Item 1.01
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Entry into a Material Definitive Agreement
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On November 13, 2017, CHS/Community
Health Systems, Inc. (CHS), a wholly-owned subsidiary of Community Health Systems, Inc., and certain of CHS subsidiaries (the Originators) amended their existing accounts receivable securitization program (the
Receivables Facility) with a group of conduit lenders and liquidity banks (the Lenders), Crédit Agricole Corporate and Investment Bank, as a managing agent and as the administrative agent (the Administrative
Agent), The Bank of Nova Scotia, as a managing agent, and PNC Bank, National Association, as a managing agent.
In connection with
the amendment of the Receivables Facility, CHS and certain of CHS subsidiaries entered into an Eighth Omnibus Amendment of the Receivables Facility in which the Receivables Sale Agreement, Receivables Purchase and Contribution Agreement and
Receivables Loan Agreement were amended to extend the facility scheduled termination date and to amend certain other provisions thereof.
Pursuant to the Receivables Sale Agreement, dated as of March 21, 2012 (as amended through November 13, 2017, the Sale
Agreement), among the Originators, CHSPSC, LLC (as
successor-by-conversion
to Community Health Systems Professional Services Corporation), as the collection agent
(the Collection Agent), and CHS, the Originators agreed to sell all existing and future health care accounts receivable, other than
self-pay,
originated by the Originators during the term of the
Receivables Facility (collectively, the Receivables) and other related assets to CHS in exchange for cash and subordinated notes. The Originators and CHS intend for the transactions contemplated by the Sale Agreement to be true sales to
CHS by the respective Originators.
Pursuant to the Receivables Purchase and Contribution Agreement, dated as of March 21, 2012 (as
amended through November 13, 2017, the Purchase Agreement), among CHS, the Collection Agent and CHS Receivables Funding, LLC, a bankruptcy-remote, special purpose limited liability company and a wholly-owned subsidiary of CHS
(CHS Receivables), CHS agreed to sell or contribute Receivables and other related assets to CHS Receivables in exchange for cash and/or equity. CHS and CHS Receivables intend for the transactions contemplated by the Purchase Agreement to
be true sales or absolute contributions to CHS Receivables by CHS.
Pursuant to the Receivables Loan Agreement, dated as of March 21,
2012 (as amended through November 13, 2017, the Loan Agreement), among CHS Receivables, the Administrative Agent, the Lenders party thereto, the financial institutions party thereto as managing agents for the conduit lenders, and
the Collection Agent, CHS Receivables agreed to grant security interests in its Receivables and other related assets to the Administrative Agent in exchange for borrowings from the Lenders of up to $600 million outstanding from time to time
based on the availability of eligible Receivables and other customary factors. Borrowings will be funded by either (i) the issuance of asset backed commercial paper by the conduit lenders or (ii) drawing under the committed liquidity
facility provided by the liquidity banks. The lenders under the Loan Agreement are entitled to receive interest for each day that their loans are outstanding. In addition, CHS Receivables will pay upfront fees to the managing agents and the
Administrative Agent for their services and ongoing usage fees to the committed lenders and conduits lenders for their participation in the facility. Unless earlier terminated or subsequently extended pursuant to the terms of the Loan Agreement, the
Receivables Facility will expire on November 13, 2019. The Loan Agreement contains customary termination events that could cause an early termination date, including, among other things, the failure to make timely payments or deposits under the
Loan Agreement, breach of covenants, the failure to make timely payments under other indebtedness, certain changes of control and the failure to meet certain leverage ratios and Receivables ratios.
CHS has agreed to guarantee the performance of the Collection Agent under the Sale Agreement, the Purchase Agreement and the Loan Agreement.
CHS has not agreed to guarantee the collection of any of the Receivables and CHS is not responsible for any guaranteed obligations to the extent that the failure to perform such guaranteed obligations by the Collection Agent results from any
Receivable being uncollectible on account of the insolvency or bankruptcy of the related obligor under such Receivable.
The foregoing
summary of the Sale Agreement, the Purchase Agreement and the Loan Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of such agreements, which have
been previously filed with the Securities and Exchange Commission, as well as the Eighth Omnibus Amendment, which is filed as
Exhibit 10.1
hereto and incorporated into this report by reference.