As filed with the Securities and Exchange Commission on May 27, 2009

Registration No. 333-      

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

HCA Inc.

(Exact name of registrant issuer as specified in its charter)

 

 

 

 

SEE TABLE OF ADDITIONAL REGISTRANTS

 

 

 

 

 

 

 

 

One Park Plaza

Nashville, Tennessee 37203

(615) 344-9551

(Address, including zip code, and telephone number, including area code, of registrants’ principal executive offices)

 

John M. Franck II, Esq.

HCA Inc.

Vice President and Corporate Secretary

One Park Plaza

Nashville, Tennessee 37203

Telephone: (615) 344-9551

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

 

With a copy to:

 

Richard A. Fenyes, Esq.

John C. Ericson, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017-3954

Telephone: (212) 455-2000

 

 

 

 

Approximate date of commencement of proposed sale to public:  From time to time after this registration statement becomes effective.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:  þ

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

(Do not check if a smaller reporting company)

 

 

CALCULATION OF REGISTRATION FEE

 

 

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

Table of Additional Registrant Guarantors

 

 

SUBJECT TO COMPLETION, DATED MAY 27, 2009

 

Preliminary Prospectus

 

 

HCA Inc.

 

Debt Securities

 

 

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

This prospectus has been prepared for and may be used by Banc of America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and their affiliates in connection with offers and sales of the debt securities referenced herein related to market-making transactions in such debt securities effected from time to time. Such affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when they act as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales.

 

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. The prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted.

 

 

 

 

Investing in the notes involves risks. See “Risk Factors” beginning on page 6 for a discussion of certain risks that you should consider before investing in the securities.

 

We are offering to sell these securities only in places where sales are permitted.

 

The date of this prospectus is          , 2009.

 

TABLE OF CONTENTS

 

 

We file certain reports with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We are an electronic filer, and the SEC maintains an Internet site at http://www.sec.gov that contains the reports and other information we file electronically. Our website address is www.hcahealthcare.com. Please note that our website address is provided as an inactive textual reference only. The information provided on our website is not part of this prospectus and is therefore not incorporated by reference unless such information is specifically referenced elsewhere in this prospectus. We make available free of charge, through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 15(d) of the Exchange Act, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

 

The SEC allows us to “incorporate by reference” into this prospectus the information in documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and later information that we file with the SEC will update and supersede this information. The information contained in this prospectus supersedes any inconsistent information contained in the documents incorporated by reference herein.

 

We incorporate by reference the documents listed below other than, in each case, those documents or the portions of those documents which are furnished and not filed:

 

 

 

 

 

You may request a copy of these filings, at no cost, by writing or calling us at the following address or telephone number:

 

Corporate Secretary
HCA Inc.
One Park Plaza
Nashville, Tennessee 37203

(615) 344-9551

 

The terms “Company,” “HCA,” “we,” “our” or “us,” as used herein, refer to HCA Inc. and its affiliates unless otherwise stated or indicated by context. The term “affiliates” means direct and indirect subsidiaries of HCA Inc. and partnerships and joint ventures in which such subsidiaries are partners.

 

We are one of the leading health care services companies in the United States. At March 31, 2009, we operated 163 hospitals, comprised of 157 general, acute care hospitals; five psychiatric hospitals; and one rehabilitation hospital. The 163 hospital total includes eight hospitals (seven general, acute care hospitals and one rehabilitation hospital) owned by joint ventures in which an affiliate of HCA is a partner, and these joint ventures are accounted for using the equity method. In addition, we operated 105 freestanding surgery centers, eight of which are owned by joint ventures in which an affiliate of HCA is a partner, and these joint ventures are accounted for using the equity method. Our facilities are located in 20 states and England. For the year ended December 31, 2008, we generated revenues of $28.374 billion and net income attributable to HCA Inc. of $673 million, and for the three months ended March 31, 2009, we generated revenues of $7.431 billion and net income attributable to HCA Inc. of $360 million.

 

Our primary objective is to provide a comprehensive array of quality health care services in the most cost-effective manner possible. Our general, acute care hospitals typically provide a full range of services to accommodate such medical specialties as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and emergency services. Outpatient and ancillary health care services are provided by our general, acute care hospitals, freestanding surgery centers, diagnostic centers and rehabilitation facilities. Our psychiatric hospitals provide a full range of mental health care services through inpatient, partial hospitalization and outpatient settings.

 

We also provide a variety of management services to our health care facilities, including patient safety programs; ethics and compliance programs; national supply contracts; equipment purchasing and leasing contracts; accounting, financial and clinical systems; governmental reimbursement assistance; construction planning and coordination; information technology systems and solutions; legal counsel; human resources services; and internal audit services.

 

 

HCA Inc. was incorporated in Nevada in January 1990 and reincorporated in Delaware in September 1993. Our principal executive offices are located at One Park Plaza, Nashville, Tennessee 37203, and our telephone number is (615) 344-9551.

 

You should carefully consider the risk factors set forth below as well as the risk factors incorporated herein by reference to our annual report on Form 10-K for the fiscal year ended December 31, 2008 (the “2008 10-K”) and our quarterly report on Form 10-Q for the quarter ended March 31, 2009 (the “2009 First Quarter 10-Q”) and the other information contained in this prospectus before purchasing the notes. This prospectus contains forward-looking statements that involve risks and uncertainties. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. In such a case, you may lose all or part of your original investment.

 

As used herein, the “senior secured credit facilities” refer to, collectively, our senior secured cash flow credit facility, dated as of November 17, 2006, as amended on February 16, 2007, and as amended on March 2, 2009 (the “cash flow credit facility”), and our senior secured asset-based revolving credit facility, dated as of November 17, 2006, as amended and restated as of June 20, 2007, and as amended on March 2, 2009 (the “asset-based revolving credit facility”). We refer to the “senior notes” as those notes, debentures and medium-term notes issued under the indenture, dated as of December 16, 1993, as amended or supplemented, to the “second lien notes” as those notes issued under, collectively, the indenture dated as of November 17, 2006 and the indenture dated as of February 19, 2009, each as amended or supplemented, to the “first lien notes” as those notes issued under the indenture, dated as of April 22, 2009, as amended or supplemented, and to the “senior secured notes” as, collectively, the second lien notes and the first lien notes. We refer to the “notes” as, collectively, the senior notes and the senior secured notes. For a more detailed description of the notes and the indentures and agreements governing such notes, see “Description of Notes.”

 

Risks Related to Our Indebtedness

 

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations.

 

Since completing our recapitalization in November 2006 we are highly leveraged. As of March 31, 2009 our total indebtedness was $26.567 billion. Our high degree of leverage could have important consequences, including:

 

 

We and our subsidiaries have the ability to incur additional indebtedness in the future, subject to the restrictions contained in our senior secured credit facilities and the indentures governing our outstanding notes. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.

We may not be able to generate sufficient cash to service all of our indebtedness and may not be able to refinance our indebtedness on favorable terms. If we are unable to do so, we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

 

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

 

As of March 31, 2009, our substantial indebtedness included $13.356 billion of indebtedness under our senior secured credit facilities that matures in 2012 and 2013, $6.000 billion of second lien notes maturing in 2014, 2016 and 2017 and $6.826 billion of unsecured senior notes and debentures that mature on various dates from 2009 to 2095 (including $5.437 billion maturing through 2016). Because a significant portion of our indebtedness matures in the next few years, we may find it necessary or prudent to refinance that indebtedness with longer-maturity debt at a higher interest rate. In April 2009, for example, we issued $1.500 billion of 81/2% Senior Secured Notes due 2019. We used the net proceeds of that offering to prepay term loans under our cash flow credit facility, which currently bears interest at a lower floating rate. Our ability to refinance our indebtedness on favorable terms, or at all, is directly affected by the current global economic and financial crisis. In addition, our ability to incur secured indebtedness (which may enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part on the value of our assets, which depends, in turn, on the strength of our cash flows and results of operations, and on economic and market conditions and other factors.

 

If our cash flows and capital resources are insufficient to fund our debt service obligations or we are unable to refinance our indebtedness, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions, or the proceeds from the dispositions may not be adequate to meet any debt service obligations then due.

 

Our debt agreements contain restrictions that limit our flexibility in operating our business.

 

Our senior secured credit facilities and the indentures governing our outstanding notes contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and certain of our subsidiaries’ ability to, among other things:

 

 

Under our asset-based revolving credit facility, when (and for as long as) the combined availability under our asset-based revolving credit facility and our senior secured revolving credit facility is less than a specified amount for a certain period of time or, if a payment or bankruptcy event of default has occurred and is continuing, funds deposited into any of our depository accounts will be transferred on a daily basis into a

blocked account with the administrative agent and applied to prepay loans under the asset-based revolving credit facility and to cash collateralize letters of credit issued thereunder.

 

Under our senior secured credit facilities, we are required to satisfy and maintain specified financial ratios. Our ability to meet those financial ratios can be affected by events beyond our control, and there can be no assurance that we will continue to meet those ratios. A breach of any of these covenants could result in a default under both our cash flow credit facility and our asset-based revolving credit facility. Upon the occurrence of an event of default under our senior secured credit facilities, our lenders could elect to declare all amounts outstanding under our senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under our senior secured credit facilities could proceed against the collateral granted to them to secure such indebtedness. We have pledged a significant portion of our assets as collateral under our senior secured credit facilities. If any of the lenders under our senior secured credit facilities accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay our senior secured credit facilities and the notes.

 

Risks Related to the Notes

 

Your ability to transfer the notes may be limited by the absence of an active trading market, and there is no assurance that any active trading market for the notes exists or will continue.

 

We do not intend to apply for a listing of the notes on a securities exchange or automated dealer quotation system. We cannot assure you as to the liquidity of markets that may develop for the notes, your ability to sell the notes or the price at which you would be able to sell the notes. No financial institution is obligated to make a market in any of the notes, and any financial institutions that do so may discontinue their market-making activities at any time without notice. Therefore, an active market for any of the notes, if developed, may not continue. Because Banc of America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and their respective affiliates (collectively, the “market makers”) may be considered affiliates of ours, they are required to deliver a current “market-maker” prospectus in connection with any secondary market sale of the notes, which may affect their ability to continue market-making activities. Historically, the market for non investment-grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the notes. The market, if any, for any of the notes may not be free from similar disruptions and any such disruptions may adversely affect the prices at which you may sell your notes. In addition, the notes may trade at a discount from your purchase price, depending upon prevailing interest rates, the market for similar notes, our performance and other factors.

 

If we default on our obligations to pay our indebtedness, we may not be able to make payments on the notes.

 

Any default under the agreements governing our indebtedness, including a default under our senior secured credit facilities that is not waived by the required lenders or a default under any of the indentures governing the notes, and the remedies sought by the holders of such indebtedness, could prevent us from paying principal, premium, if any, and interest on the notes and substantially decrease the market value of the notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness (including covenants in our senior secured credit facilities and the indentures governing the notes), we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our senior secured credit facilities could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to obtain waivers from the required lenders under our senior secured credit facilities to avoid being in default. If we breach our covenants under our senior secured credit facilities and seek a waiver, we may not be able to obtain a waiver from the required lenders. If

this occurs, we would be in default under the instruments governing that indebtedness, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.

 

Federal and state fraudulent transfer laws may permit a court to void the notes, and with respect to the senior secured notes, the guarantees, and, if that occurs, you may not receive any payments on the notes.

 

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the notes and, with respect to the senior secured notes, the incurrence of the guarantees. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the notes or guarantees could be voided as a fraudulent transfer or conveyance if (1) we or any of the guarantors, as applicable, issued the notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors or (2) we or any of the guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for either issuing the notes or incurring the guarantees and, in the case of (2) only, one of the following is also true at the time thereof:

 

 

If a court were to find that the issuance of the notes or the incurrence of any guarantee were a fraudulent transfer or conveyance, the court could void the payment obligations under the notes or such guarantee or further subordinate the notes or such guarantee to presently existing and future indebtedness of ours or of the related guarantor, or require the holders of the notes to repay any amounts received with respect to such guarantee. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the notes. Further, the voidance of the notes could result in an event of default with respect to our and our subsidiaries’ other debt that could result in acceleration of such debt.

 

As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to make a dividend payment or otherwise retire or redeem equity securities issued by the debtor.

 

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were solvent at the relevant time or, regardless of the standard that a court uses, that the issuance of the guarantees would not be further subordinated to our or any of our guarantors’ other debt. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

 

 

Risks Related to the Senior Notes

 

The senior notes are unsecured and effectively junior to our secured indebtedness, including our senior secured credit facilities and our senior secured notes, to the extent of the value of the collateral securing such secured indebtedness.

 

Our obligations under our senior notes are unsecured and are effectively junior to our secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. Our senior secured credit facilities and our senior secured notes are collateralized by, among other things, the capital stock of any wholly owned first-tier subsidiary of our company or of any U.S. subsidiary guarantor, substantially all of our and the U.S. subsidiary guarantors’ other tangible and intangible assets and accounts receivable of our company and certain of our domestic subsidiaries, subject to exceptions. Our senior secured credit facilities and the indentures governing our senior secured notes also permit us to incur additional secured indebtedness. The senior notes are effectively subordinated to all such secured indebtedness to the extent of the value of that collateral. If an event of default occurs under the senior secured credit facilities or under the indentures governing our senior secured notes, the holders of such senior secured indebtedness will have a prior right to our assets, to the exclusion of the holders of our senior notes, even if we are in default with respect to such notes. In that event, our assets would first be used to repay in full all indebtedness and other obligations secured by them (including all amounts outstanding under the senior secured credit facilities and the senior secured notes), resulting in all or a portion of our assets being unavailable to satisfy the claims of the holders of the senior notes and other unsecured indebtedness. Therefore, in the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, holders of the senior notes will participate in our remaining assets ratably with each other and with all holders of our unsecured indebtedness that is deemed to be of the same class as such notes, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor. In any of the foregoing events, we cannot assure you that there will be sufficient assets to pay amounts due on the senior notes. As a result, holders of such notes may receive less, ratably, than holders of secured indebtedness.

 

As of March 31, 2009, on an as adjusted basis after giving effect to our offering of $1.500 billion aggregate principal amount of first lien notes in April 2009 and the use of proceeds therefrom, we had outstanding an aggregate principal amount of $19.855 billion of senior secured indebtedness. This senior secured indebtedness includes that outstanding under our senior secured credit facilities, including letters of credit, the senior secured notes, capital leases and other secured debt. We also had an additional $2.198 billion available for borrowing under our senior secured revolving credit facilities after giving effect to certain outstanding letters of credit.

 

Claims of holders of our senior notes will be structurally subordinate to claims of creditors of all of our subsidiaries that do not guarantee such notes.

 

The senior notes are not guaranteed by any of our subsidiaries. Accordingly, claims of holders of the senior notes are structurally subordinate to the claims of creditors of these non-guarantor subsidiaries, including trade creditors. All obligations of our subsidiaries that do not guarantee the senior notes will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon a liquidation or otherwise, to holders of the senior notes. In addition, the indentures governing the notes permit, subject to some limitations, these subsidiaries to incur additional indebtedness and do not contain limitations on the amount of certain other liabilities, such as trade payables, that may be incurred by these subsidiaries.

 

Risks Related to the Senior Secured Notes

 

The value of the collateral securing the senior secured notes may not be sufficient to satisfy our obligations under such notes.

 

No appraisal of the value of the collateral was made in connection with the offerings of each series of senior secured notes, and the fair market value of the collateral is subject to fluctuations based on factors that include, among others, general economic conditions and similar factors. The amount to be received upon a

sale of the collateral would be dependent on numerous factors, including, but not limited to, the actual fair market value of the collateral at such time, the timing and the manner of the sale and the availability of buyers. By its nature, portions of the collateral may be illiquid and may have no readily ascertainable market value. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, the collateral may not be sold in a timely or orderly manner and the proceeds from any sale or liquidation of this collateral may not be sufficient to pay our obligations under the senior secured notes.

 

To the extent that liens securing obligations under the senior secured credit facilities, pre-existing liens, liens permitted under the indentures governing the senior secured notes and other rights, including liens on excluded assets, such as those securing purchase money obligations and capital lease obligations granted to other parties (in addition to the holders of any other obligations secured by higher-priority liens), encumber any of the collateral securing the senior secured notes and the guarantees, those parties have or may exercise rights and remedies with respect to the collateral that could adversely affect the value of the collateral and the ability of the collateral agents, the trustees or the holders of the senior secured notes to realize or foreclose on the collateral.

 

In addition, the senior secured notes and the related guarantees are not secured by any of the European collateral described under “Description of Other Indebtedness — Senior Secured Credit Facilities — Guarantee and Security.”

 

There may not be sufficient collateral to pay off all amounts we may borrow under our senior secured credit facilities, the existing senior secured notes and additional notes that we may offer that would be secured on the same basis as the existing senior secured notes. Consequently, liquidating the collateral securing the senior secured notes may not result in proceeds in an amount sufficient to pay any amounts due under such notes after also satisfying the obligations to pay any creditors with prior liens. In addition, we may be required to repay obligations under our cash flow credit facility with proceeds from a sale of assets before repaying the senior secured notes. If the proceeds of any sale of collateral are not sufficient to repay all amounts due on the senior secured notes, the holders of such notes (to the extent not repaid from the proceeds of the sale of the collateral) would have only a senior unsecured, unsubordinated claim against our and the subsidiary guarantors’ remaining assets.

 

Claims of holders of our senior secured notes are structurally subordinate to claims of creditors of all of our non-U.S. subsidiaries and some of our U.S. subsidiaries because they do not guarantee such notes.

 

The senior secured notes are not guaranteed by any of our non-U.S. subsidiaries, our less than wholly-owned U.S. subsidiaries or certain other U.S. subsidiaries. Accordingly, claims of holders of the senior secured notes are structurally subordinate to the claims of creditors of these non-guarantor subsidiaries, including trade creditors. All obligations of our non-guarantor subsidiaries will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon a liquidation or otherwise, to us or a guarantor of the senior secured notes.

 

On an as adjusted basis after giving effect to our offering of $1.500 billion aggregate principal amount of first lien notes in April 2009 and the use of proceeds therefrom, our non-guarantor subsidiaries would have accounted for approximately $11.867 billion, or 41.8%, of our total revenues for the year ended December 31, 2008, approximately $3.038 billion, or 40.9%, of our total revenues for the three months ended March 31, 2009, approximately $9.876 billion, or 40.7%, of our total assets, and approximately $7.517 billion, or 22.5%, of our total liabilities, in each case as of December 31, 2008, and approximately $9.817 billion, or 40.4%, of our total assets, and approximately $7.224 billion, or 21.9%, of our total liabilities, in each case as of March 31, 2009.

 

There are circumstances other than repayment or discharge of the senior secured notes under which the collateral securing such notes and guarantees will be released automatically, without your consent or the consent of the applicable trustee.

 

Under various circumstances, collateral securing the senior secured notes will be released automatically, including:

 

 

 

In addition, the guarantee of a subsidiary guarantor will be automatically released to the extent it is released under the senior secured credit facilities or in connection with a sale of such subsidiary guarantor in a transaction not prohibited by the indentures.

 

The indentures governing the senior secured notes also permit us to designate one or more of our restricted subsidiaries that is a guarantor of the senior secured notes as an unrestricted subsidiary. If we designate a subsidiary guarantor as an unrestricted subsidiary for purposes of the indentures governing the senior secured notes, all of the liens on any collateral owned by such subsidiary or any of its subsidiaries and any guarantees of the notes by such subsidiary or any of its subsidiaries will be released under the indentures but not necessarily under our senior secured credit facilities. Designation of an unrestricted subsidiary will reduce the aggregate value of the collateral securing the notes to the extent that liens on the assets of the unrestricted subsidiary and its subsidiaries are released. In addition, the creditors of the unrestricted subsidiary and its subsidiaries will have a senior claim on the assets of such unrestricted subsidiary and its subsidiaries. See “Description of Notes.”

 

We will in most cases have control over the collateral, and the sale of particular assets by us could reduce the pool of assets securing the senior secured notes and the guarantees.

 

The collateral documents allow us to remain in possession of, retain exclusive control over, freely operate, and collect, invest and dispose of any income from, the collateral securing the senior secured notes and the

guarantees, except, under certain circumstances, cash transferred to accounts controlled by the administrative agent under our asset-based revolving credit facility.

 

In addition, we are not required to comply with all or any portion of Section 314(d) of the Trust Indenture Act of 1939 (the “Trust Indenture Act”) if we determine, in good faith based on advice of counsel, that, under the terms of that Section and/or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including “no action” letters or exemptive orders, all or such portion of Section 314(d) of the Trust Indenture Act is inapplicable to the released collateral. For example, so long as no default or event of default under the indentures governing the senior secured notes would result therefrom and such transaction would not violate the Trust Indenture Act, we may, among other things, without any release or consent by the applicable trustees, conduct ordinary course activities with respect to collateral, such as selling, factoring, abandoning or otherwise disposing of collateral and making ordinary course cash payments (including repayments of indebtedness). See “Description of Notes.”

 

The imposition of certain permitted liens will cause the assets on which such liens are imposed to be excluded from the collateral securing the senior secured notes and the guarantees. There are also certain other categories of property that are also excluded from the collateral.

 

The indentures governing the senior secured notes permit liens in favor of third parties to secure additional debt, including purchase money indebtedness and capital lease obligations, and any assets subject to such liens will be automatically excluded from the collateral securing the senior secured notes and the guarantees. Our ability to incur purchase money indebtedness and capital lease obligations is subject to the limitations as described in “Description of Notes.” In addition, certain categories of assets are excluded from the collateral securing the senior secured notes and the guarantees. Excluded assets include the assets of our non-guarantor subsidiaries and equity investees, certain capital stock and other securities of our subsidiaries and equity investees, certain properties that do not secure our senior secured credit facilities, deposit accounts, other bank or securities accounts, cash, leaseholds and motor vehicles, and the proceeds from any of the foregoing. The assets excluded from the collateral for the second lien secured notes include the properties defined as “principal properties” under our indenture dated as of December 16, 1993, so long as that indenture remains in effect. Although the first lien secured notes share a lien on such “principal properties,” that lien is limited to securing a portion of the indebtedness under the senior secured notes and our cash flow credit facility that, in the aggregate, does not exceed 10% of our consolidated net tangible assets. See “Description of Notes.” If an event of default occurs and the senior secured notes are accelerated, such notes and the guarantees will rank equally with the holders of other unsubordinated and unsecured indebtedness of the relevant entity with respect to such excluded property.

 

On an as adjusted basis after giving effect to our offering of $1.500 billion aggregate principal amount of first lien notes in April 2009 and the use of proceeds therefrom, our non-guarantor subsidiaries would have accounted for approximately $9.817 billion, or 40.4%, of our total assets as of March 31, 2009.

 

The pledge of the capital stock, other securities and similar items of our subsidiaries that secure the senior secured notes will automatically be released from the lien on them and no longer constitute collateral for so long as the pledge of such capital stock or such other securities would require the filing of separate financial statements with the SEC for that subsidiary.

 

The senior secured notes and the guarantees are secured by a pledge of the stock of some of our subsidiaries. Under the SEC regulations in effect as of the issue date of the senior secured notes, if the par value, book value as carried by us or market value (whichever is greatest) of the capital stock, other securities or similar items of a subsidiary pledged as part of the collateral is greater than or equal to 20% of the aggregate principal amount of the senior secured notes then outstanding, such a subsidiary would be required to provide separate financial statements to the SEC. Therefore, the indentures governing the senior secured notes and the collateral documents provide that any capital stock and other securities of any of our subsidiaries will be excluded from the collateral for so long as the pledge of such capital stock or other securities to secure the senior secured notes would cause such subsidiary to be required to file separate financial statements with the SEC pursuant to Rule 3-16 of Regulation S-X (as in effect from time to time).

As a result, holders of the senior secured notes could lose a portion or all of their security interest in the capital stock or other securities of those subsidiaries during such period. It may be more difficult, costly and time-consuming for holders of the senior secured notes to foreclose on the assets of a subsidiary than to foreclose on its capital stock or other securities, so the proceeds realized upon any such foreclosure could be significantly less than those that would have been received upon any sale of the capital stock or other securities of such subsidiary. See “Description of Notes.”

 

Your rights in the collateral may be adversely affected by the failure to perfect security interests in certain collateral in the future.

 

Applicable law requires that certain property and rights acquired after the grant of a general security interest, such as real property, equipment subject to a certificate and certain proceeds, can only be perfected at the time such property and rights are acquired and identified. The trustees or the collateral agents for the senior secured notes may not monitor, or we may not inform the trustees or the collateral agents for the senior secured notes of, the future acquisition of property and rights that constitute collateral, and necessary action may not be taken to properly perfect the security interest in such after-acquired collateral. The collateral agents for the senior secured notes have no obligation to monitor the acquisition of additional property or rights that constitute collateral or the perfection of any security interest in favor of the senior secured notes against third parties. Such failure may result in the loss of the security interest therein or the priority of the security interest in favor of the senior secured notes against third parties.

 

The collateral is subject to casualty risks.

 

We intend to maintain insurance or otherwise insure against hazards in a manner appropriate and customary for our business. There are, however, certain losses that may be either uninsurable or not economically insurable, in whole or in part. Insurance proceeds may not compensate us fully for our losses. If there is a complete or partial loss of any of the pledged collateral, the insurance proceeds may not be sufficient to satisfy all of the secured obligations, including the senior secured notes and the guarantees.

 

We may not be able to repurchase the senior secured notes upon a change of control.

 

Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all outstanding senior secured notes at 101% of their principal amount plus accrued and unpaid interest. The source of funds for any such purchase of such notes will be our available cash or cash generated from our subsidiaries’ operations or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the senior secured notes upon a change of control because we may not have sufficient financial resources to purchase all of the senior secured notes that are tendered upon a change of control. Further, we are contractually restricted under the terms of our senior secured credit facilities from repurchasing all of the notes tendered by holders upon a change of control. Accordingly, we may not be able to satisfy our obligations to purchase the senior secured notes unless we are able to refinance or obtain waivers under the instruments governing that indebtedness. Our failure to repurchase the senior secured notes upon a change of control would cause a default under the indentures governing the senior secured notes and a cross-default under the instruments governing our senior secured credit facilities. The instruments governing our senior secured credit facilities also provide that a change of control will be a default that permits lenders to accelerate the maturity of borrowings thereunder. Any of our future debt agreements may contain similar provisions.

 

In the event of our bankruptcy, the ability of the holders of the senior secured notes to realize upon the collateral will be subject to certain bankruptcy law limitations.

 

The ability of holders of the senior secured notes to realize upon the collateral will be subject to certain bankruptcy law limitations in the event of our bankruptcy. Under applicable U.S. federal bankruptcy laws, secured creditors are prohibited from repossessing their security from a debtor in a bankruptcy case without bankruptcy court approval and may be prohibited from disposing of security repossessed from such a debtor without bankruptcy court approval. Moreover, applicable federal bankruptcy laws generally permit the debtor

to continue to retain collateral, including cash collateral, even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.”

 

The meaning of the term “adequate protection” may vary according to the circumstances, but is intended generally to protect the value of the secured creditor’s interest in the collateral at the commencement of the bankruptcy case and may include cash payments or the granting of additional security if and at such times as the court, in its discretion, determines that a diminution in the value of the collateral occurs as a result of the stay of repossession or the disposition of the collateral during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term “adequate protection” and the broad discretionary powers of a U.S. bankruptcy court, we cannot predict whether or when the collateral agents and/or the trustees under the indentures which govern senior secured notes could foreclose upon or sell the collateral or whether or to what extent holders of senior secured notes would be compensated for any delay in payment or loss of value of the collateral through the requirement of “adequate protection.”

 

Moreover, the collateral agents for the senior secured notes may need to evaluate the impact of the potential liabilities before determining to foreclose on collateral consisting of real property, if any, because secured creditors that hold a security interest in real property may be held liable under environmental laws for the costs of remediating or preventing the release or threatened releases of hazardous substances at such real property. Consequently, the collateral agents for the senior secured notes may decline to foreclose on such collateral or exercise remedies available in respect thereof if they do not receive indemnification to their satisfaction from the holders of the senior secured notes.

 

Certain series of senior secured notes were issued with original issue discount for U.S. federal income tax purposes.

 

The 95/8%/103/8% senior secured toggle notes due 2016, the 97/8% senior secured notes due 2017 and the 81/2% senior secured notes due 2019 (collectively, the “OID Notes”) were issued with original issue discount (“OID”) for U.S. federal income tax purposes. Thus, in addition to stated interest on the OID Notes, U.S. holders (as defined in “Certain U.S. Federal Tax Consequences”) will be required to include amounts representing the OID in gross income on a constant yield to maturity basis in advance of the receipt of cash payment thereof, regardless of a U.S. holder’s method of accounting for U.S. federal income tax purposes. With respect to the 95/8%/103/8% senior secured toggle notes due 2016, U.S. holders will be required to include such OID in gross income even if we do not pay cash interest. For more information about the U.S. federal income tax consequences of owning the OID Notes, see “Certain U.S. Federal Tax Consequences.”

 

If a bankruptcy petition were filed by or against us, holders of the OID Notes may receive a lesser amount for their claim than they would have been entitled to receive under the indenture governing such notes.

 

If a bankruptcy petition were filed by or against us under the U.S. Bankruptcy Code after the issuance of the OID Notes, the claim by any holder of the notes for the principal amount of the notes may be limited to an amount equal to the sum of:

 

 

Any original issue discount that was not amortized as of the date of the bankruptcy filing would constitute unmatured interest. Accordingly, holders of the OID Notes under these circumstances may receive a lesser amount than they would be entitled to receive under the terms of the indenture governing such notes, even if sufficient funds are available.

Risks Related to the Second Lien Senior Secured Notes

 

Other secured indebtedness, including our senior secured credit facilities and first lien notes, is effectively senior to the second lien notes to the extent of the value of the collateral securing such indebtedness on a higher priority basis.

 

Our cash flow credit facility and our first lien notes are collateralized by a first-priority lien, subject to permitted liens, in, among other things, the capital stock of any wholly owned first-tier subsidiary of our company or of any U.S. subsidiary guarantor and substantially all of our and the U.S. subsidiary guarantors’ other tangible and intangible assets, subject to exceptions. In addition, our asset-based revolving credit facility has a first-priority lien in the accounts receivable of our company and certain of our subsidiaries, and our first lien notes and our cash flow credit facility, other than the European term loan facility, have a second-priority lien in those receivables (except for those of certain special purpose subsidiaries that only guarantee and pledge their assets under our asset-based revolving credit facility). Our senior secured credit facilities and the indentures governing our senior secured notes also permit us to incur additional indebtedness secured on a first-priority basis by such assets in the future. The first- and second-priority liens in the collateral securing indebtedness under our senior secured credit facilities and our first lien notes, as the case may be, and any such future indebtedness is higher in priority as to such collateral than the security interests securing the second lien notes and the guarantees of such notes. The second lien notes and the related guarantees are secured, subject to permitted liens, by a second-priority lien or a third-priority lien, as the case may be, in the assets that secure our cash flow credit facility and first lien notes on a first-priority or second-priority basis, as the case may be. Holders of the indebtedness under our senior secured credit facilities, the first lien notes and any other indebtedness collateralized by a higher-priority lien in such collateral will be entitled to receive proceeds from the realization of value of such collateral to repay such indebtedness in full before the holders of the second lien notes will be entitled to any recovery from such collateral. As a result, holders of the second lien notes will only be entitled to receive proceeds from the realization of value of assets securing our senior secured credit facilities and first lien notes on a higher-priority basis after all indebtedness and other obligations under our senior secured credit facilities, first lien notes and any other obligations secured by higher-priority liens on such assets are repaid in full. The second lien notes are effectively junior in right of payment to indebtedness under our senior secured credit facilities, the first lien notes and any other indebtedness collateralized by a higher-priority lien in our assets, to the extent of the realizable value of such collateral. In addition, the indentures governing the second lien notes permit us to incur additional indebtedness secured by a lien that ranks equally with the second lien notes. Any such indebtedness may further limit the recovery from the realization of the value of such collateral available to satisfy holders of the second lien notes.

 

As of March 31, 2009, on an as adjusted basis after giving effect to our offering of $1.500 billion aggregate principal amount of first lien notes in April 2009 and the use of proceeds therefrom, we had outstanding an aggregate principal amount of $13.855 billion of senior secured indebtedness secured by liens ranking senior to those securing the second lien notes. This indebtedness includes that outstanding under our senior secured credit facilities, including letters of credit, the first lien notes, capital leases and other debt secured on a first priority basis. We also had an additional $2.198 billion available for borrowing under our senior secured revolving credit facilities after giving effect to certain outstanding letters of credit.

 

The lien ranking provisions of the indentures and other agreements relating to the collateral securing the second lien notes limit the rights of holders of such notes with respect to that collateral, even during an event of default.

 

The rights of the holders of the second lien notes with respect to the collateral that secures the notes on a second-priority or third-priority basis, as the case may be, are substantially limited by the terms of the lien ranking agreements set forth in the indentures and the intercreditor agreements, even during an event of default. Under the indentures and the intercreditor agreements, at any time that obligations that have the benefit of the higher-priority liens are outstanding, any actions that may be taken with respect to such collateral, including the ability to cause the commencement of enforcement proceedings against such collateral and to control the conduct of such proceedings, and the approval of amendments to, releases of such collateral from the lien of, and waivers of past defaults under, such documents relating to such collateral, will be at the

direction of the holders of the obligations secured by the first-priority and second-priority liens, as applicable, and the holders of the notes secured by lower-priority liens may be adversely affected.

 

In addition, the indentures and the intercreditor agreements contain certain provisions benefiting holders of indebtedness under our senior secured credit facilities, including provisions requiring the second lien trustees and the second lien collateral agent not to object following the filing of a bankruptcy petition to a number of important matters regarding the collateral. After such filing, the value of this collateral could materially deteriorate, and holders of the second lien notes would be unable to raise an objection. In addition, the right of holders of obligations secured by first-priority and second-priority liens, as applicable, to foreclose upon and sell such collateral upon the occurrence of an event of default also would be subject to limitations under applicable bankruptcy laws if we or any of our subsidiaries become subject to a bankruptcy proceeding.

 

The collateral that secures the second lien notes and guarantees on a lower-priority basis will also be subject to any and all exceptions, defects, encumbrances, liens and other imperfections as may be accepted by the lenders under our senior secured credit facilities, the holders of our first lien notes and other creditors that have the benefit of higher-priority liens on such collateral from time to time, whether on or after the date the second lien notes and guarantees are issued. The existence of any such exceptions, defects, encumbrances, liens and other imperfections could adversely affect the value of the collateral securing the second lien notes as well as the ability of the second lien collateral agent to realize or foreclose on such collateral.

 

The lenders under our senior secured credit facilities will have the discretion to release the guarantors under the instruments governing that indebtedness in a variety of circumstances, which will cause those guarantors to be released from their guarantees of the second lien notes.

 

While any obligations under our senior secured credit facilities remain outstanding, any guarantee of the second lien notes may be released without action by, or consent of, any holder of the second lien notes or the trustees under the indentures governing the second lien notes, at the discretion of lenders under our senior secured credit facilities, if the related guarantor is no longer a guarantor of obligations under that indebtedness or any other indebtedness. See “Description of Notes.” The lenders under our senior secured credit facilities will have the discretion to release the guarantees under the senior secured credit facilities in a variety of circumstances. You will not have a claim as a creditor against any subsidiary that is no longer a guarantor of the second lien notes, and the indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will effectively be senior to claims of holders of such notes.

 

Risks Related to the First Lien Senior Secured Notes

 

The secured indebtedness under our senior secured asset-based revolving credit facility is effectively senior to the first lien notes to the extent of the value of the receivables collateral securing such facility on a first-priority basis.

 

Our asset-based revolving credit facility has a first-priority lien in the accounts receivable of our company and our domestic subsidiaries, with certain exceptions. Our other senior secured credit facilities have, and our first lien notes have, a second-priority lien in those receivables (except for those of certain special purpose subsidiaries that only guarantee and pledge their assets under our asset-based revolving credit facility). The indentures governing both the second lien notes and the first lien notes permit us to incur additional indebtedness secured on a first-priority basis by such assets in the future. The first-priority liens in the collateral securing indebtedness under our asset-based revolving credit facility and any such future indebtedness is higher in priority as to such collateral than the security interests securing the first lien notes and the guarantees. Holders of the indebtedness under our asset-based revolving credit facility and any other indebtedness secured by higher priority liens on such collateral will be entitled to receive proceeds from the realization of value of such collateral to repay such indebtedness in full before the holders of the first lien notes will be entitled to any recovery from such collateral. As a result, holders of the first lien notes will only be entitled to receive proceeds from the realization of value of assets securing our asset-based revolving credit facility on a higher priority basis after all indebtedness and other obligations under our asset-based revolving credit facility and any other obligations secured by higher priority liens on such assets are repaid in full. The

first lien notes are effectively junior in right of payment to indebtedness under our asset-based revolving credit facility and any other indebtedness secured by higher priority liens on such collateral to the extent of the realizable value of such collateral. Even if there were receivables collateral or proceeds left over to pay the first lien notes and the cash flow credit facility after a foreclosure on that collateral and payment of the outstanding amounts under the asset-based revolving credit facility, that collateral would be subject to the first lien intercreditor agreement, and the representative of the lenders under the cash flow credit facility would initially control actions with respect to that collateral. See “— Even though the holders of the first lien notes have the benefit of a first-priority lien on the collateral that secures our cash flow credit facility, the representative of the lenders under the cash flow credit facility will initially control actions with respect to that collateral.”

 

As of March 31, 2009, the first lien notes would have been effectively junior to $1.715 billion of indebtedness outstanding under our asset-based revolving credit facility to the extent of the value of collateral securing such indebtedness.

 

The lien ranking provisions of the indenture and other agreements relating to the collateral securing the first lien notes limit the rights of holders of the first lien notes with respect to that collateral, even during an event of default.

 

The rights of the holders of the first lien notes with respect to the receivables collateral that secures the asset-based revolving credit facility on a first-priority basis and that secures our cash flow credit facility and the first lien notes on a second-priority basis are substantially limited by the terms of the lien ranking agreements set forth in the indenture governing the first lien notes and the applicable receivables intercreditor agreement, even during an event of default. Under the indenture governing the first lien notes and the applicable receivables intercreditor agreement, at any time that obligations that have the benefit of the higher priority liens are outstanding, any actions that may be taken with respect to such collateral, including the ability to cause the commencement of enforcement proceedings against such collateral, to control the conduct of such proceedings and to approve amendments to releases of such collateral from the lien of, and waive past defaults under, such documents relating to such collateral, will be at the direction of the holders of the obligations secured by the first-priority liens, and the holders of the first lien notes secured by lower-priority liens may be adversely affected.

 

In addition, the indenture governing the first lien notes and the applicable receivables intercreditor agreement contain certain provisions benefiting holders of indebtedness under our asset-based revolving credit facility, including provisions requiring the trustee and the collateral agent for the first lien notes not to object following the filing of a bankruptcy petition to certain important matters regarding the receivables collateral. After such filing, the value of this collateral could materially deteriorate, and holders of the first lien notes would be unable to raise an objection.

 

The receivables collateral that secures the first lien notes and guarantees on a lower-priority basis will also be subject to any and all exceptions, defects, encumbrances, liens and other imperfections as may be accepted by the lenders under our asset-based revolving credit facility, whether on or after the date the first lien notes and guarantees were issued. The existence of any such exceptions, defects, encumbrances, liens and other imperfections could adversely affect the value of the collateral securing the first lien notes, as well as the ability of the collateral agent to realize or foreclose on such collateral.

 

Even though the holders of the first lien notes have the benefit of a first-priority lien on the collateral that secures our cash flow credit facility, the representative of the lenders under the cash flow credit facility will initially control actions with respect to that collateral.

 

The rights of the holders of the first lien notes with respect to the collateral that secures such notes on a first-priority basis are subject to a first lien intercreditor agreement among all holders of obligations secured by that collateral on a first-priority basis, including the obligations under our cash flow credit facility. Under that intercreditor agreement, any actions that may be taken with respect to such collateral, including the ability to cause the commencement of enforcement proceedings against such collateral, to control such proceedings

and to approve amendments to releases of such collateral from the lien of, and waive past defaults under, such documents relating to such collateral, will be at the direction of the authorized representative of the lenders under the cash flow credit facility until (1) our obligations under the cash flow credit facility are discharged (which discharge does not include certain refinancings of the cash flow credit facility) or (2) 90 days after the occurrence of an event of default under the indenture governing the first lien notes, if the authorized representative of the holders of the first lien notes represents the largest outstanding principal amount of indebtedness secured by a first-priority lien on the collateral (other than the cash flow credit facility) and has complied with the applicable notice provisions.

 

However, even if the authorized representative of the first lien notes gains the right to direct the collateral agent in the circumstances described in clause (2) above, the authorized representative must stop doing so (and those powers with respect to the collateral would revert to the authorized representative of the lenders under the cash flow credit facility) if the lenders’ authorized representative has commenced and is diligently pursuing enforcement action with respect to the collateral or the grantor of the security interest in that collateral (whether our company or the applicable subsidiary guarantor) is then a debtor under or with respect to (or otherwise subject to) an insolvency or liquidation proceeding.

 

In addition, the senior secured credit facilities and the indenture governing the first lien notes permit us to issue additional series of notes that also have a first-priority lien on the same collateral. At any time that the representative of the lenders under the cash flow credit facility does not have the right to take actions with respect to the collateral pursuant to the first lien intercreditor agreement, that right passes to the authorized representative of the holders of the next largest outstanding principal amount of indebtedness secured by a first-priority lien on the collateral. If we issue additional first lien notes in the future in a greater principal amount than the existing first lien notes, then the authorized representative for those additional notes would be next in line to exercise rights under the first lien intercreditor agreement, rather than the authorized representative for the existing first lien notes.

 

Under the first lien intercreditor agreement, the authorized representative of the holders of the first lien notes may not object following the filing of a bankruptcy petition to any debtor-in-possession financing or to the use of the shared collateral to secure that financing, subject to conditions and limited exceptions. After such a filing, the value of this collateral could materially deteriorate, and holders of the first lien notes would be unable to raise an objection.

 

The collateral that secures the first lien notes and guarantees on a first-priority basis will also be subject to any and all exceptions, defects, encumbrances, liens and other imperfections as may be accepted by the authorized representative of the lenders under our cash flow credit facility during any period that such authorized representative controls actions with respect to the collateral pursuant to the first lien intercreditor agreement. The existence of any such exceptions, defects, encumbrances, liens and other imperfections could adversely affect the value of the collateral securing the first lien notes as well as the ability of the collateral agent to realize or foreclose on such collateral for the benefit of the holders of the first lien notes.

 

FORWARD-LOOKING STATEMENTS

 

This prospectus and the documents incorporated herein by reference contain “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “continue,” “initiative” or “anticipates” or similar expressions that concern our prospects, objectives, strategies, plans or intentions. All statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to the impact of existing or proposed laws or regulations described, or incorporated by reference, in this prospectus are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are

reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results.

 

Some of the important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk Factors” and elsewhere in this prospectus as well as in our 2008 10-K and 2009 First Quarter 10-Q incorporated herein by reference. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

 

We do not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

This prospectus is delivered in connection with the sale of notes by Banc of America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and their affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.

 

Senior Secured Credit Facilities

 

On November 17, 2006 in connection with our recapitalization, we entered into the senior secured credit facilities with Banc of America Securities LLC, J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arrangers and bookrunners, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A. and Citicorp North America, Inc., as co-syndication agents and Merrill Lynch Capital Corporation, as documentation agent.

 

The senior secured credit facilities provide senior secured financing of $16.800 billion, consisting of:

 

 

We refer to these senior secured credit facilities, excluding the asset-based revolving credit facility, as the “cash flow credit facility” and, collectively with the asset-based revolving credit facility, the “senior secured credit facilities.”

 

HCA Inc. is the primary borrower under the senior secured credit facilities, except that a U.K. subsidiary is the borrower under the European term loan facility. The revolving credit facilities include capacity available for the issuance of letters of credit and for borrowings on same-day notice, referred to as the swingline loans. A portion of the letter of credit availability under the cash-flow revolving credit facility is available in euros, dollars and pounds sterling. Lenders under the cash flow credit facility are subject to a loss sharing agreement pursuant to which, upon the occurrence of certain events, including a bankruptcy event of default under the cash flow credit facility, each such lender will automatically be deemed to have exchanged its interest in a particular tranche of the cash flow credit facility for a pro rata percentage in all of the tranches of the cash flow credit facility.

 

The asset-based revolving credit facility is documented in a separate loan agreement from the other senior secured credit facilities.

 

On February 16, 2007, we amended our cash flow credit facility to reduce the applicable margins with respect to the term borrowings thereunder. On June 20, 2007, we amended our asset-based revolving credit facility to reduce the applicable margin with respect to borrowings thereunder.

 

On March 2, 2009, we amended our cash flow credit facility to allow for one or more future issuances of additional secured notes, which may include notes that are secured on a pari passu basis or on a junior basis with the obligations under the cash flow credit facility, so long as (1) such notes do not require, subject to certain exceptions, scheduled repayments, payment of principal or redemption prior to the scheduled term loan B maturity date as currently in effect, (2) the terms of such notes, taken as a whole, are not more restrictive than those in the cash flow credit facility and (3) the proceeds from any such issuance are used within three business days of receipt to permanently prepay term loans under the cash flow credit facility in accordance with the terms of the cash flow credit facility. The U.S. security documents related to the cash flow credit facility were also amended and restated or, in the case of the U.S. mortgages, will be amended and restated, in connection with the amendment in order to give effect to the security interests to be granted to holders of such additional secured notes.

 

On March 2, 2009, we also amended our asset-based revolving credit facility to allow for one or more future issuances of additional secured notes or loans, which may include notes or loans that are secured on a

pari passu basis or on a junior basis with the obligations under the cash flow credit facility, so long as (1) such notes or loans do not require, subject to certain exceptions, scheduled repayments, payment of principal or redemption prior to the scheduled term loan B final maturity date as currently in effect, (2) the terms of such notes or loans, as applicable, taken as a whole, are not more restrictive than those in the cash flow credit facility and (3) the proceeds from any such issuance are used within three business days of receipt to permanently prepay term loans under the cash flow credit facility in accordance with the terms of the cash flow credit facility. The amendment to the asset-based revolving credit facility also altered the excess facility availability requirement to include a separate minimum facility availability requirement applicable to the asset-based revolving credit facility and increased the applicable LIBOR and asset-based revolving margins for all borrowings under the asset-based revolving credit facility by 0.25% each.

 

See also our 2008 10-K under “Item 13. Certain Relationships and Related Transactions” for a description of certain relationships between our company and Bank of America, N.A., the administrative agent under the cash flow credit facility and the asset-based revolving credit facility.

 

Interest Rate and Fees

 

Borrowings under the senior secured credit facilities bear interest at a rate equal to, at our option, either (a) LIBOR for deposits in the applicable currency plus an applicable margin or (b) the higher of (1) the prime rate of Bank of America, N.A. and (2) the federal funds effective rate plus 0.50%, plus an applicable margin. The applicable margins currently in effect for borrowings are (w) under the asset-based revolving credit facility, 0.50% with respect to base rate borrowings and 1.50% with respect to LIBOR borrowings, (x) under the senior secured revolving credit facility and the term loan B facility, 1.25% with respect to base rate borrowings and 2.25% with respect to LIBOR borrowings, (y) under the term loan A facility, 1.00% with respect to base rate borrowings and 2.00% with respect to LIBOR borrowings and (z) under the European term loan facility, 2.00% with respect to LIBOR borrowings. The applicable margins may be reduced or increased depending on our leverage ratios.

 

In addition to paying interest on outstanding principal under the senior secured credit facilities, we are required to pay a commitment fee to the lenders under the revolving credit facilities in respect of the unutilized commitments thereunder. The initial commitment fee rate is 0.50% per annum for the revolving credit facility and 0.375% for the asset-based revolving credit facility. Each of these commitment fee rates may be reduced subject to our reducing our leverage to specified ratios. We must also pay customary letter of credit fees.

 

Prepayments

 

The cash flow credit facility requires us to prepay outstanding term loans, subject to certain exceptions, with:

 

 

The foregoing mandatory prepayments are applied among the term loan facilities (1) during the first three years after the effective date of the Merger, pro rata to such facilities based on the respective aggregate

amounts of unpaid principal installments thereof due during such period, with amounts allocated to each facility being applied to the remaining installments thereof in direct order of maturity and (2) thereafter, pro rata to such facilities, with amounts allocated to each facility being applied, in the case of the term loan A facility, pro rata to the remaining installments thereof and, in the case of the term loan B facility or the European term loan facility, to the next eight unpaid scheduled installments of principal of such facility and then pro rata to the remaining amortization payments under such facility. Notwithstanding the foregoing, (i) proceeds of asset sales by foreign subsidiaries are applied solely to prepay European term loans until such term loans have been repaid in full and (ii) we are not required to prepay loans under the term loan A facility or the term loan B facility with net cash proceeds of asset sales or with excess cash flow, in each case attributable to foreign subsidiaries, to the extent that the repatriation of such amounts is prohibited or delayed by applicable local law or would result in material adverse tax consequences.

 

The asset-based revolving credit facility requires us to prepay outstanding loans if borrowings exceed the borrowing base.

 

We may voluntarily repay outstanding loans under the senior secured credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans.

 

Amortization

 

We are required to repay the loans under the term loan facilities as follows:

 

 

Principal amounts outstanding under the revolving credit facilities are due and payable in full at maturity, six years from the date of the closing of the senior secured credit facilities.

 

Guarantee and Security

 

All obligations under the senior secured credit facilities are unconditionally guaranteed by substantially all existing and future, direct and indirect, wholly-owned material domestic subsidiaries that are “Unrestricted Subsidiaries” under the 1993 Indenture (except for certain special purpose subsidiaries that only guarantee and pledge their assets under the asset-based revolving credit facility), and the obligations under the European term loan facility are also unconditionally guaranteed by HCA Inc. and each of our existing and future wholly owned material subsidiaries formed under the laws of England and Wales, subject, in each of the foregoing cases, to any applicable legal, regulatory or contractual constraints and to the requirement that such guarantee does not cause adverse tax consequences.

 

All obligations under the asset-based revolving credit facility, and the guarantees of those obligations, are secured, subject to permitted liens and other exceptions, by a first-priority lien on substantially all of the receivables of the borrowers and each guarantor under such asset-based revolving credit facility (the “Receivables Collateral”).

 

All obligations under the cash flow credit facility and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by:

 

 

 

The obligations of the borrowers and the guarantors under the European term loan facility are also secured by substantially all present and future assets of the European subsidiary borrower and each European guarantor (the “European Collateral”), subject to permitted liens and other exceptions (including, without limitation, exceptions for deposit accounts, other bank or securities accounts, cash, leaseholds, motor-vehicles and certain other exceptions) and subject to such security interests otherwise being permitted by applicable law and contract and not resulting in adverse tax consequences. The notes offered hereby will not be secured by any of the European Collateral.

 

Certain Covenants and Events of Default

 

The senior secured credit facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to:

 

 

In addition, the senior secured credit facilities require us to maintain the following financial covenants:

 

 

The senior secured credit facilities also contain certain customary affirmative covenants and events of default, including a change of control.

 

Existing Indebtedness

 

Existing Senior Notes, Debentures and Medium-Term Notes

 

As of March 31, 2009, we had outstanding an aggregate principal amount of $6.296 billion and £122 million of senior notes and debentures, consisting of the following series:

 

 

As of March 31, 2009, we also had outstanding $121,180,000 aggregate principal amount of our 8.70% Medium-Term Notes due 2010; $121,110,000 aggregate principal amount of our 9.00% Medium-Term Notes due 2014; and $125,000,000 aggregate principal amount of our 7.58% Medium-Term Notes due 2025.

 

All of our outstanding series of senior notes, debentures and medium-term notes were issued under the 1993 Indenture. The terms of the 1993 Indenture governing the existing senior notes, debentures and medium-term notes provide that in addition to customary events of default and a customary covenant limiting mergers and consolidations of HCA, the aggregate amount of all other indebtedness of HCA secured by mortgages on “Principal Properties” (as such term is defined in the indenture) together with the aggregate principal amount of all indebtedness of restricted subsidiaries (as such term is defined in the indenture) and the attributable debt in respect of sale-leasebacks of Principal Properties, may not exceed 15% of the consolidated net tangible assets of HCA and its consolidated subsidiaries, subject to exceptions for certain permitted mortgages and debt. See “Description of Notes — Senior Notes, Debentures and Medium-Term Notes Issued Under the 1993 Indenture.”

Existing Senior Secured Notes

 

Also in connection with the Recapitalization, we issued $4.200 billion of senior secured notes (comprised of $1.000 billion of 91/8% notes due 2014 and $3.200 billion of 91/4% notes due 2016) and $1.500 billion of 95/8/103/8% senior secured toggle notes (which allow us, at our option, to pay interest in kind during the first five years at the higher interest rate of 103/8%) due 2016. See “Description of Notes — Senior Secured Notes Issued Under the 2006 Indenture.”

 

As of March 31, 2009, we had outstanding an aggregate principal amount of $5.700 billion of senior secured notes consisting of the following series:

 

 

In November 2008, we elected to make an interest payment on the senior secured toggle notes for the interest period ending in May 2009 by paying in kind (“PIK”) at the PIK interest rate of 103/8% instead of paying interest in cash. On May 15, 2009, the aggregate principal amount of the senior secured toggle notes increased by $77,813,000 as a result of the PIK interest payment.

 

On February 19, 2009, we issued $310 million aggregate principal amount of 97/8% senior secured notes due 2017 at a price of 96.673% of their face value, resulting in approximately $300 million of gross proceeds. These notes and the related guarantees are secured by second-priority liens, subject to permitted liens, on our and our subsidiary guarantors’ assets, subject to certain exceptions, that secure our cash flow credit facility on a first-priority basis and are secured by third-priority liens, subject to permitted liens, on our and our subsidiary guarantors’ assets that secure our asset-based revolving credit facility on a first priority basis and our other cash flow credit facility on a second-priority basis. See “Description of Notes — Senior Secured Notes Issued Under the 2009 Second Lien Indenture.”

 

On April 22, 2009 we issued $1.500 billion aggregate principal amount of 81/2% senior secured notes due 2019 at a price of 96.755% of their face value, resulting in approximately $1.451 billion of gross proceeds. These notes and the related guarantees are secured by first-priority liens, subject to permitted liens, on our and our subsidiary guarantors’ assets, subject to certain exceptions, that secure our cash flow credit facility on a first-priority basis and are secured by second priority liens, subject to permitted liens, on our and our subsidiary guarantors’ assets that secure our asset-based revolving credit facility on a first priority basis and our other cash flow credit facility on a second-priority basis. See “Description of Notes — Senior Secured Notes Issued Under the 2009 First Lien Indenture.”

 

Other Existing Secured Indebtedness

 

We had outstanding approximately $385 million of capital leases and other secured debt as of March 31, 2009.

 

Under our lease with HRT of Roanoke, Inc., effective December 20, 2005, we make annual payments for rent and additional expenses for the use of premises in Roanoke and Salem, Virginia. The rent payments will increase each year beginning January 1, 2007 by the lesser of 3% or the change in the Consumer Price Index. The lease is for a fixed-term of 12 years with the option to extend the lease for another ten years.

 

Under our lease with Medical City Dallas Limited, effective March 18, 2004, we make annual payments for rent for the use of premises that are a part of a complex known as “Medical City Dallas” located in Dallas, Texas. The rent payment is adjusted yearly based on the fair market value of the premises and a capitalization rate. The initial term is 240 months with the option to extend for two more terms of 240 months each.

 

We have issued senior debt securities, debentures and medium-term notes, each as described below under “— Senior Notes, Debentures and Medium-Term Notes Issued Under the 1993 Indenture” and senior secured notes as described under “— Senior Secured Notes Issued Under the 2006 Indenture,” “— Senior Secured Notes Issued Under the 2009 Second Lien Indenture” and “— Senior Secured Notes Issued Under the 2009 First Lien Indenture.” The terms used in each respective section apply only to that section, and the summaries contained therein are qualified in their entirety by the actual text of the applicable agreements and indentures, each of which are filed as an exhibit to the registration statement, of which this prospectus is a part or which may be requested by contacting us at the address set forth under “Where You Can Find More Information about HCA Inc.”

 

Senior Notes, Debentures and Medium-Term Notes Issued Under the 1993 Indenture

 

General

 

The below description of the debt securities begins with a summary of certain of the terms of the Indenture. Following that summary, specific securities and relevant terms are listed, divided into two categories of debt securities issued: (a) notes and debentures and (b) medium-term notes. Each series of these debt securities has been issued under the Indenture, dated as of December 16, 1993, between Columbia Healthcare Corporation and The First National Bank of Chicago, as Trustee, as supplemented or amended by the First Supplemental Indenture, dated as of May 25, 2000, between the Issuer and Bank One Trust Company, N.A., as Trustee, the Second Supplemental Indenture, dated as of July 1, 2001, between the Issuer and Bank One Trust Company, N.A., as Trustee, the Third Supplemental Indenture, dated as of December 5, 2001, between the Issuer and The Bank of New York, and the Fourth Supplemental Indenture, dated as of November 14, 2006, between the Company and The Bank of New York, as Trustee (“Trustee”) (as may be further amended or supplemented, the “Indenture”).

 

Ranking

 

The debt securities are our senior unsecured obligations and rank equally in right of payment to any of our existing and future senior indebtedness, are senior in right of payment to all of our existing and future subordinated indebtedness, are effectively subordinated in right of payment to our secured obligations to the extent of the value of the collateral securing such obligations and are structurally subordinated in right of payment to all existing and future indebtedness of our subsidiaries that do not guarantee the debt securities. In a liquidation or reorganization of any of our subsidiaries, the right of holders of the debt securities to participate in any distribution is subject to the prior claims of creditors of that subsidiary, except to the extent that we are a creditor.

 

Limitations on Us and Our Subsidiaries

 

Limitation on Mortgages

 

The Indenture provides that neither we nor any of our subsidiaries will issue, assume or guarantee any indebtedness or obligation secured by mortgages, liens, pledges or other encumbrances (referred to collectively as “mortgages”) upon any principal property (as defined below under “ — Certain Definitions”), unless the debt securities shall be secured equally and ratably with (or prior to) such debt. This restriction will not apply to:

 

 

 

Limitation on Sale and Lease-Back Transactions

 

The Indenture provides that neither we nor any subsidiary will enter into any sale and lease-back transaction with respect to any principal property involving a lease of more than three years with another person (other than our company or a subsidiary) unless either:

 

 

Limitation on Subsidiary Debt and Preferred Stock

 

The Indenture provides that none of our restricted subsidiaries may, directly or indirectly, create, incur, issue, assume or otherwise become liable with respect to, extend the maturity of, or become responsible for the payment of, any debt or preferred stock except:

 

 

Exempted Transactions

 

Even if otherwise prohibited by these limitations, if the aggregate outstanding principal amount of all our other debt and that of our subsidiaries subject to these limitations does not exceed 15% of our consolidated net tangible assets, then:

 

 

Events of Default

 

Under the Indenture, an event of default applicable to the debt securities of any series means:

 

 

If any event of default with respect to debt securities of any series occurs and is continuing, either the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series may declare the principal amount, or in the case of discount securities, the applicable portion of the principal amount, of all the debt securities of that series to be due and payable immediately. The holders may, under certain circumstances, rescind and annul this acceleration prior to obtaining a judgment or decree.

 

Other than the duties of the Trustee during a default to act with the required standard of care, the Trustee is not obligated to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders unless the holders shall have offered to the Trustee reasonable indemnity. Subject to these indemnification provisions and certain other conditions described in the Indenture, the holders of a majority in aggregate principal amount of the outstanding debt securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the debt securities of that series.

 

We will furnish the Trustee annually with a statement as to our performance of our obligations under the Indenture and as to any default in our performance.

 

Modification and Waiver

 

We and the Trustee may modify and amend the Indenture with the consent of the holders of a majority in aggregate principal amount of the outstanding debt securities of each series affected voting separately. We must have the consent of the holder of each outstanding debt security affected to:

 

 

 

The holders of a majority in aggregate principal amount of the outstanding debt securities of each series may, on behalf of all holders of that series, waive any past default under the Indenture with respect to debt securities of that series. However, such holders may not waive a past default in the payment of principal, premium or interest, or any sinking fund installment with respect to the debt securities, or waive a covenant or provision that cannot be modified or amended without the consent of the holders of each outstanding debt security affected.

 

We and the Trustee may modify and amend the Indenture without the consent of the holders of the debt securities to, among other things:

 

 

Consolidation, Merger, Sale or Lease of Assets

 

We may consolidate with or merge into, or transfer or lease our assets substantially as an entirety to any corporation without the consent of the holders of any of the outstanding debt securities under the Indenture if:

 

 

Defeasance

 

If so specified in the terms of any series of debt securities, we may be discharged from all obligations under the debt securities of any series, and we will not be subject to the limitations in the Indenture discussed in the above sections (known as legal defeasance) or we may cease to be under any obligation to comply with

specified covenants in the Indenture (known as covenant defeasance), if (1) we deposit with the Trustee trust money or U.S. government obligations that are sufficient to pay all principal, premium and interest on the debt securities of the series and certain other conditions are met. We would deliver to the Trustee an opinion of counsel to the effect that the deposit and related defeasance would not (1) cause the holders of the debt securities of the series to recognize income, gain or loss for United States income tax purposes or (2) result in the delisting of the debt securities from any national securities exchange (if so listed).

 

Optional Redemption

 

If the terms of any series of debt securities (other than the £150,000,000 in aggregate principal amount of 8.75% Senior Notes Due 2010, which are discussed below under the heading “— Provisions that Apply Only to the £150,000,000 8.75% Senior Notes Due 2010”) indicate that they are redeemable at the option of our company, the debt securities of that series will be redeemable, at our option, at any time in whole, or in part from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed (exclusive 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 then current Treasury Rate (as defined below), plus the number of basis points specified in the terms of the debt securities. In each case, we will pay accrued and unpaid interest on the principal amount being redeemed to the date of redemption.

 

We will mail notice of any redemption between 30 and 60 days preceding the redemption date to each holder of the debt securities to be redeemed.

 

The notice of the redemption for such debt securities will state, among other things, the principal amount of the debt securities to be redeemed, the redemption price and the place or places that payment will be made upon presentation and surrender of the debt securities to be redeemed.

 

Unless we default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the debt securities or portions called for redemption.

 

Method for Determining the Treasury Rate for any Optional Redemption of the 5.50% Senior Notes due 2009, the 6.30% Senior Notes due 2012, the 6.25% Senior Notes due 2013, the 6.75% Senior Notes due 2013, the 5.75% Senior Notes due 2014, the 6.375% Senior Notes due 2015, the 6.50% Senior Notes due 2016 and the 7.50% Senior Notes due 2033

 

With respect to each of the series of redeemable debt securities listed above, for the purposes of determining the applicable redemption price, “Treasury Rate” and the other defined terms listed below have the respective meanings assigned to them in this subsection.

 

“Treasury Rate” means, with respect to any redemption date, the rate per year equal to: (1) the yield under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue; provided that, if no maturity is within three months before or after the Remaining Life of the notes to be redeemed, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from those yields on a straight line basis, rounding to the nearest month; or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Treasury Rate shall be calculated on the third business day preceding the redemption date.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker and having a maturity comparable to the remaining term of the debt securities to be

redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such debt securities.

 

“Remaining Life” means the maturity of a United States Treasury security selected by an Independent Investment Banker that is comparable to the remaining term of such debt securities.

 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Trustee after consultation with us.

 

“Comparable Treasury Price” means, with respect to any redemption date, (a) the average of the Reference Treasury Dealer Quotations for the redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (b) if the Trustee obtains fewer than four Reference Treasury Dealer Quotations, the average of all the quotations.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the third business day preceding the redemption date.

 

“Reference Treasury Dealer” means each of the financial institutions specified in the terms of the securities and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in New York City (a “Primary Treasury Dealer”), we shall substitute another Primary Treasury Dealer.

 

Method for Determining the Treasury Rate for any Optional Redemption of the 8.75% Senior Notes due 2010, the 7.875% Senior Notes due 2011, the 6.95% Senior Notes due 2012 and the 7.19% Debentures due 2015

 

With respect to each of the series of redeemable debt securities listed above, for the purposes of determining the applicable redemption price, “Treasury Rate” and the other defined terms listed below have the respective meanings assigned to them in this subsection.

 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the redemption date.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker and having a maturity comparable to the remaining term of the debt securities to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such debt securities.

 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Trustee after consultation with us, except that with respect to the 7.19% Debentures due 2015, such term means Morgan Stanley & Co. Incorporated or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent banking institution of national standing appointed by the Trustee.

 

“Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding the redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities” or (2) if the release (or any successor release) is not published or does not contain the prices on that business day, (a) the average of the Reference Treasury Dealer Quotations for the redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (b) if the Trustee obtains fewer than four Reference Treasury Dealer Quotations, the average of all the quotations.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the third business day preceding the redemption date.

 

“Reference Treasury Dealer” means each of the financial institutions specified in the terms of the securities and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), we shall substitute another Primary Treasury Dealer.

 

Provisions that Apply Only to the £150,000,000 8.75% Senior Notes Due 2010

 

Optional Redemption of the £150,000,000 8.75% Senior Notes Due 2010

 

The £150,000,000 in aggregate principal amount of 8.75% Senior Notes Due 2010 (the “2010 Pounds Sterling Notes”) will be redeemable as a whole or in part, at our option, at any time after November 1, 2003, at a redemption price equal to the greater of (1) 100% of the principal amount of such notes and (2) as determined by the Calculation Agent, the price at which the Gross Redemption Yield on the outstanding principal amount of the notes on the Reference Date is equal to the Gross Redemption Yield (determined by reference to the middle-market price) at 3:00 p.m. (London time) on that date on the Benchmark Gilt, plus 50 basis points, in either case, plus accrued and unpaid interest on the notes up to, but excluding, the date specified as the redemption date (the “Redemption Price”).

 

“Gross Redemption Yield” means a yield calculated on the basis indicated by the Joint Index and Classification Committee of the Institute and Faculty of Actuaries as reported in the Journal of the Institute of Actuaries, Vol. 105, Part 1, 1978, page 18 or on such other basis as the Trustee may approve.

 

“Reference Date” means the date which is the first dealing day in London prior to the publication of the notice of redemption referred to below.

 

“Benchmark Gilt” means the 5.75% Treasury Stock due December 7, 2009 or such other United Kingdom government stock as the Calculation Agent may, with the advice of three brokers and/or United Kingdom gilt-edged market makers or such other three persons operating in the United Kingdom gilt-edged market as the Calculation Agent may determine from time to time to be the most appropriate benchmark United Kingdom government stock for the notes.

 

“Calculation Agent” means Deutsche Bank AG London or any successor entity.

 

We will give notice of any redemption between 30 and 60 days preceding the redemption date to each holder of the notes to be redeemed.

 

In the case of any partial redemption, selection of the notes for redemption will be made by the Trustee in compliance with the requirements of the principal securities exchange, if any, on which the notes are listed or, if the notes are not so listed or such exchange prescribes no method of selection, on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no note of £1,000 in original principal amount or less shall be redeemed in part. If any note is to be redeemed in part only, the notice of redemption relating to the note shall state the portion of the principal amount thereof to be redeemed. A new note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Trustee, or its nominee, or, in the case of notes in definitive form, issued in the name of the holder thereof, in each case upon cancellation of the original note.

 

Unless we default in payment of the Redemption Price, on and after the redemption date, interest will cease to accrue on the notes or portions called for redemption.

 

Tax Redemption of the £150,000,000 8.75% Senior Notes Due 2010

 

The 2010 Pounds Sterling Notes may be redeemed at our option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, together with interest accrued and

unpaid to the date fixed for redemption, at any time, on giving not less than 30 nor more than 60 days’ notice, which notice shall be irrevocable, if:

 

 

However, no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which we would be, in the case of a redemption for the reasons specified in the first bullet point above, or there would be a substantial likelihood that we would be, in the case of a redemption for the reasons specified in the second bullet point above, obligated to pay such Additional Amounts if a payment in respect of the notes were then due.

 

Prior to the publication of any notice of redemption pursuant to this subsection, we will deliver to the Trustee:

 

 

Such notice, once delivered by us to the Trustee, will be irrevocable.

 

Additional Amounts

 

All payments of principal and interest in respect of the 2010 Pounds Sterling Notes will be made without deduction or withholding for or on account of any present or future taxes, duties, assessments or other governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by the United States or any political subdivision or taxing authority of or in the United States, unless such withholding or deduction is required by law.

 

In the event such withholding or deduction is required by law, subject to the limitations described below, we will pay as additional interest on the notes to the holder or beneficial owner of any note who is a non-U.S. holder (as defined below), such additional amounts (“Additional Amounts”) as may be necessary in order that every net payment by us or any paying agent of principal of or interest on the notes (including upon redemption), after deduction or withholding for or on account of any present or future tax, duty, assessment or other governmental charge imposed upon or as a result of such payment by the United States or any political subdivision or taxing authority of or in the United States, will not be less than the amount provided for in such note to be then due and payable before any such tax, duty, assessment or other governmental charge.

However, our obligation to pay Additional Amounts shall not apply to:

 

(a) any tax, duty, assessment or other governmental charge which would not have been so imposed but for:

 

(1) the existence of any present or former connection between such holder or beneficial owner (or between a fiduciary, settlor, beneficiary, member or shareholder or other equity owner of, or a person having a power over, such holder or beneficial owner, if such holder or beneficial owner is an estate, a trust, a limited liability company, a partnership, a corporation or other entity) and the United States, including, without limitation, such holder or beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder or other equity owner or person having such a power) being or having been a citizen or resident or treated as a resident of the United States or being or having been engaged in a trade or business in the United States or being or having been present in the United States or having had a permanent establishment in the United States;

 

(2) the failure of such holder or beneficial owner to comply with any requirement under United States tax laws and regulations to establish entitlement to a partial or complete exemption from such tax, duty, assessment or other governmental charge (including, but not limited to, the requirement to provide Internal Revenue Service Forms W-8BEN, Forms W-8ECI, or any subsequent versions thereof or successor thereto); or

 

(3) such holder’s or beneficial owner’s present or former status as a personal holding company or a foreign personal holding company with respect to the United States, as a controlled foreign corporation with respect to the United States, as a passive foreign investment company with respect to the United States, as a private foundation or other tax exempt organization with respect to the United States or as a corporation which accumulates earnings to avoid United States federal income tax;

 

(b) any tax, duty, assessment or other governmental charge imposed by reason of the holder or beneficial owner:

 

(1) owning or having owned, directly or indirectly, actually or constructively, 10% or more of the total combined voting power of all classes of HCA Inc.’s stock;

 

(2) being a bank receiving interest described in section 881(c)(3)(A) of the Internal Revenue Code; or

 

(3) being a controlled foreign corporation with respect to the United States that is related to HCA Inc. by stock ownership;

 

(c) any tax, duty, assessment or other governmental charge which would not have been so imposed but for the presentation by the holder or beneficial owner of such note for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment of the note is duly provided for and notice is given to holders, whichever occurs later, except to the extent that the holder or beneficial owner would have been entitled to such additional amounts on presenting such note on any date during such 30-day period;

 

(d) any estate, inheritance, gift, sales, transfer, personal property, wealth, interest equalization or similar tax, assessment or other governmental charge;

 

(e) any tax, duty, assessment or other governmental charge which is payable otherwise than by withholding from payment of principal of or interest on such note;

 

(f) any tax, duty, assessment or other governmental charge which is payable by a holder that is not the beneficial owner of the note, or a portion of the note, or that is a fiduciary, partnership, limited liability company or other similar entity, but only to the extent that a beneficial owner, a beneficiary or settlor with respect to such fiduciary or member of such partnership, limited liability company or similar entity would not have been entitled to the payment of an additional amount had such beneficial owner, settlor, beneficiary or member received directly its beneficial or distributive share of the payment;

(g) any tax, duty, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any note, if such payment can be made without such withholding by any other paying agent; or

 

(h) any combination of items (a), (b), (c), (d), (e), (f) and (g).

 

For purposes of this subsection, the holding of or the receipt of any payment with respect to a note will not constitute a connection (1) between the holder or beneficial owner and the United States or (2) between a fiduciary, settlor, beneficiary, member or shareholder or other equity owner of, or a person having a power over, such holder or beneficial owner, if such holder or beneficial owner is an estate, a trust, a limited liability company, a partnership, a corporation or other entity, and the United States or any political subdivision or taxing authority thereof or therein.

 

Any reference in this prospectus, in the Indenture or in the notes to principal or interest with respect to the 2010 Pounds Sterling Notes shall be deemed to refer also to Additional Amounts which may be payable under the provisions of this subsection.

 

We will pay all stamp and other duties, if any, which may be imposed by the United States or any political subdivision thereof or taxing authority therein with respect to the issuance of the notes.

 

Except as specifically provided in the notes, we will not be required to make any payment with respect to any tax, duty, assessment or other governmental charge imposed by any government or any political subdivision or taxing authority of or in the United States.

 

Unless previously redeemed or repurchased and cancelled, the notes will be payable at par, including Additional Amounts, if any, on November 1, 2010 or such earlier date on which the applicable notes shall be due and payable in accordance with the terms and conditions of the applicable notes. However, if the maturity date of the applicable notes is not a Business Day, the notes will be payable on the next succeeding business day and no interest shall accrue for the period from the maturity date to such payment date.

 

For purposes of the 2010 Pounds Sterling Notes, a “non-U.S. holder” is a beneficial owner of the notes that is not a U.S. holder. A “U.S. holder” is a beneficial owner of the notes that is for United States federal income tax purposes:

 

 

Issuance of Additional Debt Securities

 

If the terms of any series of debt securities so indicate, we may, without the consent of the holders of that series of debt securities, increase the principal amount of the debt securities of that series by issuing additional debt securities in the future on the same terms and conditions, except for any differences in the issue price and interest accrued prior to the issue date of the additional debt securities, and with the same CUSIP number as existing debt securities of that series. The existing debt securities of that series and any additional debt securities of that series would rank equally and ratably for all purposes under the Indenture.

 

Governing Law

 

We will construe the Indenture and the debt securities in accordance with the laws of the State of New York.

 

Certain Definitions

 

Set forth below are certain defined terms used in the Indenture.

“joint venture subsidiary” means a subsidiary as of the date of the Indenture of which we, directly or indirectly, own less than 100% of the voting securities entitling the holders thereof to elect a majority of the directors (or, in the case of a partnership, of which we, directly or indirectly, own less than 100% of the general partnership interests therein).

 

“permitted subsidiary refinancing debt” means debt of any subsidiary, the proceeds of which are used to renew, extend, refinance or refund outstanding debt of that subsidiary; provided that the debt is scheduled to mature no earlier than the debt being renewed, extended, refinanced or refunded; provided, further, that the debt will be permitted subsidiary refinancing debt only to the extent that the aggregate principal amount of that debt (or, if that debt is issued at a price less than the principal amount thereof, the aggregate amount of gross proceeds therefrom) does not exceed the aggregate principal amount then outstanding under the debt being renewed, extended, refinanced or refunded (or if the debt being renewed, extended, refinanced or refunded was issued at a price less than the principal amount thereof, then not in excess of the amount of liability in respect thereof determined in accordance with generally accepted accounting principles.)

 

“principal property” means each acute care hospital providing general medical and surgical services (excluding equipment, personal property and hospitals that primarily provide specialty medical services, such as psychiatric and obstetrical and gynecological services) owned solely by our company and/or one or more of our subsidiaries and located in the United States of America.

 

“restricted subsidiary” means (1) any subsidiary other than an unrestricted subsidiary and (2) any subsidiary that was an unrestricted subsidiary but which, subsequent to the date hereof, is designated by our company (by board resolution) to be a restricted subsidiary; provided, that we may not designate any such subsidiary to be a restricted subsidiary if we would thereby breach any covenant or agreement contained in the Indenture (on the assumption that any transaction to which that subsidiary was a party at the time of such designation and which would have given rise to debt or preferred stock or constituted a sale and lease-back transaction at the time it was entered into had that subsidiary then been a restricted subsidiary was entered into at the time of that designation).

 

“subsidiary” means (1) any corporation of which at least a majority of the outstanding stock having ordinary voting power to elect a majority of the directors of that corporation, whether or not at the time stock of any other class or classes of that corporation have or might have voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by our company or by one or more of our subsidiaries, or by our company and one or more of our subsidiaries or (2) any partnership or joint venture of which at least a majority of the equity ownership, whether in the form of membership, general, special or limited partnership interests or otherwise, is directly or indirectly owned or controlled by our company or by one or more of our subsidiaries, or by our company and one or more of our subsidiaries; provided, that the term “subsidiary” does not include any corporation or partnership controlled by our company (referred to in this definition as an “affiliated entity”) that:

 

 

“unrestricted subsidiary” means (1) any subsidiary acquired or organized after the date hereof; provided, that the subsidiary is not a successor, directly or indirectly, to, and does not directly or indirectly own any equity interest in, any restricted subsidiary; (2) any subsidiary the principal business of which consists of

obtaining financing in capital markets outside the United States of America or financing the acquisition or disposition of machinery, equipment, inventory, accounts receivable and other real, personal and intangible property by persons including our company or a subsidiary; (3) any subsidiary the principal business of which is owning, leasing, dealing in or developing real property for residential or office building purposes or land, buildings or related real property owned by our company or any subsidiary as of the date of the Indenture; (4) any joint venture subsidiary; or (5) stock or other securities of an unrestricted subsidiary of the character described in clauses (1) through (4) of this definition, unless and until, in each of the cases specified in this paragraph, any such subsidiary has been designated a restricted subsidiary pursuant to clause (2) of the definition of “restricted subsidiary.”

 

Senior Notes and Debentures

 

The principal terms of the debt securities issued and outstanding as of the date of this prospectus are set forth below. Interest on the below series of debt securities accrues at the annual rate indicated in the title of the series and is payable on the indicated interest payment dates to the registered holders on the preceding record date. The debt securities of the series listed below are not subject to a sinking fund.

 

5.50% Senior Notes Due 2009

 

 

8.75% Senior Notes Due 2010

 

 

8.75% Senior Notes Due 2010

 

 

7.875% Senior Notes Due 2011

 

 

 

6.95% Senior Notes Due 2012

 

 

6.30% Senior Notes Due 2012

 

 

6.25% Senior Notes Due 2013

 

 

6.75% Senior Notes Due 2013

 

 

5.75% Senior Notes Due 2014

 

 

 

6.375% Senior Notes Due 2015

 

 

6.50% Senior Notes due 2016

 

 

7.69% Notes Due 2025

 

 

7.50% Senior Notes Due 2033

 

 

7.19% Debentures Due 2015

 

 

 

7.50% Debentures Due 2023

 

 

8.36% Debentures Due 2024

 

 

7.05% Debentures Due 2027

 

 

7.75% Debentures Due 2036

 

 

7.50% Debentures Due 2095