Health Net 2015 Annual Report Download - page 89

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Regulations or Insurance Regulations (as each such term is defined in the credit facility) in a manner that could
reasonably be expected to result in a material adverse effect; certain voluntary and involuntary bankruptcy events;
inability to pay debts; undischarged, uninsured judgments greater than $50 million against us and/or our subsidiaries
that are not stayed within 60 days; actual or asserted invalidity of any loan document; and a change of control. If an
event of default occurs and is continuing under the revolving credit facility, the lenders thereunder may, among other
things, terminate their obligations under the facility and require us to repay all amounts owed thereunder.
The pending Merger with Centene, if completed, would constitute a change of control under the terms of our
revolving credit facility, which would constitute an event of default thereunder. Accordingly, if the pending Merger with
Centene is completed prior to the due date of the facility, the lenders thereunder may, among other things, terminate
their obligations under the facility and require us to repay all outstanding amounts thereunder and replace the existing
letters of credit discussed below. See "—Overview—Centene Transaction" for additional information regarding our
pending Merger with Centene.
As of December 31, 2015, we were in compliance with all covenants under our revolving credit facility.
Letters of Credit
Pursuant to the terms of our revolving credit facility, we can obtain letters of credit in an aggregate amount of
$400 million and the maximum amount available for borrowing is reduced by the dollar amount of any outstanding
letters of credit. As of December 31, 2015, we had outstanding letters of credit of $7.1 million. As of February 23, 2016,
we had no outstanding letters of credit under the revolving credit facility. All outstanding letters of credit under our
revolving credit facility were transferred to a new uncommitted bi-lateral letter of credit facility, and as of February 23,
2016, we had letters of credit of $6.4 million outstanding under the bi-lateral facility. Accordingly, the maximum
amount available for borrowing under our revolving credit facility was $307.9 million as of December 31, 2015 and
$315.0 million as of February 23, 2016. As of December 31, 2015 and February 23, 2016, no amounts had been drawn
on any of our outstanding letters of credit.
Senior Notes
We have issued $400 million in aggregate principal amount of 6.375% Senior Notes due 2017 (the “Senior
Notes”). 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, 2015, we were in compliance with all of the covenants 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;
• failure to pay principal or premium, if any, on any note when due, either at maturity, upon any redemption,
by declaration or otherwise;
• failure to perform any other covenant or agreement in the notes or indenture for a period of 60 days after
notice that performance was required;