Health Net 2009 Annual Report Download - page 122

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
• noncompliance by the Company with any material term or provision of the HMO Regulations or
Insurance Regulations (as each such term is defined in the financing facility);
• events in bankruptcy, insolvency or reorganization of the Company;
• undischarged, uninsured judgments in the amount of $50 million or more against the Company; or
• certain changes in law that could adversely affect a participant in the financing facility.
In addition, in connection with the financing facility, we entered into the 2007 Swap with a non-U.S. bank
affiliated with one of the financing facility participants (see Note 2 to our consolidated financial statements).
As of December 31, 2009, our entire $104.0 million amortizing financing facility payable was classified as a
current liability on our consolidated balance sheet. As of December 31, 2008, our amortizing financing facility
payables were classified as current and noncurrent liabilities in the amount of $27.3 million and $104.0 million,
respectively.
Senior Notes
On May 18, 2007, we issued $300 million in aggregate principal amount of 6.375% Senior Notes due 2017.
On May 31, 2007, we issued an additional $100 million of 6.375% Senior Notes due 2017 which were
consolidated with, and constitute the same series as, the Senior Notes issued on May 18, 2007 (collectively,
Senior Notes). The aggregate net proceeds from the issuance of the Senior Notes were $393.5 million and were
used to repay outstanding debt.
The indenture governing the Senior Notes limits our ability to incur certain liens, or consolidate, merge or
sell all or substantially all of our assets. In the event of the occurrence of both (1) a change of control of Health
Net, Inc. and (2) a below investment grade rating by any two of Fitch, Inc., Moody’s Investors Service, Inc. and
Standard & Poor’s Ratings Services within a specified period, we will be required to make an offer to purchase
the Senior Notes at a price equal to 101% of the principal amount of the Senior Notes plus accrued and unpaid
interest to the date of repurchase. As of December 31, 2009, no default or event of default had occurred under the
indenture governing the Senior Notes.
The Senior Notes may be redeemed in whole at any time or in part from time to time, prior to maturity at
our option, at a redemption price equal to the greater of:
• 100% of the principal amount of the Senior Notes then outstanding to be redeemed; or
• the sum of the present values of the remaining scheduled payments of principal and interest on the
Senior Notes to be redeemed (not including any portion of such payments of interest accrued to the
date of redemption) discounted to the date of redemption on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the applicable treasury rate plus 30 basis points
plus, in each case, accrued and unpaid interest on the principal amount being redeemed to the redemption date.
Each of the following will be an Event of Default under the indenture governing the Senior Notes:
• failure to pay interest for 30 days after the date payment is due and payable; provided that an extension
of an interest payment period by us in accordance with the terms of the Senior Notes shall not
constitute a failure to pay interest;
F-28