Concentra gets tenders for 95.88% of 9 1/8%, 91.76% of 9½% notes in exchange offer

By Jennifer Chiou

New York, June 22 - Concentra Operating Corp. said it received tenders from holders of a total of $313.775 million of notes in its offer to issue cash and $185 million of new 10 1/8% senior subordinated notes due 2017 in exchange for its $155 million of 9 1/8% senior subordinated notes due 2012 and $180 million of 9½% senior subordinated notes due 2010.

The company received tenders from holders of $148.615 million, or 95.88%, of its 9 1/8% notes and $165.16 million, or 91.76%, of its 9½% notes.

The offer ended at midnight ET on June 21. It began on May 24.

The company's newly formed, wholly owned subsidiary, Viant Holdings, Inc., will issue $185 million of new notes and pay $155,219,636.98 in cash, including accrued interest.

On June 8, the company announced that the new notes would bear interest at 10 1/8%, instead of 9 7/8%.

Concentra also solicited consents to amend the indentures governing its outstanding senior subordinated notes.

As of 5 p.m. ET on June 7, the original consent deadline, holders of $211.320 million total of old notes had submitted consent, which will allow the company to execute a supplemental indenture.

For each $1,000 principal amount, those who tendered will receive $1,075.31 for the 9 1/8% notes and $1,052.57 for the 9½% notes plus accrued interest to the settlement date, which is expected to be June 25.

As of 2 p.m. ET on June 7, the reference yield on the 4 7/8% Treasury due May 31, 2008 was 5.056%, used for the 9 1/8% notes, while the reference yield on the 3¼% Treasury due Aug. 15, 2007 was 4.789%, which was used for the 9½% notes. Both determinations used a fixed spread of 50 basis points.

For each $1,000 principal amount of old notes, the payout includes a consent payment of $20.00 to those who tendered by the extended consent expiration, which was 5 p.m. ET on June 12.

The company said the offer is linked to the separation of its two principal operating segments, Health Services and Network Services.

In order to finance a portion of the transactions, Concentra plans to borrow about $485 million of term debt, of which about $330 million would be senior, first-lien debt, and the remainder being second-lien debt.

Concentra will additionally obtain a $75 million revolving credit facility and Viant would borrow about $275 million in senior secured debt and would obtain a $50 million revolving credit facility.

Concentra also intends to retire its current senior secured debt using the cash proceeds received from Viant and a portion of the cash proceeds borrowed under Concentra's new senior credit facilities.

Under the separation, Concentra will additionally pay a cash dividend to its stockholders of about $350 million and would distribute to its stockholders as a dividend all of the Viant common stock pro rata to complete the separation of its Network Services business from its Health Services and Auto Injury Solutions businesses.

The new notes will be Viant's general unsecured obligations and will be subordinated to all existing and future senior debt. Concentra's new senior credit facilities would replace its existing revolver and term loan facilities.

The company had said that if it obtained tenders in excess of $185 million of notes, it would accept securities on a pro rata basis.

The information agent was Global Bondholder Services Corp. (866 470-4200 or call collect 212 430-3774).

Citi (800 558-3745 or call collect 212 723-6106) and UBS Investment Bank (888 722-9555, ext. 4210 or call collect 203 719-4210) were the lead dealer managers, and Banc of America Securities LLC (888 292-0700 or call collect 704 388-9217) and JPMorgan (800 245-8812) were co-dealer managers.

Concentra is an Addison, Texas, provider of services designed to contain health care and disability costs.

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