Tag Archives: Debt Covenants

CHS in negotiations to extend nearly $2B in debt

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https://www.beckershospitalreview.com/finance/chs-in-negotiations-to-extend-nearly-2b-in-debt.html

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Franklin, Tenn.-based Community Health Systems is in talks with a group of bondholders led by Franklin Resources, an asset management company, to extend approximately $2 billion in bonds due in 2019, people familiar with the matter told the Wall Street Journal.

The company is in talks to swap the 2019 unsecured notes for debt secured by its assets, one person familiar with the matter told WSJ. This type of transaction would be difficult for CHS to complete, as the company can only issue about $1 billion in new secured debt without permission from its lenders to waive a covenant in its revolver loans.

Extending the debt due in 2019 is only a short-term solution because CHS faces billions of dollars in debt maturities from 2020 to 2023, according to the report.

CHS put a financial turnaround plan into place last year, which included selling 30 hospitals to reduce its heavy debt load. The company completed the divestiture plan earlier this month. With the help of proceeds from the hospital sales, CHS brought down its long-term debt load to $13.9 billion in the third quarter of this year, from $14.8 billion in the same period of 2016.

CHS ended the most recent quarter with a net loss of $110 million on revenues of $3.67 billion. That’s compared to the third quarter of 2016, when the company posted a net loss of $79 million on revenues of $4.38 billion.

 

Moody’s: Shareholder pressure may lead Tenet to make drastic changes

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https://www.beckershospitalreview.com/finance/moody-s-shareholder-pressure-may-lead-tenet-to-make-drastic-changes.html

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Dallas-based Tenet Healthcare has sufficient liquidity and plenty of flexibility from a debt covenant perspective to give the company time to improve its operations or change its strategic direction before it needs to undertake material refinancing, according to a Moody’s Investors Service report.

While Tenet’s leverage is high, its next maturity is $500 million in March 2019. “We believe Tenet can repay this with a combination of cash, which will be increasing due to proceeds from anticipated asset sales, and use of its $1 billion revolving credit facility,” said Moody’s.

The company has no amortizing debt requiring periodic payments, and its bond indentures include no financial maintenance covenants or debt incurrence covenants, according to Moody’s.

Moody’s also noted Tenet’s earnings have longer-term growth potential. Although Tenet’s facilities are generally located in highly competitive urban areas, these areas have growing populations. Across all service areas, Moody’s views Tenet’s ambulatory surgery center business as having higher growth prospects than its acute care hospitals.

Despite financial flexibility, Tenet is facing increasing shareholder pressure, which Moody’s said may lead the company to take more drastic measures, such as larger asset sales or even the sale of the entire company.