EFTA01385393.pdf

3 January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite To.,: Reform There are several key pieces to the Tax Cuts and Jobs Act of 2017 (signed into law 12/22/17) that could be pertinent to certain companies in our HY Healthcare universe, especially those who have a high level of interest relative to EBITDA. Although we do not granular details for our specific companies (and we believe many of our companies are still finalizing the details of this legislation on their own), we can make some broad observations. We expect interest deductibility to be limited to 30% of EBITDA (less minority interest) over the coming years. And although we believe companies can deduct (for tax purposes) certain short-term capital expenditures (we suspect this would be related to equipment and other items with shorter useful lives), we do not know what proportion of our companies' capex relates to this type of capex. As such, we believe assuming $0 in this category would be conservative. And although the legislation would allow 80% of NOLs to be used in certain circumstances, we believe many of our companies already had some limitations on NOL use, and as such this 80% (or inability to use 20%) is not necessarily all incrementally negative. In the following table we attempt to show the potential impact to Tenet (THC) in connection with tax reform. We acknowledge that these are very rough numbers and there are many unknowns. We further expect that on the heels of this legislation that many companies will look to tax consultants to attempt to minimize any incremental tax liability that may arise from the legislation. All this said, on a very simplistic and rough basis, our math suggests that after NOLs THC would see an incremental $18 mm of cash taxes. Figure 4 further illustrates. FFigure 8: Simplistic Potential Impact of Tax Refoim Tenet (THC) - Simplistic Potential Impact of Tax Reform Current Interest 1,024 EBITDA Less Cash Minority Interest 1,980 Interest Cap at 30% of EBITDA less Minority Interest 594 Assumed Capex Deductable for Tax Purposes Increase in Taxable Income 430 Tax Rate 21% Incremental Tax Before NOL Usage 90 Net Increase In Taxable Income After 80% NOL 86 Tax Rate 21% Incremental Cash Tax After NOL Usage 18 Savo. a,.,,d,. Ltirt anf Comptes, Ducbraos Page 118 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086677 CONFIDENTIAL SDNY_GM_00232861 EFTA01385393