA
Holdings, Inc., HCA Inc., any trustee or any underwriters or
agents involved in the offering or sale of any debt securities.
Payment of principal, premium, if any, and interest, if any, to
DTC is HCA Holdings, Inc.s or HCA Inc.s, as
applicable, responsibility, disbursement of payments to direct
participants is the responsibility of DTC, and disbursement of
payments to the beneficial owners is the responsibility of
direct and indirect participants.
Except under the limited circumstances described below,
beneficial owners of interests in a global debt security will
not be entitled to have debt securities registered in their
names and will not receive physical delivery of debt securities.
Accordingly, each beneficial owner must rely on the procedures
of DTC to exercise any rights under the debt securities and the
indenture.
The laws of some jurisdictions may require that some purchasers
of securities take physical delivery of securities in definitive
form. These laws may impair the ability to transfer or pledge
beneficial interests in global debt securities.
DTC is under no obligation to provide its services as depositary
for the debt securities of any series and may discontinue
providing its services at any time. Neither HCA Holdings, Inc.,
HCA Inc. nor any trustee nor any underwriters or agents involved
in the offering or sale of any debt securities will have any
responsibility for the performance by DTC or its participants or
indirect participants under the rules and procedures governing
DTC. As noted above, beneficial owners of interests in global
debt securities generally will not receive certificates
representing their ownership interests in the debt securities.
However, if
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DTC notifies HCA Holdings, Inc. or HCA Inc., as applicable, that
it is unwilling or unable to continue as a depositary for the
global debt securities of any series or if DTC ceases to be a
clearing agency registered under the Securities Exchange Act of
1934 (if so required by applicable law or regulation) and a
successor depositary for the debt securities of such series is
not appointed within 90 days of the notification to HCA
Holdings, Inc. or HCA Inc., as applicable, or of HCA Holdings,
Inc. or HCA Inc., as applicable, becoming aware of DTCs
ceasing to be so registered, as the case may be,
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HCA Holdings, Inc. or HCA Inc., as applicable, determines, in
its sole discretion, not to have the debt securities of any
series represented by one or more global debt securities, or
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an Event of Default under the applicable indenture has occurred
and is continuing with respect to the debt securities of any
series,
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HCA Holdings, Inc. or HCA Inc., as applicable, will prepare and
deliver certificates for the debt securities of that series in
exchange for beneficial interests in the global debt securities
of that series. Any beneficial interest in a global debt
security that is exchangeable under the circumstances described
in the preceding sentence will be exchangeable for debt
securities in definitive certificated form registered in the
names and in the authorized denominations that the depositary
shall direct. It is expected that these directions will be based
upon directions received by the depositary from its participants
with respect to ownership of beneficial interests in the global
debt securities.
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Clearstream, Luxembourg and Euroclear hold interests on behalf
of their participating organizations through customers
securities accounts in Clearstream, Luxembourgs and
Euroclears names on the books of their respective
depositaries, which hold those interests in customers
securities accounts in the depositaries names on the books
of DTC. At the present time, Citibank, N.A. acts as
U.S. depositary for Clearstream, Luxembourg and JPMorgan
Chase Bank, N.A. acts as U.S. depositary for Euroclear (the
U.S. Depositaries).
Clearstream, Luxembourg holds securities for its participating
organizations (Clearstream Participants) and
facilitates the clearance and settlement of securities
transactions between Clearstream Participants through electronic
book-entry changes in accounts of Clearstream Participants,
thereby eliminating the need for physical movement of
certificates. Clearstream, Luxembourg provides to Clearstream
Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally
traded securities and securities lending and borrowing.
Clearstream, Luxembourg is registered as a bank in Luxembourg,
and as such is subject to regulation by the Commission de
Surveillance du Secteur Financier and the Banque Centrale du
Luxembourg, which supervise and oversee the activities of
Luxembourg banks. Clearstream Participants are financial
institutions including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations, and
may include any underwriters or agents involved in the offering
or sale of any debt securities or their respective affiliates.
Indirect access to Clearstream, Luxembourg is available to other
institutions that clear through or maintain a custodial
relationship with a Clearstream Participant. Clearstream,
Luxembourg has established an electronic bridge with Euroclear
as the operator of the Euroclear System (the Euroclear
Operator) in Brussels to facilitate settlement of trades
between Clearstream, Luxembourg and the Euroclear Operator.
Distributions with respect to global debt securities held
beneficially through Clearstream, Luxembourg will be credited to
cash accounts of Clearstream Participants in accordance with its
rules and procedures, to the extent received by the
U.S. Depositary for Clearstream, Luxembourg. Euroclear
holds securities and book-entry interests in securities for
participating organizations (Euroclear Participants)
and facilitates the clearance and settlement of securities
transactions between Euroclear Participants, and between
Euroclear Participants and participants of certain other
securities intermediaries through electronic book-entry changes
in accounts of such participants or other securities
intermediaries. Euroclear provides Euroclear Participants, among
other things, with safekeeping, administration, clearance and
settlement, securities lending and borrowing, and related
services. Euroclear Participants are investment banks,
securities brokers and dealers, banks, central banks,
supranationals, custodians, investment managers, corporations,
trust companies and certain other organizations, and may include
any underwriters or agents involved in the offering or sale of
any debt securities or their respective affiliates.
Non-participants in Euroclear may hold and transfer beneficial
interests in a global debt security through accounts with a
participant in the Euroclear System or any other securities
intermediary that holds a book-entry interest in a global debt
security through one or more securities intermediaries standing
between such other securities intermediary and Euroclear.
Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating Procedures
of the Euroclear System, and applicable Belgian law
(collectively, the Terms and Conditions). The Terms
and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear and
receipts of payments with respect to securities in Euroclear.
All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclear Participants, and has
no record of or relationship with persons holding through
Euroclear Participants.
Distributions on interests in global debt securities held
beneficially through Euroclear will be credited to the cash
accounts of Euroclear Participants in accordance with the Terms
and Conditions, to the extent received by the
U.S. Depositary for Euroclear.
Transfers between Euroclear Participants and Clearstream
Participants will be effected in the ordinary way in accordance
with their respective rules and operating procedures.
14
Cross-market transfers between direct participants in DTC, on
the one hand, and Euroclear Participants or Clearstream
Participants, on the other hand, will be effected through DTC in
accordance with DTCs rules on behalf of Euroclear or
Clearstream, Luxembourg, as the case may be, by its
U.S. Depositary; however, such cross-market transactions
will require delivery of instructions to Euroclear or
Clearstream, Luxembourg, as the case may be, by the counterparty
in such system in accordance with the applicable rules and
procedures and within the established deadlines (European time)
of such system. Euroclear or Clearstream, Luxembourg, as the
case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. Depositary
to take action to effect final settlement on its behalf by
delivering or receiving interests in global debt securities in
DTC, and making or receiving payment in accordance with normal
procedures for
same-day
fund settlement applicable to DTC. Euroclear Participants and
Clearstream Participants may not deliver instructions directly
to their respective U.S. Depositaries.
Due to time zone differences, the securities accounts of a
Euroclear Participant or Clearstream Participant purchasing an
interest in a global debt security from a direct participant in
DTC will be credited, and any such crediting will be reported to
the relevant Euroclear Participant or Clearstream Participant,
during the securities settlement processing day (which must be a
business day for Euroclear or Clearstream, Luxembourg)
immediately following the settlement date of DTC. Cash received
in Euroclear or Clearstream, Luxembourg as a result of sales of
interests in a global debt security by or through a Euroclear
Participant or Clearstream Participant to a direct participant
in DTC will be received with value on the settlement date of DTC
but will be available in the relevant Euroclear or Clearstream,
Luxembourg cash account only as of the business day for
Euroclear or Clearstream, Luxembourg following DTCs
settlement date.
Euroclear and Clearstream, Luxembourg are under no obligation to
perform or to continue to perform the foregoing procedures and
such procedures may be discontinued at any time without notice.
Neither HCA Holdings, Inc. or HCA Inc. nor any trustee nor any
underwriters or agents involved in the offering or sale of any
debt securities will have any responsibility for the performance
by Euroclear or Clearstream, Luxembourg or their respective
participants of their respective obligations under the rules and
procedures governing their operations.
The information in this section concerning DTC, Euroclear and
Clearstream, Luxembourg and their book-entry systems has been
obtained from sources that HCA Holdings, Inc. and HCA Inc.
believe to be reliable, but HCA Holdings, Inc. and HCA Inc. take
no responsibility for the accuracy of that information.
Redemption
and Repurchase
The debt securities of any series may be redeemable at the
option of HCA Holdings, Inc. or HCA Inc., as applicable, or may
be subject to mandatory redemption by HCA Holdings, Inc. or HCA
Inc., as applicable, as required by a sinking fund or otherwise.
In addition, the debt securities of any series may be subject to
repurchase or repayment by HCA Holdings, Inc. or HCA Inc., as
applicable, at the option of the holders. The applicable
prospectus supplement will describe the terms, the times and the
prices regarding any optional or mandatory redemption by HCA
Holdings, Inc. or HCA Inc., as applicable, or any repurchase or
repayment at the option of the holders of any series of debt
securities.
Secured
Debt Securities
The debt securities of any series and the Guarantees, if any, of
the debt securities of any series may be secured by collateral.
The applicable prospectus supplement will describe any such
collateral and the terms of such secured debt securities.
Merger,
Consolidation and Sale of Assets
Unless otherwise specified in the applicable prospectus
supplement, the indentures provide that HCA Holdings, Inc. or
HCA Inc., as applicable, will not consolidate or merge with or
into or wind up into (whether
15
or not the Issuer is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more
related transactions, to any Person unless:
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either (1) HCA Holdings, Inc. or HCA Inc., as applicable,
is the surviving corporation or (2) the Person formed by or
surviving any such consolidation or merger (if other than HCA
Holdings, Inc. or HCA Inc., as applicable,) or to which such
sale, assignment, transfer, lease, conveyance or other
disposition will have been made is a corporation organized or
existing under the laws of the jurisdiction of organization of
the applicable issuer or the laws of the United States, any
state thereof, the District of Columbia, or any territory
thereof (such Person, as the case may be, being herein called
the Successor Company);
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the Successor Company, if other than the applicable issuer,
shall expressly assume all the obligations of the applicable
issuer pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory in form to the
trustee;
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immediately after giving effect to the transaction described
above, no Event of Default under the applicable indenture, and
no event which, after notice or lapse of time or both would
become an Event of Default under the applicable indenture, shall
have occurred and be continuing;
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with respect to any guaranteed debt securities, each Guarantor,
unless it is the other party to the transactions described
above, shall have by supplemental indenture confirmed that its
Guarantee shall apply to such persons obligations under
the applicable indenture and the debt securities; and
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the trustee shall have received the officers certificate
and opinion of counsel called for by the applicable indenture.
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In addition, with respect to secured debt securities, unless
otherwise specified in the applicable prospectus supplement, the
indentures provide that immediately after giving pro forma
effect to the transaction described above, (1) the
Collateral owned by the Successor Company will continue to
constitute Collateral under the applicable indenture and related
security documents and (2) to the extent any assets of the
Person which is merged or consolidated with or into the
Successor Company are assets of the type which would constitute
Collateral under the related security documents, the Successor
Company will take such action as may be reasonably necessary to
cause such property and assets to be made subject to the Lien of
the security documents in the manner and to the extent required
by the applicable indenture.
In the case of any such merger, consolidation, sale, assignment,
transfer, lease, conveyance or other disposition in which HCA
Holdings, Inc. or HCA Inc., as applicable, is not the continuing
entity and upon execution and delivery by the successor person
of the supplemental indenture described above, such Successor
Person shall succeed to, and be substituted for, HCA Holdings,
Inc. or HCA Inc., as applicable, and may exercise every right
and power of HCA Holdings, Inc. or HCA Inc., as applicable,
under the applicable indenture with the same effect as if such
successor person had been named as HCA Holdings, Inc. or HCA
Inc., as applicable, therein, and HCA Holdings, Inc. or HCA
Inc., as applicable, shall be automatically released and
discharged from all obligations and covenants under the
applicable indenture and the debt securities issued under that
indenture.
With respect to guaranteed debt securities, unless otherwise
specified in the applicable prospectus supplement, the merger,
consolidation and transfer of assets provisions described above
are equally applicable to each of the Guarantors in its capacity
as guarantor of such debt securities.
Events of
Default
Unless otherwise specified in the applicable prospectus
supplement, an Event of Default with respect to the
debt securities of any series is defined in the applicable
indenture as being:
(1) default in payment when due and payable, upon
redemption, acceleration or otherwise, of principal of, or
premium, if any, on the debt securities;
(2) default for 30 days or more in the payment when
due of interest on or with respect to the debt securities;
16
(3) default in the deposit of any sinking fund payment when
and as due with respect to any of the debt securities of that
series;
(4) default in the performance, or breach, of any covenant
or warranty of the issuer in the applicable indenture, and
continuance of such default or breach for a period of
60 days after there has been given written notice by the
trustee or the holders of at least 10% in principal amount of
the outstanding debt securities (with a copy to the trustee)
specifying such default or breach and requiring it to be
remedied;
(5) HCA Holdings, Inc. or HCA Inc., as applicable, pursuant
to or within the meaning of any Bankruptcy Law:
(i) commences proceedings to be adjudicated bankrupt or
insolvent; (ii) consents to the institution of bankruptcy
or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief
under applicable Bankruptcy Law; (iii) consents to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator or other similar official of it or for all or
substantially all of its property; (iv) makes a general
assignment for the benefit of its creditors; or
(v) generally is not paying its debts as they become due;
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief
against HCA Holdings, Inc. or HCA Inc. as applicable, in a
proceeding in which the issuer is to be adjudicated bankrupt or
insolvent; appoints a receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the issuer, or for all
or substantially all of the property of the issuer; or orders
the liquidation of the issuer; and the order or decree remains
unstayed and in effect for 60 consecutive days;
(7) if applicable, the Guarantee of any Significant
Subsidiary shall for any reason cease to be in full force and
effect or be declared null and void or any responsible officer
of any Guarantor that is a Significant Subsidiary, as the case
may be, denies that it has any further liability under its
Guarantee or gives notice to such effect, other than by reason
of the termination of the indenture or the release of any such
Guarantee in accordance with the indenture; or
(8) any other Event of Default established for the debt
securities of that series.
No Event of Default with respect to any particular series of
debt securities necessarily constitutes an Event of Default with
respect to any other series of debt securities. The indentures
provide that, within 90 days after the occurrence of any
default with respect to the debt securities of any series, the
trustee will mail to all holders of the debt securities of that
series notice of that default. Except in the case of a default
relating to the payment of principal, premium, if any, or
interest on debt securities of any series, the trustee may
withhold from the holders notice of any continuing default if
and so long as a committee of its responsible officers in good
faith determines that withholding the notice is in the interests
of the holders of the debt securities. The trustee shall not be
deemed to know of any default unless a responsible officer of
the trustee has actual knowledge thereof or unless written
notice of any event which is such a Default is received by the
trustee at the corporate trust office of the trustee.
The indentures provide that if any Event of Default (other than
an Event of Default specified in clauses (5) or (6) of the
second preceding paragraph with respect to of HCA Holdings, Inc.
or HCA Inc., as applicable) occurs and is continuing under the
indenture, the trustee or the holders of at least 25% in
principal amount of the then total outstanding debt securities
may declare the principal, premium, if any, interest and any
other monetary obligations on all the then outstanding debt
securities to be due and payable immediately. Upon the
effectiveness of such declaration, such principal and interest
shall be due and payable immediately. The trustee shall have no
obligation to accelerate the debt securities if and so long as a
committee of its Responsible Officers in good faith determines
acceleration is not in the best interest of the holders of the
debt securities. Notwithstanding the foregoing, in the case of
an Event of Default arising under clauses (5) or (6), all
outstanding debt securities shall be due and payable immediately
without further action or notice. The holders of a majority in
aggregate principal amount of the then outstanding debt
securities by written notice to the trustee may on behalf of all
of the holders rescind an acceleration and its consequences if
the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
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Subject to the provisions of the Trust Indenture Act of
1939 requiring the trustee, during the continuance of an Event
of Default under the applicable indenture, to act with the
requisite standard of care, the trustee is under no obligation
to exercise any of its rights or powers under the applicable
indenture at the request or direction of any of the holders of
debt securities of any series unless those holders have offered
the trustee indemnity reasonably satisfactory to the trustee
against the costs, fees and expenses and liabilities which might
be incurred in compliance with such request or direction.
Subject to the foregoing, holders of a majority in principal
amount of the outstanding debt securities of any series issued
under the applicable indenture have the right to direct the
time, method and place of conducting any proceeding for any
remedy available to the trustee under the indenture with respect
to that series. The indentures require the annual filing by HCA
Holdings, Inc. or HCA Inc., as applicable, with the trustee of a
certificate which states whether or not HCA Holdings, Inc. or
HCA Inc., as applicable, are in default under the terms of the
indenture.
Unless otherwise specified in the applicable prospectus
supplement, no holder of any debt securities of any series shall
have any right to institute any proceeding, judicial or
otherwise, with respect to the applicable indenture, or for the
appointment of a receiver or trustee, or for any other remedy
under the indenture, unless:
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such holder has previously given written notice to the trustee
of a continuing Event of Default with respect to the debt
securities of such series;
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the holders of not less than 25% in principal amount of the
total outstanding debt securities of such series shall have made
written request to the trustee to institute proceedings in
respect of such Event of Default in its own name as trustee
under the indenture;
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holders have offered to the trustee security or indemnity
reasonably satisfactory to the trustee against any loss
liability or expense incurred in compliance with such request;
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the trustee has not complied with such request within
60 days after the receipt thereof and the offer of security
or indemnity; and
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holders of a majority in principal amount of the total
outstanding debt securities have not given the trustee a
direction inconsistent with such request within such
60-day
period.
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Notwithstanding any other provision of the indenture, the right
of any holder of a debt security to receive payment of
principal, premium, if any, and interest on the debt security,
on or after the respective due dates expressed in the debt
security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired
or affected without the consent of such holder.
Amendment,
Supplement and Waiver
Unless otherwise specified in the applicable prospectus
supplement, the indentures permit HCA Holdings, Inc. or HCA
Inc., as applicable, any Guarantors party to such indenture and
the trustee, with the consent of the holders of at least
majority in principal amount of the outstanding debt securities
of each series issued under the applicable indenture and
affected by a modification or amendment, to modify or amend any
of the provisions of the applicable indenture or of the debt
securities of the applicable series or the rights of the holders
of the debt securities of that series under the applicable
indenture. However, no such modification or amendment shall,
among other things:
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change the stated maturity of the principal of, or installment
of interest, if any, on, any debt securities, or reduce the
principal amount thereof or the interest thereon or any premium
payable upon redemption thereof;
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change the currency in which the principal of (and premium, if
any) or interest on such debt securities are denominated or
payable;
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adversely affect the right of repayment or repurchase, if any,
at the option of the holder after such obligation arises, or
reduce the amount of, or postpone the date fixed for, any
payment under any sinking fund or impair the right to institute
suit for the enforcement of any payment on or after the stated
maturity thereof (or, in the case of redemption, on or after the
redemption date);
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reduce the percentage of holders whose consent is required for
modification or amendment of the indenture or for waiver of
compliance with certain provisions of the indenture or certain
defaults;
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modify the provisions that require holder consent to modify or
amend the indenture or that permit holders to waive compliance
with certain provisions of the indenture or certain defaults;
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impair the right of any holder to receive payment of principal
of, or interest on such holders debt securities on or
after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such
holders debt securities; or
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except as expressly permitted by the indenture, modify the
Guarantees of any Significant Subsidiary in any manner adverse
to the holders of any debt securities.
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without in each case obtaining the consent of the holder of each
outstanding debt security issued under such indenture affected
by the modification or amendment.
Unless otherwise specified in the applicable prospectus
supplement, the indentures also contain provisions permitting
HCA Holdings, Inc. or HCA Inc., as applicable, any Guarantors
party to such indenture and the trustee, without the consent of
the holders of any debt securities issued under the applicable
indenture, to modify or amend the indenture, among other things:
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to evidence the succession of another corporation to HCA
Holdings, Inc. or HCA Inc., as applicable, or, if applicable,
any Guarantor under the applicable indenture and the assumption
by such successor of the covenants of HCA Holdings, Inc. or HCA
Inc., as applicable, in compliance with the requirements set
forth in the indenture;
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to add to the covenants for the benefit of the holders or to
surrender any right or power herein conferred upon the HCA
Holdings, Inc. or HCA Inc., as applicable;
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to add any additional Events of Default;
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to change or eliminate any of the provisions of the indenture,
provided that any such change or elimination shall become
effective only when there are no outstanding debt securities of
any series created prior to the execution of such supplemental
indenture that is entitled to the benefit of such provision and
as to which such supplemental indenture would apply;
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to secure the debt securities;
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to supplement any of the provisions of the indenture to such
extent necessary to permit or facilitate the defeasance and
discharge of the debt securities, provided that any such action
does not adversely affect the interests of the holders of the
debt securities in any material respect;
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to evidence and provide for the acceptance of appointment
hereunder by a successor trustee and to add to or change any of
the provisions of the indenture necessary to provide for or
facilitate the administration of the trusts by more than one
trustee;
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to cure any ambiguity to correct or supplement any provision of
the indenture which may be defective or inconsistent with any
other provision;
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to change any place or places where the principal of and
premium, if any, and interest, if any, on the debt securities
shall be payable, the debt securities may be surrendered for
registration or transfer, the debt securities may be surrendered
for exchange, and notices and demands to or upon HCA Holdings,
Inc. or HCA Inc., as applicable, may be served;
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to comply with requirements of the SEC in order to effect or
maintain the qualification of the indenture under the
Trust Indenture Act of 1939;
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to conform the text of the indenture or the debt securities to
any provision of the section regarding the description of the
notes contained in the prospectus supplement to the extent that
such provision in such section was intended to be a verbatim
recitation of a provision of the indenture or the debt
securities;
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to make any amendment to the provisions of the indenture
relating to the transfer and legending of debt securities as
permitted by the indenture, including, without limitation to
facilitate the issuance and administration of the debt
securities; provided, however, that (i) compliance with the
indenture as so amended would not result in debt securities
being transferred in violation of the Securities Act or any
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applicable securities law and (ii) such amendment does not
materially and adversely affect the rights of holders to
transfer debt securities; or
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to add additional Guarantees or additional Guarantors in respect
of all or any securities under the indenture, and to evidence
the release and discharge of any Guarantor from its obligations
under its Guarantee of any or all securities and its obligations
under the indenture in respect of any or all Securities in
accordance with the terms of the indenture.
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Unless otherwise specified in the applicable prospectus
supplement, the holders of a majority in aggregate principal
amount of the outstanding debt securities of any series may
waive the compliance of HCA Holdings, Inc. or HCA Inc., as
applicable, with the provisions described above under
Merger, Consolidation and Sale of Assets
and certain other provisions of the indenture and, if specified
in the prospectus supplement relating to such series of debt
securities, any additional covenants applicable to the debt
securities of such series. The holders of a majority in
aggregate principal amount of the outstanding debt securities of
any series may, on behalf of all holders of debt securities of
that series, waive any past default under the applicable
indenture with respect to debt securities of that series and its
consequences, except a default in the payment of the principal
of, or premium, if any, or interest, if any, on debt securities
of that series or, in the case of any debt securities which are
convertible into or exchangeable for other securities or
property, a default in any such conversion or exchange, or a
default in respect of a covenant or provision which cannot be
modified or amended without the consent of the holder of each
outstanding debt security of the affected series.
Discharge,
Defeasance and Covenant Defeasance
Unless otherwise provided in the applicable prospectus
supplement, HCA Holdings, Inc. and HCA Inc., as applicable, may
discharge certain obligations to holders of the debt securities
of a series that have not already been delivered to the trustee
for cancellation and that either have become due and payable or
will become due and payable within one year (or scheduled for
redemption within one year) by depositing with the trustee, in
trust, funds in U.S. dollars in an amount sufficient to pay
the entire indebtedness including the principal, premium, if
any, and interest to the date of such deposit (if the debt
securities have become due and payable) or to the maturity
thereof or the redemption date of the debt securities of that
series, as the case may be.
The indentures provide that the applicable issuer may elect
either (1) to defease and be discharged from any and all
obligations with respect to the debt securities of a series
(except for, among other things, obligations to register the
transfer or exchange of the debt securities, to replace
temporary or mutilated, destroyed, lost or stolen debt
securities, to maintain an office or agency with respect to the
debt securities and to hold moneys for payment in trust)
(legal defeasance) or (2) to be released from
its obligations to comply with the restrictive covenants under
the indenture, and any omission to comply with such obligations
will not constitute a default or an event of default with
respect to the debt securities of a series and clauses (3), (5)
and (6) under Events of Default will no
longer be applied (covenant defeasance). Legal
defeasance or covenant defeasance, as the case may be, will be
conditioned upon, among other things, the irrevocable deposit by
the issuer with the trustee, in trust, of an amount in
U.S. dollars, or U.S. government obligations, or both,
applicable to the debt securities of that series which through
the scheduled payment of principal and interest in accordance
with their terms will provide money in an amount sufficient to
pay the principal or premium, if any, and interest on the debt
securities on the scheduled due dates therefor.
If HCA Holdings, Inc. or HCA Inc., as applicable, effects
covenant defeasance with respect to the debt securities of any
series, the amount in U.S. dollars, or U.S. government
obligations, or both, on deposit with the trustee will be
sufficient, in the opinion of a nationally recognized firm of
independent accountants, to pay amounts due on the debt
securities of that series at the time of the stated maturity but
may not be sufficient to pay amounts due on the debt securities
of that series at the time of the acceleration resulting from
such event of default. However, HCA Holdings, Inc. or HCA Inc.,
as applicable, would remain liable to make payment of such
amounts due at the time of acceleration.
HCA Holdings, Inc. or HCA Inc., as applicable, will be required
to deliver to the trustee an opinion of counsel that the deposit
and related defeasance will not cause the holders and beneficial
owners of the debt securities of that series to recognize
income, gain or loss for U.S. federal income tax purposes.
If HCA
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Holdings, Inc. or HCA Inc., as applicable, elects legal
defeasance, that opinion of counsel must be based upon a ruling
from the U.S. Internal Revenue Service or a change in law
to that effect.
HCA Holdings, Inc. or HCA Inc., as applicable, may exercise our
legal defeasance option notwithstanding our prior exercise of
our covenant defeasance option.
Definitions
As used in the indentures, unless otherwise specified in the
applicable prospectus supplement the following terms have the
meanings specified below:
Bankruptcy Law means the Bankruptcy Code and
any similar federal, state or foreign law for the relief of
debtors.
Collateral means, collectively, all of the
property and assets that are from time to time subject to the
Lien of the security documents including the Liens, if any,
required to be granted pursuant to the applicable indenture.
Event of Default has the meaning set forth
under the section Events of Default.
Lien means, with respect to any asset, any
mortgage, lien (statutory or otherwise), pledge, hypothecation,
charge, security interest, preference, priority or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction;
provided that in no event shall an operating lease be deemed to
constitute a Lien.
Person means any individual, corporation,
limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
Significant Subsidiary means any direct or
indirect Subsidiary of the issuer that would be a
significant subsidiary as defined in Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation
is in effect on the Issue Date and which is not designated by
the issuer to be an Unrestricted Subsidiary (as defined in the
applicable indenture).
Subsidiary means, with respect to any Person,
(i) any corporation, association, or other business entity
(other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total
voting power of shares of capital stock entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that
Person or a combination thereof or is consolidated under GAAP
with such Person at such time; and (ii) any partnership, joint
venture, limited liability company or similar entity of which
more than 50% of the equity ownership, whether in the form of
membership, general, special or limited partnership interests or
otherwise, is owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that
Person or a combination thereof;
Governing
Law
The indentures and the debt securities (including any Guarantees
endorsed on the debt securities, if any) will be governed by,
and construed in accordance with, the laws of the State of New
York.
Regarding
the Trustees
The Trust Indenture Act of 1939 limits the rights of a
trustee, if the trustee becomes a creditor of HCA Holdings, Inc.
or HCA Inc., as applicable, to obtain payment of claims or to
realize on property received by it in respect of those claims,
as security or otherwise. Any trustee is permitted to engage in
other transactions with HCA Holdings, Inc. or HCA Inc., as
applicable, and its subsidiaries from time to time. However, if
a trustee acquires any conflicting interest it must eliminate
the conflict upon the occurrence of an Event of Default under
the applicable indenture or resign as trustee.
21
PLAN OF
DISTRIBUTION
We may sell the debt securities described in this prospectus
from time to time in one or more transactions:
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to purchasers directly;
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to underwriters for public offering and sale by them;
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through agents;
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through dealers; or
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through a combination of any of the foregoing methods of sale.
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We may sell the debt securities directly to institutional
investors or others who may be deemed to be underwriters within
the meaning of the Securities Act, with respect to any resale of
the debt securities. A prospectus supplement will describe the
terms of any sale of debt securities we are offering hereunder.
Direct sales may be arranged by a securities broker-dealer or
other financial intermediary.
The applicable prospectus supplement will name any underwriter
involved in a sale of debt securities. Underwriters may offer
and sell debt securities at a fixed price or prices, which may
be changed, or from time to time at market prices or at
negotiated prices. Underwriters may be deemed to have received
compensation from us from sales of debt securities in the form
of underwriting discounts or commissions and may also receive
commissions from purchasers of debt securities for whom they may
act as agent. Underwriters may be involved in any at the
market offering of debt securities by or on our behalf.
Underwriters may sell debt securities to or through dealers, and
such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters
and/or
commissions (which may be changed from time to time) from the
purchasers for whom they may act as agent.
Unless we state otherwise in the applicable prospectus
supplement, the obligations of any underwriters to purchase debt
securities will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all the debt
securities if any are purchased.
The applicable prospectus supplement will set forth whether or
not underwriters may over-allot or effect transactions that
stabilize, maintain or otherwise affect the market price of the
debt securities at levels above those that might otherwise
prevail in the open market, including, for example, by entering
stabilizing bids, effecting syndicate covering transactions or
imposing penalty bids.
We will name any agent involved in a sale of debt securities, as
well as any commissions payable by us to such agent, in a
prospectus supplement. Unless we state otherwise in the
applicable prospectus supplement, any such agent will be acting
on a reasonable efforts basis for the period of its appointment.
If we utilize a dealer in the sale of the debt securities being
offered pursuant to this prospectus, we will sell the debt
securities to the dealer, as principal. The dealer may then
resell the debt securities to the public at varying prices to be
determined by the dealer at the time of resale.
Underwriters, dealers and agents participating in a sale of the
debt securities may be deemed to be underwriters as defined in
the Securities Act, and any discounts and commissions received
by them and any profit realized by them on resale of the debt
securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. We may have agreements
with underwriters, dealers and agents to indemnify them against
certain civil liabilities, including liabilities under the
Securities Act, and to reimburse them for certain expenses.
22
LEGAL
MATTERS
The validity of the securities to be sold hereunder will be
passed upon for us by Simpson Thacher & Bartlett LLP,
New York, New York or other counsel who is satisfactory to us.
An investment vehicle comprised of several partners of Simpson
Thacher & Bartlett LLP, members of their families,
related persons and others own interests representing less than
1% of the capital commitments of the KKR Millennium Fund, L.P.
and KKR 2006 Fund L.P.
EXPERTS
The consolidated financial statements of HCA Holdings, Inc.
incorporated by reference in HCA Holdings, Inc.s Current
Report on
Form 8-K
dated July 26, 2011, and the effectiveness of HCA Holdings,
Inc.s internal control over financial reporting as of
December 31, 2010, have been audited by Ernst &
Young LLP, independent registered public accounting firm, as set
forth in its reports thereon, included therein, and incorporated
herein by reference. Such consolidated financial statements and
HCA Holdings, Inc. managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2010 are incorporated herein by reference in
reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
23
$500,000,000
HCA Inc.
% Senior
Notes due 2018
Prospectus Supplement
,
2011
Joint Book-Running Managers
Barclays Capital
Deutsche Bank Securities
Goldman, Sachs & Co.
Morgan Stanley
RBC Capital Markets
Wells Fargo Securities
Co-Managers
Credit Agricole CIB
Credit Suisse
Mizuho Securities
SunTrust Robinson Humphrey