Vanguard Health gets required consents from 9¾% noteholders, extends tender offer, pricing deadlines

New York, Aug. 10 - Vanguard Health Systems Inc. (B3/B-) said it has received the required amount of consents to proposed indenture amendments from the holders of its 9¾% senior subordinated notes due 2011 and has extended its previously announced tender offer for those notes.

As of the consent deadline, which expired as scheduled at 5 p.m. ET on Aug. 9 without extension, holders of $298.789 million of the notes, or 99.6% of the outstanding principal amount, had tendered them under the terms of the offer and had delivered the related consents, becoming eligible to receive the previously announced consent payment as part of their consideration.

Vanguard and J.P. Morgan Trust Co. NA, the indenture trustee, have executed a supplemental indenture incorporating the desired changes. However, the amendments will not become operative until the tendered notes are accepted for purchase under terms of the offer.

Vanguard also said that it had extended the offer to 11:59 p.m. ET on Sept. 16 from the original Aug. 23 expiration and had accordingly also extended the pricing deadline for the notes to 2 p.m. ET on Sept. 2 from the originally announced Aug. 10, with both deadlines subject to possible further extension.

As previously announced, Vanguard Health Systems, a Nashville, Tenn.-based hospital operator, said on July 27 that it had begun a cash tender offer and consent solicitation for any and all its $300 million principal amount of 9¾% notes.

It set a now-expired consent deadline of 5 p.m. ET on Aug. 9 and originally said it would price the notes on Aug. 10, with the offer to expire at 11:59 p.m. ET on Aug. 23 (the pricing and expiration deadlines were subsequently extended).

The company said it would set the consideration it would offer for the notes based on a fixed spread of 50 basis points over the yield on the pricing date of the 7% U.S. Treasury note due July 15, 2006, plus accrued and unpaid interest up to, but not including, the date of payment for the notes. Holders tendering notes by the consent deadline and delivering consents to the proposed indenture changes, which would eliminate substantially all of the restrictive covenants, would receive a $20 per $1,000 principal amount consent payment as part of their consideration; holders tendering afterward would not.

The company said holders could not tender without also delivering consents or vice versa.

Vanguard began the tender offer in connection with its recently announced agreement to receive a major investment from The Blackstone Group. The offer is subject to various conditions, including those relating to Blackstone's investment and the now-fulfilled condition of receipt of consents from holders of a majority of the outstanding notes.

Citigroup Global Markets Inc. at (800 558-3745 or call collect 212 723-6106) and Banc of America Securities LLC at (888 292-0070 or call collect 704 388-4813) are dealer managers and solicitation agents.

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