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Tenet Completes Merger, Refinancings Tenet Healthcare Ramps Up Momentum With Merger of OrNda HealthCorp.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Jan. 30, 1997--

$2 Billion Available for New Acquisitions

Tenet Healthcare Corporation (THC: NYSE, PSE) Thursday completed its merger with OrNda HealthCorp and finalized two financial transactions that will enhance Tenet's ability to fund additional strategic acquisitions that create or expand its healthcare delivery networks. The completed financial transactions include the issuance of $2 billion of public debt and closure of a $2.8 billion revolving credit facility.

"Today we are celebrating not only the joining of two premiere companies but the next step toward exciting new affiliations with hospitals and health systems that share our vision of providing community based healthcare," said Jeffrey C. Barbakow, chairman and chief executive officer of Tenet. "This merger clearly strengthens our position as a driving force in the healthcare industry.

"The ability to provide quality healthcare efficiently across broader geographic areas will make us more attractive to managed care plans and other healthcare providers looking for strategic alliances," he said. "It also will make us more valuable to the physicians and patients who have placed their trust in Tenet hospitals."

The Refinancings

A portion of the new $2.8 billion credit facility, as well as proceeds from public offerings of $2 billion in notes, were used to repurchase substantially all of OrNda's public debt and to repay outstanding bank debt under the previous credit facilities of both companies. The previous debt and credit facilities were refinanced by Tenet at lower rates. With these refinancings completed, Tenet now has in excess of $2 billion in available credit with which to fund additional acquisitions and for general corporate purposes.

Barbakow added: "We are pleased to have significant new borrowing capability, but we will continue to be very selective and prudent about future acquisitions and partnerships."

The Merger

The merger with OrNda creates a company with 127 acute care hospitals and numerous ancillary facilities serving communities in 22 states. Of OrNda's 50 acute care hospitals, 32 complement and strengthen Tenet's existing networks, making Tenet an even stronger healthcare provider in its existing key markets and providing entree to new ones.

The combined company's pro forma revenues for the 12 months ended November 30, 1996 totaled almost $9 billion. Tenet expects OrNda to add more than $420 million in earnings before income tax, depreciation and amortization (EBITDA).

OrNda now becomes a wholly owned subsidiary of Tenet. Each share of OrNda common stock outstanding immediately prior to the merger has been converted into the right to receive 1.35 shares of Tenet's common stock. In connection with the transaction, Tenet will issue approximately 85.9 million common shares with a total value of about $2 billion.

Charles I. Martin, OrNda's former chairman and chief executive officer, said: "The merger creates economies of scale and operating efficiencies which ultimately mean better service to patients because they allow Tenet to improve its investment in the people, buildings, equipment and on the front lines of healthcare."

Michael H. Focht Sr., Tenet's president and chief operating officer, noted that the merger supports a major strategic objective by reinforcing Tenet's position in important markets such as Southern California and South Florida. The merger also opens attractive new markets for Tenet in Arizona and Massachusetts.

Focht emphasized, however, that Tenet will maintain its emphasis on locally directed healthcare, a cornerstone in the ability of Tenet hospitals to serve their communities professionally and compassionately. Tenet's operating culture emphasizes the importance of local governing boards comprised of physicians and community leaders who direct how Tenet hospitals address the healthcare needs of their own communities.

"Healthcare is and always will be a community endeavor," Focht said. "Our hospital boards have the authority and flexibility to respond quickly to local healthcare issues. At the same time, the corporation provides access to capital, management expertise, quality indicators, information systems and the ability to negotiate with payors and providers. It's really the best of both worlds: local care backed by national resources."

The merger accomplishes a number of strategic goals for Tenet, including:

- improving Tenet's ability to pursue strategic

acquisitions and partnerships;

- providing more comprehensive coverage to group

healthcare purchasers;

- enhancing Tenet's ability to negotiate contracts with

new providers;

- achieving cost savings;

- creating a combined company with greater financial

resources and flexibility; and

- providing accretive earnings in fiscal 1998 and beyond,

after giving effect to cost savings.

Although OrNda is Tenet's largest recent acquisition, it is only one of several transactions that underscore Tenet's growing success in acquiring and partnering with other hospitals and healthcare systems. Within the past two months, Tenet has:

- entered exclusive negotiations to acquire Deaconess

Incarnate Word Health System in St. Louis, increasing

Tenet's hospitals there to four from one;

- formed a 50/50 joint venture with 759-bed Baptist

Hospital in Nashville, Tenn., to develop healthcare

services in Middle Tennessee;

- completed the acquisition of 357-bed North Shore

Medical Center in Miami;

- finalized an agreement to lease Brookside Hospital, a

326-bed hospital in San Pablo, Calif.;

- acquired Eye, Ear, Nose and Throat Hospital (EENT) in

New Orleans; and

- entered negotiations for the acquisition of Georgia

Baptist Medical Center in Atlanta as well as a

partnership to create a stronger healthcare network in

Georgia.

Donaldson, Lufkin & Jenrette Securities Corporation acted as lead managing underwriter in the debt offerings and Goldman, Sachs & Co., Merrill Lynch & Co., J.P. Morgan & Co., and Smith Barney Inc. acted as co-managers.

The arranging banks for the new credit facility are Morgan Guaranty Trust Company of New York, Bank of America NT&SA, The Bank of New York and the Bank of Nova Scotia.

Tenet, based in Santa Barbara, Calif., owns and operates 127 acute care hospitals as well as numerous related facilities. As the nation's second-largest investor-owned healthcare company, Tenet employs 97,000 people serving communities in 22 states. The company's name reflects its core business philosophy: the importance of shared values between partners, including employees, patients, insurers and communities, in providing a full spectrum of healthcare.

(fact sheet and table of combined hospitals follows) -0-

Tenet Healthcare Corporation-OrNda HealthCorp Merger

Fact Sheet

Combined Company Highlights - 127 acute care hospitals with 27,920 beds - 97,000 employees serving communities in 22 states - Almost $9 billion in pro forma revenues (Based on the

combined revenues for the 12 months ended November 30, 1996) - $1.5 billion pro forma EBITDA (Earnings before income taxes,

depreciation and amortization; same period as above)

Terms of the Merger - Transaction valued at $3.5 billion in stock and debt - Tenet has issued approximately 85.9M shares in connection

with the merger - Each share of OrNda common stock was converted into the

right to receive 1.35 shares of Tenet's common stock - Tax-free stock-for-stock transaction, accounted for as a

pooling of interests - 306 million shares outstanding after the merger

Summary of Refinancings - Tenet raised $4.8 billion in the week beginning January 27,

1997 through public debt offerings and a new revolving

credit facility

- $2 billion raised through public debt offerings

- $2.8 billion revolving credit facility established - Portion of proceeds from both debt offering and credit

facility were used to repurchase substantially all of OrNda's

public debt and to repay Tenet's and OrNda's previously

outstanding bank debt - Tenet is left with more than $2 billion in preapproved

borrowing ability - In the public debt offerings on Jan. 27, Tenet offered three

series of notes as follows:

- $400 million principal amount of 7.875% Senior

- Notes due 2003 priced at 99.924% to yield 7.89%;

- $900 million principal amount of 8.000% Senior

- Notes due 2005 priced at 99.358% to yield 8.11%;

and

- $700 million principal amount of 8.625% Senior

Subordinated Notes due 2007 priced at 99.894% to

yield 8.64%. -0-

127 GENERAL HOSPITALS WITH 27,920 BEDS

The following table lists the 127 general hospitals owed or operated by Tenet through its subsidiaries at January 30, 1997. Hospitals formerly operated by OrNda appear in italicized type.

Facility Location Licensed

Beds Southern California

Alvarado Hospital Medical Center San Diego 231

Century City Hospital Los Angeles 190

Encino-Tarzana Regional Medical

Center (Encino Campus) Encino 151

Encino-Tarzana Regional Medical

Center (Tarzana Campus) Tarzana 231

Garden Grove Hospital and Medical Center Garden Grove 167

Garfield Medical Center Monterey Park 211

Irvine Medical Center Irvine 176

John F. Kennedy Memorial Hospital Indio 130

Lakewood Regional Medical Center Lakewood 161

Los Alamitos Medical Center Los Alamitos 173

North Hollywood Medical Center North Hollywood 160

Placentia Linda Hospital Placentia 114

San Dimas Community Hospital San Dimas 93

South Bay Medical Center Redondo Beach 201

USC University Hospital Los Angeles 286

Brotman Medical Center Culver City 438

Centinela Hospital Medical Center Inglewood 400

Chapman Medical Center Orange 135

Coastal Communities Hospital Santa Ana 177

Community Hospital of Huntington Park Huntington Park 99

Fountain Valley Regional Hospital

and Medical Center Fountain Valley 413

Greater El Monte Community Hospital South El Monte 113

Harbor View Medical Center San Diego 156

Midway Hospital Medical Center Los Angeles 225

Mission Hospital of Huntington Park Huntington Park 127

Monterey Park Hospital Monterey Park 102

Santa Ana Hospital Medical Center Santa Ana 90

St. Luke Medical Center Pasadena 162

Suburban Medical Center Paramount 184

Western Medical Center Santa Ana 288

Western Medical Center-Anaheim Anaheim 193

Whittier Hospital Medical Center Whittier 15

Woodruff Community Hospital Long Beach 96 Other California

Brookside Hospital San Pablo 326

Community Hospital of Los Gatos Los Gatos 164

Doctors Hospital of Manteca Manteca 73

Doctors Hospital of Pinole Pinole 137

Doctors Medical Center of Modesto Modesto 433

Redding Medical Center Redding 185

San Ramon Regional Medical Center San Ramon 123

Sierra Vista Regional Medical Center San Luis Obispo 199

Twin Cities Community Hospital Templeton 84

French Hospital Medical Center San Luis Obispo 147

Valley Community Hospital Santa Maria 70 South Florida

Delray Medical Center Delray Beach 211

Hialeah Hospital Hialeah 378

Hollywood Medical Center Hollywood 324

North Ridge Medical Center Ft. Lauderdale 391

North Shore Medical Center Miami 357

Palm Beach Gardens Medical Center Palm Beach Gardens 204

Palmetto General Hospital Hialeah 360

West Boca Medical Center Boca Raton 185

Coral Gables Hospital Coral Gables 273

Florida Medical Center Ft. Lauderdale 459

Florida Medical Center, South Plantation 202

Parkway Regional Medical Center North Miami 699 Tampa/St. Petersburg, Florida Area

Memorial Hospital of Tampa Tampa 174

Palms of Pasadena Hospital St. Petersburg 310

Seven Rivers Community Hospital Crystal River 128

Town & Country Hospital Tampa 201

North Bay Medical Center New Port Richey 122 New Orleans, Louisiana Area

Doctors Hospital of Jefferson Metairie 138

Kenner Regional Medical Center Kenner 300

Meadowcrest Hospital Gretna 200

Memorial Medical Center (Baptist Campus) New Orleans 487

Memorial Medical Center (Mercy Campus) New Orleans 272

NorthShore Regional Medical Center Slidell 174

St. Charles General Hospital New Orleans 173 Other Louisiana

Minden Medical Center Minden 121 Phoenix/Tucson, Arizona

Community Hospital Medical Center Phoenix 59

Mesa General Hospital Medical Center Mesa 138

St. Luke's Medical Center Phoenix 276

Tempe St. Luke's Hospital Tempe 90

Tucson General Hospital Tucson 146 Dallas, Texas Area

Doctors Hospital of Dallas Dallas 268

RHD Memorial Medical Center Dallas 190

Trinity Medical Center Carrollton 149

Garland Community Hospital Garland 113

Lake Point Medical Center Rowlett 92 Houston, Texas Area

Park Plaza Hospital Houston 468

Twelve Oaks Hospital Houston 336

Cypress Fairbanks Medical Center Houston 149

Houston Northwest Medical Center Houston 498

Sharpstown General Hospital Houston 190 Other Texas

Brownsville Medical Center Brownsville 177

Mid-Jefferson Hospital Nederland 138

Nacogdoches Medical Center Nacogdoches 150

Odessa Regional Hospital Odessa 100

Park Place Hospital Port Arthur 236

Providence Memorial Hospital El Paso 471

Sierra Medical Center El Paso 365

South Park Hospital & Medical Center Lubbock 101

Southwest General Hospital San Antonio 286

Trinity Valley Medical Center Palestine 150 Alabama

Brookwood Medical Center Birmingham 586

Lloyd Noland Hospital Birmingham 319 Arkansas

Central Arkansas Hospital Searcy 193

Methodist Hospital of Jonesboro Jonesboro 104

National Park Medical Center Hot Springs 166

Saint Mary's Regional Medical Center Russellville 170 Georgia

North Fulton Regional Hospital Roswell 167

Spalding Regional Hospital Griffin 160 Indiana

Culver Union Hospital Crawfordsville 120

Winona Memorial Hospital Indianapolis 317 Missouri

Columbia Regional Hospital Columbia 265

Lucy Lee Hospital Poplar Bluff 201

Lutheran Medical Center St. Louis 408

Twin Rivers Regional Medical Center Kennett 126 North Carolina

Central Carolina Hospital Sanford 137

Frye Regional Medical Center Hickory 355 Oregon

Eastmoreland Hospital Portland 100

Woodland Park Hospital Portland 209 South Carolina

East Cooper Regional Medical Center Mount Pleasant 100

Hilton Head Hospital Hilton Head 64

Piedmont Medical Center Rock Hill 268 Tennessee

Harton Regional Medical Center Tullahoma 137

Medical Center of Manchester Manchester 49

Saint Francis Hospital Memphis 890

University Medical Center Lebanon 261 Eight Additional States

Saint Joseph Hospital Omaha, NE 374

Davenport Medical Center Davenport, IA 150

Saint Vincent Hospital Worcester, MA 432

Gulf Coast Medical Center Biloxi, MI 189

Lake Meade Hospital Medical Center N. Las Vegas, NV 198

Puget Sound Hospital Tacoma, WA 160

Plateau Medical Center Oak Hill, WV 91

Lander Valley Medical Center Lander, WY 102

CONTACT: Tenet Healthcare Corp.

Investor Contact: Paul Russell, 805/563-7188

Media Contact: Lance Ignon, 805/563-6975
COPYRIGHT 1997 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1997, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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