CHS in negotiations to extend nearly $2B in debt

Franklin, Tenn.-based Community Health Systems is in talks with a group of bondholders led by Franklin Resources, an asset management company, to extend approximately $2 billion in bonds due in 2019, people familiar with the matter told the Wall Street Journal.

The company is in talks to swap the 2019 unsecured notes for debt secured by its assets, one person familiar with the matter told WSJ. This type of transaction would be difficult for CHS to complete, as the company can only issue about $1 billion in new secured debt without permission from its lenders to waive a covenant in its revolver loans.

Extending the debt due in 2019 is only a short-term solution because CHS faces billions of dollars in debt maturities from 2020 to 2023, according to the report.

CHS put a financial turnaround plan into place last year, which included selling 30 hospitals to reduce its heavy debt load. The company completed the divestiture plan earlier this month. With the help of proceeds from the hospital sales, CHS brought down its long-term debt load to $13.9 billion in the third quarter of this year, from $14.8 billion in the same period of 2016.

CHS ended the most recent quarter with a net loss of $110 million on revenues of $3.67 billion. That's compared to the third quarter of 2016, when the company posted a net loss of $79 million on revenues of $4.38 billion.

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