Community Health Systems, Inc. (the “Company”) (NYSE:CYH) today
announced that its wholly owned subsidiary, CHS/Community Health
Systems, Inc. (the “Issuer”), intends to commence an offer to
exchange (the “Exchange Offer”) a combination of (i) $700 million
aggregate principal amount of its new 8.000% Senior Secured Notes
due 2027 (the “New Secured Notes”) and (ii) up to $1,932 million
aggregate principal amount of its new 6.875% Senior Unsecured Notes
due 2028 (the “New Unsecured Notes” and, together with the New
Secured Notes, the “New Notes”) in exchange for any and all of its
$2,632 million aggregate principal amount of outstanding 6.875%
Senior Unsecured Notes due 2022 (the “Old Notes”).
The Issuer is under no obligation to commence the Exchange
Offer. There can be no assurance that the Exchange Offer
will be commenced or consummated on the terms described in this
press release or at all. The complete terms and conditions of the
Exchange Offer will be set forth in an offering memorandum (the
“Offering Memorandum”) and related letter of transmittal (the
“Letter of Transmittal”), each of which will be distributed to
eligible holders of Old Notes in connection with the proposed
Exchange Offer.
It is expected that holders whose Old Notes are validly tendered
(and not validly withdrawn) at or prior to the early tender
deadline with respect to the Exchange Offer (which deadline will be
described in the Offering Memorandum) will receive in exchange for
each $1,000 principal amount of Old Notes so tendered and accepted
for exchange: (1) a principal amount of New Secured Notes equal to
the product of (a) $1,000 and (b) the quotient of (i) $700,000,000
and (ii) the aggregate principal amount of Old Notes validly
tendered (and not validly withdrawn) by all eligible holders at or
prior to such early tender deadline and accepted by the Issuer for
exchange; and (2) a principal amount of New Unsecured Notes equal
to (a) $1,000 minus (b) the principal amount of New Secured Notes
calculated in accordance with the immediately preceding clause (1)
(the “Total Consideration”). The Exchange Offer will contemplate a
par-for-par treatment for the Old Notes in exchange for
$700,000,000 in New Secured Notes (ratio dependent on participation
level, but, provided the Supporting Holders (as defined below)
tender their Old Notes, $700,000,000 aggregate principal amount of
New Secured Notes will be issued regardless of participation level)
and the balance of the consideration for tenders of the Old Notes
will come in the form of New Unsecured Notes such that the total
consideration across the two new series of debt securities will be
a par-for-par exchange.
The percentage of Total Consideration that will be comprised of
New Secured Notes that a holder will receive per $1,000 principal
amount of Old Notes validly tendered (and not validly withdrawn) by
the early tender deadline and accepted by the Issuer for exchange
will depend on the total aggregate principal amount of Old Notes
exchanged in the Exchange Offer. The greater the level of
participation in the Exchange Offer by holders of the Old Notes,
the lower the aggregate principal amount of New Secured Notes such
holders will receive as Total Consideration for each $1,000
principal amount of Old Notes.
The Issuer and certain institutional investors that are holders
of the Old Notes (the “Supporting Holders”) have agreed that,
subject to satisfaction of certain conditions, such holders will
tender in the Exchange Offer (and not withdraw) Old Notes
representing approximately 82.8% of the aggregate outstanding
principal amount of Old Notes. As a result, holders that exchange
their Old Notes after the early tender deadline will not receive
any New Secured Notes. See the table below for more information on
the composition of the Total Consideration in the following
hypothetical scenarios: (1) 82.8% of the aggregate outstanding
principal amount of Old Notes are tendered (and not validly
withdrawn) at or prior to the early tender deadline (i.e., only Old
Notes held by the Supporting Holders are validly tendered (and not
validly withdrawn) at or prior to the early tender deadline) and
(2) 100% of the aggregate outstanding principal amount of Old Notes
are tendered (and not validly withdrawn) at or prior to the early
tender deadline.
Total Consideration
Hypothetical Participation
Percentage
Principal amount of New Secured
Notes issued per
$1,000 principal amount of Old
Notes tendered
Principal amount of New Unsecured
Notes issued per
$1,000 principal amount of Old
Notes tendered
82.8% (Supporting Holders
only)
$321.22
$678.78
100%
$265.97
$734.03
In order to be eligible to receive any New Secured Notes
offered in the Exchange Offer, eligible holders must validly tender
(and not validly withdraw) their Old Notes at or prior to the early
tender deadline.
It is expected that holders whose Old Notes are validly tendered
(and not validly withdrawn) after the early tender deadline and
prior to the expiration date (which date will be described in the
Offering Memorandum) will receive $950 principal amount of New
Unsecured Notes (the “Exchange Consideration”) in exchange for each
$1,000 principal amount of Old Notes so tendered and accepted for
exchange.
In addition, holders whose Old Notes are exchanged in the
Exchange Offer will receive accrued and unpaid interest in cash in
respect of their exchanged Old Notes from the last interest payment
date to, but not including, the applicable settlement date for the
Exchange Offer (which dates will be described in the Offering
Memorandum); provided that in the case of Old Notes tendered after
the early tender deadline, the Issuer will deduct from such unpaid
interest an amount equal to the entitlement embedded in such
holders’ Exchange Notes relating to the period from the early
settlement date to the issuance of such Exchange Notes on the final
settlement date.
The Exchange Offer will be subject to certain conditions as will
be set forth in the Offering Memorandum and Letter of Transmittal,
including (i) the Supporting Holders validly tendering (and not
validly withdrawing) the 82.8% of the aggregate outstanding
principal amount of Old Notes held by them and (ii) the repayment
in full and termination of the Issuer’s existing cash-flow based
revolving credit facility. The Issuer reserves the right, subject
to applicable law, to terminate, withdraw or amend the Exchange
Offer at any time and from time to time, as will be described in
the Offering Memorandum. Exchanging holders of Old Notes will have
withdrawal rights as will be described in the Offering
Memorandum.
If after the early tender deadline, all conditions to the
Exchange Offer have been or concurrently are or will be satisfied
or waived by the Issuer, the Issuer will accept for exchange all
Old Notes validly tendered (and not withdrawn) in the Exchange
Offer as of such early tender deadline. It is expected that the
early settlement date will be on the fourth business day after the
early tender deadline.
In connection with the Exchange Offer, the Issuer intends to
issue an additional $500.0 million of 8.000% Senior Secured Notes
due 2026 (the “Tack-On Notes”) substantially concurrently with the
initial settlement date of the Exchange Offer, and use the net
proceeds of that offering to (i) redeem all $121.0 million
aggregate principal amount of the Issuer’s outstanding 7.125%
Senior Unsecured Notes due 2020 (the “2020 Notes”) at par plus
accrued and unpaid interest to, but excluding, the redemption date,
(ii) repay any amounts outstanding the Issuer’s cash-flow based
revolving credit facility (including cash-collateralizing
outstanding letters of credit) and permanently terminate such
agreement and (iii) repay borrowings outstanding under the Issuer’s
ABL facility. The Issuer has received, for no consideration, a
waiver from requisite holders of each series of its junior-priority
secured notes to waive any limitation in the indentures governing
such notes on using proceeds of new notes offerings to redeem the
2020 Notes prior to May 15, 2020. The Issuer has also received a
commitment from certain institutional investors to purchase,
subject to the satisfaction of certain conditions, the Tack-On
Notes under certain circumstances if they are not otherwise
subscribed for. The Issuer is under no obligation to consummate any
offering of Tack-On Notes and there can be no assurance that any
such offering will be consummated on the terms described in this
press release or at all. The terms of any offering of Tack-On Notes
will be set forth in an offering memorandum which will be
distributed to eligible investors.
It is expected that the New Secured Notes will be redeemable, at
the Issuer’s option, on or after December 15, 2022, at par plus 50%
of the coupon, declining ratably to par on and after December 15,
2024. Prior to December 15, 2022, the New Secured Notes will be
redeemable, at the Issuer’s option, subject to a standard
make-whole provision. It is expected that the New Unsecured Notes
will be redeemable, at the Issuer’s option, on or after April 1,
2023, at par plus 50% of the coupon, declining ratably to par on
and after April 1, 2025. Prior to April 1, 2023, the New Unsecured
Notes will be redeemable, at the Issuer’s option, subject to a
standard make-whole provision.
It is expected that each indenture governing each series of New
Notes (each a “New Notes Indenture”) will contain covenants
substantially similar to those included in the Issuer’s outstanding
8.000% Senior Secured Notes due 2026, with additional restrictions
on the ability of the Issuer and its restricted subsidiaries to
incur any additional secured debt.
It is expected that each series of New Notes will be guaranteed
by the Company and certain of its existing and future domestic
subsidiaries that guarantee the Issuer’s outstanding revolving
credit facility, ABL facility and senior notes. In addition, the
New Secured Notes and related guarantees are expected to be secured
by (i) shared first-priority liens on the collateral that secures
the Issuer’s outstanding cash-flow based revolving credit facility
and existing secured notes and (ii) shared second-priority liens on
the collateral that secures the Issuer’s outstanding ABL facility,
in each case subject to permitted liens as will be described in the
Offering Memorandum.
The New Notes and any Tack-On Notes will not be registered under
the Securities Act of 1933, as amended (the “Securities Act”) or
any state securities laws. The New Notes and any Tack-On Notes may
not be offered or sold in the United States or to any U.S. persons
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
The Exchange Offer is expected to be made, and each series of New
Notes are expected to be offered and issued only (i) in the United
States to holders of Old Notes who the Issuer reasonably believes
are “qualified institutional buyers” (as defined in Rule 144A under
the Securities Act) and (ii) outside the United States to holders
of Old Notes who are (A) persons other than U.S. persons, within
the meaning of Regulation S under the Securities Act, and (B)
“non-U.S. qualified offerees” (as will be defined in the Offering
Memorandum).
This press release is for informational purposes only. This
press release is neither an offer to sell nor a solicitation of an
offer to buy any New Notes or any Tack-On Notes and is neither an
offer to purchase nor a solicitation of an offer to sell any Old
Notes or any 2020 Notes. The Exchange Offer will be made only by,
and pursuant to, the terms to be set forth in the Offering
Memorandum and the Letter of Transmittal. The Exchange Offer will
not be made to persons in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. Documents relating to
the Exchange Offer, including the Offering Memorandum and Letter of
Transmittal, will only be distributed to eligible holders who
complete and return an eligibility form confirming they are either
(i) a “qualified institutional buyer” (as defined in Rule 144A
under the Securities Act) or (ii) not a U.S. person, within the
meaning of Regulation S under the Securities Act and a “non-U.S.
qualified offeree” (as will be defined in the eligibility
letter).
Forward-Looking Statement
Statements contained in this press release regarding the
proposed Exchange Offer and the other anticipated transactions
described herein are forward-looking statements that involve risk
and uncertainties. The Company undertakes no obligation to revise
or update any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191029006109/en/
Investor Contacts: Thomas J. Aaron Executive Vice
President and Chief Financial Officer 615-465-7000
Ross W. Comeaux Vice President – Investor Relations
615-465-7012
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