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Financing The Acquisition
On September 17, 1987, HealthTrust adopted the ESOP and made
an initial contribution to it of $30,000. On that same date, the
ESOP used the initial contribution together with $809,970,000 it
borrowed from HealthTrust to purchase 27 million shares of Common
Stock at a purchase price of $30 per share. Of the total shares
of Common Stock the ESOP acquired from HealthTrust, 26,999,000
shares were placed in an escrow account to serve as collateral
for the loans to the ESOP. The Common Stock would be released
from the escrow account to the ESOP as the loans were repaid. On
September 17, 1987, HCAII also sold to the ESOP for $30 per share
the 1,000 shares of Common Stock that it then owned.
HealthTrust obtained the amount it loaned to the ESOP by
borrowing $540 million (ESOP Term Loans) and from the proceeds
from HealthTrust's issuance of promissory notes (ESOP Senior
Notes) in the aggregate principal amount of $270 million.
Interest was payable on the ESOP Term Loans at a fluctuating rate
which initially was 8.713 percent. The ESOP Senior Notes bore an
interest rate of 11-3/4 percent.
In furtherance of the reorganization, HealthTrust also
incurred approximately $392 million of debt under a credit
agreement (Credit Agreement) with several banks. It further
assumed the obligations of HCAII under Increasing Rate Senior
Subordinated Notes (Senior Subordinated Notes) having an
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