- 20 -
The 5,200,000 shares of class A preferred stock that
HealthTrust issued to HCAII provided for a liquidation preference
of $50 per share, or $260 million in the aggregate, plus accrued
but unpaid dividends computed through the date of liquidation.
Dividends were payable at an adjustable rate indexed to the
performance of certain market rate financial instruments. The
Reorganization Agreement required HealthTrust to pay dividends in
additional shares of class A preferred stock until September 30,
1992. Dividends paid in stock of the issuing company sometimes
are referred to as pay-in-kind dividends or as PIK dividends.
The Reorganization Agreement further required HealthTrust to pay
PIK dividends in class A preferred stock after September 30,
1992, if, pursuant to the terms of HealthTrust's loan agreements,
HealthTrust could not pay cash dividends. (The Original
Agreement had provided that the payment of PIK dividends on the
class A preferred stock would be optional.) For the initial
dividend period of September 17, 1987, to September 30, 1987,
HealthTrust computed a dividend rate under the contract on the
class A preferred stock of 14 percent.
The 4 million shares of class B preferred stock HealthTrust
issued to HCAII provided for a liquidation preference of $50 per
share, or $200 million in the aggregate, plus accrued but unpaid
dividends computed through the date of liquidation. The
Reorganization Agreement required HealthTrust to pay dividends in
additional shares of class B preferred stock until September 30,
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011