Matria sets pricing in tender for 11% notes

New York, June 28 - Matria Healthcare Inc. said it has fixed pricing in its tender offer and consent solicitation for its 11% series B senior notes due 2008.

Holders who tendered by the consent deadline will receive $1,141.36 per $1,000 principal amount. Those who tender after that date but before the expiration will receive $1,121.36 per $1,000.

Both totals include $18.03 of accrued interest based on the assumed June 30 payment date.

Matria previously said on June 24 that it had moved up the scheduled expiration date of its previously announced tender offer for its 11% series B notes and the related consent solicitation.

Matria said the tender offer, which had been scheduled to expire at noon ET July 2, will now expire at 9 a.m. June 30. The price determination date - the second business day before the offer's expiration - was accordingly accelerated to June 28 from June 30, with both deadlines subject to possible extension.

Matria said that the tender offer expiration had been accelerated to coincide with the closing of its planned $130 million sale of its pharmacy and supply business, which was announced on June 23. As a result, Matria will be able to immediately use part of the proceeds to repurchase tendered 11% notes and both transactions can be completed in the same quarter.

The company cautioned, however, that completion of the sale of the pharmacy and supplies business is conditioned upon completion by the unit's prospective buyer of due diligence and customary closing conditions, and there can be no assurance that the transaction will be completed by June 30. If the sale of the unit cannot be completed by June 30, Matria expects that it will again extend the tender offer to enable the asset sale to close simultaneously with the tender offer.

Matria expects to use about $60 million of the anticipated $102 million cash proceeds of the transaction, along with proceeds from a previously announced sale of new convertible debt, to fund the tender offer for the 11% notes.

It said that as of midnight June 23, it had received valid tenders from holders of $120 million of the 11% notes, or 98.36% of the amount outstanding - unchanged from the amount of noteholder participation announced on May 26, when the company had last announced extension of its tender offer.

As previously announced, Matria, a Marietta, Ga.-based provider of comprehensive disease management programs to health plans and employers, said on March 30 that it had begun a tender offer for all $122 million of its outstanding 11% series B notes and had started soliciting consents to proposed changes in the notes' indenture aimed at eliminating all of the restrictive covenants and certain events of default and other related provisions.

The company set a now-expired consent deadline of 9 a.m. ET April 13 and initially said the tender offer would expire at noon ET April 27. The expiration was subsequently extended several times as the company attempted to line up financing for the tender offer.

Matria said it would determine the price no later than the start of business on the second business day before the tender offer expires (originally a tentative pricing date of April 23, later extended several times).

The company said that holders validly tendering their notes and delivering consents before the consent deadline would receive the total consideration, which will be determined based upon a fixed spread of 0.50% over the yield to maturity on the reference security, the 1.625% U.S. Treasury note due April 30, 2005. The amount includes a $20 per $1,000 principal amount consent fee. Holders tendering their notes and delivering their consents after the consent deadline but before the expiration will not receive the consent fee.

It said that holders tendering notes would be required to consent to the proposed amendments.

Matria said the consent of holders of a majority of the outstanding principal amount of notes was required for the proposed amendments to become effective, but the proposed amendments would not become operative unless a financing condition to which the offer is subject were satisfied (the company said it was seeking to replace its existing credit facility with a new credit facility and/or obtain other financing through the sale of publicly or privately held securities on acceptable terms and in an overall sufficient amount to let Matria purchase all of the outstanding notes).

Matria said that should the amount of notes tendered exceed the amount of proceeds raised by the company in a financing permitted by the waiver, it will be required to use those proceeds to purchase the tendered notes on a pro rata basis.

The completion of the tender offer and the consent solicitation is subject to several conditions, including the financing condition.

By purchasing the notes through the tender offer, Matria anticipates saving the annual interest expense related to the senior notes of $12.8 million.

On April 12, Matria said that it had obtained waivers to the debt incurrence covenant from holders of $69.755 million principal amount of the 11% notes, a majority of the outstanding amount, meaning that it can now incur up to $150 million of additional debt to buy notes in the tender offer.

On April 14, Matria said that it had it obtained the required consents from holders of the 11% notes; it said that the consent deadline expired as scheduled at 9 a.m. ET April 13, without extension and as of that deadline, holders of $120 million principal amount of the notes or 98.36% had tendered their notes and consented to the proposed amendments to the related indenture.

Matria said it would enter into a supplemental indenture that incorporates the proposed amendments.

On April 30, Matria said it priced$75 million of 4 7/8% convertible notes due 2024 and said it would use the proceeds to pay for a portion of the 11% notes' tender. Matria subsequently announced that the sale, which closed on May 5, had been increased to $86.2 million with the exercise of their greenshoe option by the issue's underwriters. Proceeds of the convertibles sale were put into escrow, pending Matria's lining up the rest of the roughly $145 million that it said would be necessary to fund the full tender offer.

UBS Investment Bank is dealer manager for the offer and the solicitation agent for the consent solicitation (contact Kevin Reynolds at 888 722-9555 or 203 719-4210). UBS is also advising Matria on financing alternatives to complete the tender offer. MacKenzie Partners Inc. is the information agent (call 800 322-2885).

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.