HCA Holdings 2011 Annual Report Download - page 43

We may find it necessary or prudent to refinance our outstanding indebtedness with longer-maturity debt at
a higher interest 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 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:
• incur additional indebtedness or issue certain preferred shares;
• pay dividends on, repurchase or make distributions in respect of our capital stock or make other
restricted payments;
• make certain investments;
• sell or transfer assets;
• create liens;
• consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and
• enter into certain transactions with our affiliates.
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 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 our other indebtedness.
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