HealthSouth: 10¾% noteholders consent to amendments, waivers; solicitation extended for other notes

New York, May 14 - HealthSouth Corp. said it received consents to proposed indenture changes and desired waivers of indenture conditions from the holders of a majority of its 10¾% senior subordinated notes due 2008, under its previously announced consent solicitation, in a sufficient number under the terms of the consent solicitation.

The news follows by a day HealthSouth's announcement that holders of a majority of its 8½% senior notes due 2008 had agreed to the indenture changes and waivers. The company said that it had received consents from holders of some 89.21% in principal amount of the 10¾% notes, and from the holders of some 90.98% in principal amount of its 8½% notes. The two issues for which the company has now gained consent represent a total principal amount of $662.26 million, or more than 25% of the total amount of senior and senior subordinated debt for which HealthSouth is seeking consents.

The company also said that, encouraged by the success of its efforts in gaining the consents of the holders of these two series of notes, it was continuing its previously announced efforts to solicit consents from the holders of several other series of notes - its 6 7/8% senior notes due 2005, its 7 3/8% senior notes due 2006, its 7% senior notes due 2008, its 8 3/8% senior notes due 2011 and its 7 7/8% senior notes due 2012 - and was extending its consent solicitation to the holders of those notes to 11:59 p.m. ET on May 20, subject to possible further extension, from the originally announced deadline of 11:59 p.m. ET on May 13.

HealthSouth further said that it was amending the consent solicitations for the 6 7/8% notes, the 7 3/8% notes, the 7% notes and the 8 3/8% notes to eliminate the condition to each of these solicitations relating to the successful completion of any other consent solicitation. As amended, each of these consent solicitations is independent of the consent solicitation for any other issue of senior notes.

As previously announced, HealthSouth, a Birmingham, Ala.-based operator of outpatient surgery, diagnostic imaging and rehabilitative healthcare centers, said on March 16 that it had begun soliciting the consent of holders of record (as of March 15) of seven series of its outstanding notes to proposed indenture amendments and waivers of indenture conditions.

The company initially said the consent solicitations would expire at 11:59 p.m. ET on April 13, although this was later extended several times.

The consent solicitations seek approval of proposed amendments to the notes respective indentures, and waivers under the indentures, to address, on a consensual basis, among other things, issues relating to HealthSouth's inability to provide current financial statements.

The company initially said that holders of notes delivering consents prior to the expiration of the consent solicitations would be entitled to receive a consent fee of $10 in cash per $1,000 principal amount of notes held by such holders (this was subsequently increased). It said the payment of the consent fee would be conditioned upon the proposed amendments to the indentures becoming operative.

The company said that the proposed amendments would, as a consensual matter, temporarily suspend HealthSouth's obligations under the indentures to furnish compliance certificates to the indenture trustees and to furnish to the SEC periodic and other reports under the federal securities laws, until HealthSouth is able to comply with such reporting requirements.

The proposed amendments, if applicable, also seek to modify HealthSouth's ability to incur certain debt under certain circumstances. Each noteholder who consents to the proposed amendments will also be waiving all alleged and potential defaults under the indentures arising out of events occurring on or before the effectiveness of the proposed amendments.

The proposed amendments will become effective only upon satisfaction or waiver by HealthSouth of certain conditions, including receipt of valid and unrevoked consents from holders representing at least a majority in total principal amount of outstanding notes for a series.

Consent solicitations for series of notes that are governed by the same indentures are also conditioned upon receipt of valid and unrevoked consents from a majority in principal amount of the holders of each other series of notes issued under such indenture.

On April 14, HealthSouth said that that it had extended the deadline on the consent solicitations to 11:59 p.m. ET on April 28, subject to possible further extension, from the originally announced April 13 deadline. On April 29, HealthSouth again extended the consent solicitation, to 11:59 p.m. ET on May 13, subject to possible further extension.

The company also announced that it was increasing the consent offered to holders delivering valid and unrevoked consents prior to the expiration of the consent solicitations to $13.75 per $1,000 principal amount of notes for which consents have been delivered, an increase of $3.75 per $1,000 from the $10 amount originally offered.

The company said the payment of the consent fee would remain conditional on the proposed amendments to the indentures becoming operative. It said holders who had previously delivered valid consents and had not revoked them would receive the increased consent fee if the conditions to the consent solicitation are satisfied or waived.

HealthSouth also announced that it was modifying certain terms of the proposed amendments that it was seeking to the notes' indentures. It said each holder of notes consenting to the proposed amendments would also be waiving all alleged and potential defaults under the indentures arising out of events occurring on or prior to the effectiveness of the proposed amendments.

Credit Suisse First Boston is the solicitation agent for the consent solicitation (call 800 820-1653) Innisfree M&A Inc. is the information agent (banks and brokers call collect at 212 750-5833; noteholders call toll-free at 888 750-5834).

© 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.