Columbia/HCA `BBB-` Sr Nts Still On Fitch IBCA RtgAlert Neg.Business Editors NEW YORK--(BUSINESS WIRE)--March 3, 2000 Columbia/HCA Healthcare Corp.'s `BBB-` rated $4.0 billion senior notes remain on RatingAlert Negative by Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals , following the company's announcement today that its Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an additional share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program of up to $1 billion of its common stock. The RatingAlert Negative status acknowledges the uncertainty surrounding the ongoing government investigation and indicates that the rating could be affirmed or lowered. Through Columbia/HCA's restructuring program, during 1998 and 1999 the company completed the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of certain non-strategic assets. As a result, revenues declined from $18.8 billion in 1997 to $16.7 billion in 1999. However operating profitability improved significantly with EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become margin increasing from 14.8% to 16.8%, over the same period. Proceeds from the divestitures were used to complete share repurchases and reduce outstanding debt with total debt decreasing from $9.4 billion at Dec. 31, 1997 to $6.4 billion at Dec. 31, 1999. As a result, leverage, measured by total debt to EBITDA, improved to 2.3 times (x) in 1999 from 3.4x in 1997 and cash flow (EBITDA) after interest, taxes and capital expenditures remained strong at about $400 million. Given the expected timing of settlement of the announced $1 billion share repurchase program and that this program is expected to be funded primarily through operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , leverage is not expected to increase materially from current levels. Fitch IBCA expects the company to continue to meet its financial goals and maintain bondholder Bondholder A firm often has stockholders and bondholders. In a liquidation, the bondholders have first priority. bondholder An individual or institution that owns bonds in a corporation or other organization. protection measures commensurate with the current rating, including leverage remaining under 2.5x. The rating continues to reflect Columbia/HCA's leading market position and broad geographic reach as well as its successful corporate reorganization and improved operating results. The rating also considers the industry-wide downward pressure on revenues from third-party payors. The RatingAlert Negative status, which reflects the uncertain status of the government investigation, will be resolved once an agreement with the government has been reached and a monetary settlement has been announced. |
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