Community Health Systems 2015 Annual Report Download - page 93

On November 22, 2011, CHS completed its offering of $1.0 billion aggregate principal amount of 8% Senior
Notes due 2019, which were issued in a private placement. On March 21, 2012, CHS completed the secondary
offering of $1.0 billion aggregate principal amount of 8% Senior Notes, which were issued in a private placement
(at a premium of 102.5%). The net proceeds from these issuances were used to finance the purchase of
approximately $1.85 billion aggregate principal amount of CHS’ then outstanding 8
7
⁄ 8 % Senior Notes, to pay
related fees and expenses and for general corporate purposes.
On July 18, 2012, CHS completed an underwritten public offering under our automatic shelf registration filed
with the SEC of $1.2 billion aggregate principal amount of 7
1
⁄ 8 % Senior Notes due 2020. The net proceeds of
the offering were used to finance the purchase or redemption of the then outstanding $934 million principal
amount plus accrued interest of the 8
7
⁄ 8 % Senior Notes, to pay for consents delivered in connection therewith, to
pay related fees and expenses, and for general corporate purposes.
On August 17, 2012, CHS completed an underwritten public offering under our automatic shelf registration
filed with the SEC of $1.6 billion aggregate principal amount of 5
1
⁄ 8 % Senior Secured Notes due 2018. The 5
1
⁄ 8 % Senior Secured Notes are secured by a first-priority lien subject to a shared lien of equal priority with
certain other obligations, including obligations under the Credit Facility, and subject to prior ranking liens
permitted by the indenture governing the 5
1
⁄ 8 % Senior Secured Notes on substantially the same assets, subject to
certain exceptions, that secure CHS’ obligations under the Credit Facility. The net proceeds of the offering,
together with available cash on hand, were used to finance the prepayment of $1.6 billion of the outstanding term
loans due 2014 under the Credit Facility and related fees and expenses.
On March 21, 2012, through certain of its subsidiaries, CHS entered into an accounts receivable loan
agreement, or the Receivables Facility, with a group of lenders and banks, Credit Agricolé Corporate and
Investment Bank, as a managing agent and as the administrative agent, and The Bank of Nova Scotia, as a
managing agent. On March 7, 2013, CHS and certain of its subsidiaries amended the Receivables Facility to add
an additional managing agent, The Bank of Tokyo-Mitsubishi UFJ, Ltd., to increase the size of the facility from
$300 million to $500 million and to extend the scheduled termination date. Additional subsidiaries also agreed to
participate in the Receivables Facility as of that date. On March 31, 2014, CHS and certain of its subsidiaries
amended the Receivables Facility to increase the size of the facility from $500 million to $700 million and to
extend the scheduled termination date. Additional subsidiaries also agreed to participate in the Receivables
Facility as of that date. On November 13, 2015, CHS and certain of its subsidiaries amended the Receivables
Facility to extend the scheduled termination date and amend certain other provisions thereof. The existing and
future non-self pay patient-related accounts receivable, or the Receivables, for certain hospitals of CHS and its
subsidiaries serve as collateral for the outstanding borrowings under the Receivables Facility. The interest rate on
the borrowings is based on the commercial paper rate plus an applicable interest rate spread. Unless earlier
terminated or subsequently extended pursuant to its terms, the Receivables Facility will expire on November 13,
2017, subject to customary termination events that could cause an early termination date. CHS maintains
effective control over the Receivables because, pursuant to the terms of the Receivables Facility, the Receivables
are sold from certain of CHS’ subsidiaries to CHS, and CHS then sells or contributes the Receivables to a
special-purpose entity that is wholly-owned by CHS. The wholly-owned special-purpose entity in turn grants
security interests in the Receivables in exchange for borrowings obtained from the group of third-party lenders
and banks of up to $700 million outstanding from time to time based on the availability of eligible Receivables
and other customary factors. The group of third-party lenders and banks do not have recourse to CHS or its
subsidiaries beyond the assets of the wholly-owned special-purpose entity that collateralizes the loan. The
Receivables and other assets of the wholly-owned special-purpose entity will be available first and foremost to
satisfy the claims of the creditors of such entity. The outstanding borrowings pursuant to the Receivables Facility
at December 31, 2015 totaled $700 million and are classified as long-term debt on the consolidated balance
sheet. At December 31, 2015, the carrying amount of Receivables included in the Receivables Facility totaled
approximately $1.7 billion and is included in patient accounts receivable on the consolidated balance sheet.
We have transitioned all of our hospitals to the ICD-10 coding system, which was required effective
October 1, 2015 of all healthcare providers covered by the Health Insurance Portability and Accountability Act,
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