Tenet Announces Pricing of its $1.4 Billion Private Offering of Senior Secured Notes

Rhea-AI Summary

Tenet Healthcare Corporation (NYSE: THC) has priced a private placement offering to issue $1.4 billion in senior secured first lien notes, maturing June 1, 2029, with a 4.25% interest rate. The sale is set for June 2, 2021, subject to market conditions. Proceeds will be utilized to redeem all outstanding 5.125% senior secured second lien notes due 2025. The notes will be secured on a first lien priority basis and will only be offered to qualified institutional buyers under Regulation S.

Positive

• Issuing $1.4 billion in senior secured first lien notes to strengthen capital structure.
• Use of proceeds to refinance higher interest second lien notes, potentially lowering interest expenses.

Negative

• Significant debt issuance may lead to shareholder dilution.
• Notes are not registered under the Securities Act, limiting market access.

Tenet Healthcare Corporation (NYSE: THC) today announced the pricing of the previously announced private placement offering and has agreed to issue and sell $1.4 billion in aggregate principal amount of senior secured first lien notes due on June 1, 2029, which will bear interest at a rate of 4.25% per annum (the “notes”). Completion of the notes offering is expected to occur on June 2, 2021, and is subject to, among other things, standard closing and market conditions.

Tenet intends to use the net proceeds from the sale of the notes, after payment of fees and expenses, to finance, together with cash on hand, the redemption of all of its outstanding 5.125% senior secured second lien notes due 2025 (the “2025 second lien notes”).

The notes will be guaranteed by certain of Tenet’s subsidiaries and secured on a first lien priority basis by a pledge of the capital stock and other ownership interests of certain of Tenet’s subsidiaries. The notes will be effectively senior to Tenet’s existing and future indebtedness secured on a more junior basis, as well as unsecured indebtedness and other liabilities, to the extent of the value of the collateral securing such borrowings.

The notes to be offered will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any other state securities laws. As a result, they may not be offered or sold in the United States or to any U.S. persons, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the notes will be offered only to persons reasonably believed to be “qualified institutional buyers” under Rule 144A of the Securities Act or, outside the United States, to persons other than “U.S. persons” in compliance with Regulation S under the Securities Act. A confidential offering memorandum for the notes will be made available to such eligible persons. The offering will be conducted in accordance with the terms and subject to the conditions set forth in such offering memorandum.

This news release is neither an offer to sell nor a solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. This news release shall not constitute a notice of redemption of the 2025 second lien notes.

Cautionary Statement

This release contains “forward-looking statements” - that is, statements that relate to future, not past, events. In this context, forward-looking statements often address the Company's expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “assume,” “believe,” “budget,” “estimate,” “forecast,” “intend,” “plan,” “predict,” “project,” “seek,” “see,” “target,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause the Company's actual results to be materially different than those expressed in the Company's forward-looking statements include, but are not limited to, the factors disclosed under “Forward-Looking Statements” and “Risk Factors” in our Form 10-K for the year ended December 31, 2020, any subsequent Form 10-Q filings and other filings with the Securities and Exchange Commission.

About Tenet Healthcare

Tenet Healthcare Corporation (NYSE: THC) is a diversified healthcare services company headquartered in Dallas with 108,000 employees. Through an expansive care network that includes United Surgical Partners International, we operate 65 hospitals and approximately 450 other healthcare facilities, including surgical hospitals, ambulatory surgery centers, imaging centers and other care sites and clinics. We also operate Conifer Health Solutions, which provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients. Across the Tenet enterprise, we are united by our mission to deliver quality, compassionate care in the communities we serve.

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FAQ

What are the details of Tenet Healthcare's recent bond offering?

Tenet is issuing $1.4 billion in senior secured first lien notes at a 4.25% interest rate, maturing on June 1, 2029.

How will Tenet Healthcare use the proceeds from the bond issuance?

Proceeds will be used to redeem all outstanding 5.125% senior secured second lien notes due 2025.

What is the impact of Tenet's bond offering on its financial health?

The offering aims to refinance existing higher-interest debt, which may improve financial health by reducing interest expenses.

When is the expected completion date for the notes offering by Tenet Healthcare?

The notes offering is expected to close on June 2, 2021, subject to market conditions.

Who can purchase the notes from Tenet Healthcare?

The notes are offered only to qualified institutional buyers under Rule 144A and outside the U.S. under Regulation S.