What types of notes are being offered and what are their maturity dates?

HCA is offering $4.2 billion in senior secured second lien notes expected to mature in 2014 and 2016, and $1.5 billion in senior secured second lien toggle notes expected to mature in 2016.

What is a 'toggle note' and how does it affect interest payments?

A toggle note allows the issuer the option to pay interest either in cash or 'in kind' (PIK), meaning the interest is added to the principal balance. For the first five years after the first interest period, HCA has the option to pay interest on these $1.5 billion in toggle notes in kind, providing financial flexibility.

HCA 8-K SEC Disclosure — Oct 25, 2006

Q: What is the primary purpose of the debt offering announced in this filing?

The primary purpose of the debt offering is to raise approximately $5.7 billion in aggregate principal amount of senior secured second lien notes to finance the consummation of HCA's previously announced merger.

Q: Who are the private equity firms involved in the merger that this financing supports?

The merger is with an entity controlled by affiliates of Bain Capital Partners, Kohlberg Kravis Roberts & Co., and Merrill Lynch Global Private Equity.

Summary

This 8-K filing from HCA Healthcare, Inc. (HCA) on October 25, 2006, details significant financing activities related to its previously announced merger with an entity controlled by affiliates of Bain Capital Partners, Kohlberg Kravis Roberts & Co., and Merrill Lynch Global Private Equity. The company announced the upcoming offering of approximately $5.7 billion in aggregate principal amount of senior secured second lien notes. This includes $4.2 billion in notes with staggered maturities in 2014 and 2016, and $1.5 billion in toggle notes due in 2016, which offer flexibility with interest payments potentially being made 'in kind' for the initial five years. The proceeds from this substantial debt issuance, along with other financing sources, are intended to fund the consummation of the merger. This announcement provides insight into the capital structure being arranged to facilitate this major transaction and highlights the significant financial commitments involved in the going-private deal.

Key Highlights

1HCA is issuing approximately $5.7 billion in senior secured second lien notes to help finance a pending merger.
2The notes include $4.2 billion due in 2014 and 2016, and $1.5 billion in toggle notes due in 2016.
3Toggle notes offer flexibility, allowing for 'in kind' interest payments for the first five years.
4Hercules Holding II, LLC is involved in the offering of these notes.
5The financing is a critical component of the previously announced merger with an entity controlled by major private equity firms (Bain Capital, KKR, Merrill Lynch PE).
6The proceeds will be used in conjunction with other financing to complete the merger.

HCA Healthcare, Inc. 8-K Report, Corporate Update (Oct 25, 2006)

Summary

Key Highlights

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