Hanger Orthopedic to start roadshow May 16 for $190 million seven-year notes

By Paul A. Harris

St. Louis, May 4 - Hangar Orthopedic Group, Inc. expects to begin a roadshow on May 16 for its $190 million offering of seven-year senior unsecured notes (B3/CCC+), according to an informed source.

Pricing is expected late in the week of May 22.

Pro forma pricing guidance is 9½% to 10%, the source added.

Lehman Brothers and Citigroup will be joint bookrunners for the Rule 144A and Regulation S offering.

The notes will come with four years of call protection.

The company is also making a $50 million private placement of 3.33% convertible perpetual preferred stock to Ares Corporate Opportunities Fund, LP and putting in place a $230 million term loan and a $75 million revolving credit facility.

About $166 million of the proceeds will be used to repay debt outstanding as of March 31 under its existing credit facilities. About $200 million will be used to refinance its 10 3/8% senior notes due 2009. About $16 million will be used to refinance outstanding 11¼% senior subordinated notes due 2009, and about $65 million will be used to redeem its outstanding 10% redeemable preferred stock.

The company expects the refinancing to be accretive to earnings per share upon its consummation.

The prospective issuer is a Bethesda, Md., provider of prosthetics and orthotics.

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