Encore Medical repurchases all 9¾% notes upon close of merger with Grand Slam

By Angela McDaniels

Seattle, Nov. 3 - Encore Medical Corp. said it repurchased all $165 million of Encore Medical IHC, Inc.'s outstanding 9¾% senior subordinated notes due 2012 following the close of Encore Medical's merger with Grand Slam Holdings, LLC and Grand Slam Acquisition Corp., affiliates of The Blackstone Group.

Encore Medical launched a tender offer and consent solicitation for the notes on Oct. 13.

For each $1,000 principal amount, the company paid $1,123.82. Noteholders will also receive accrued interest.

The price was set on Oct. 27 as the present value of the $1,048.75 redemption price on the first call date of Oct. 1, 2008 plus the present value on the settlement date of interest through the first call date. The redemption price was determined based on the yield of the 4 5/8% U.S. Treasury due Sept. 30, 2008 plus 50 basis points, less interest up to but excluding the settlement date.

The total consideration includes a consent payment of $30.00. All of the notes were tendered before the consent deadline, which was Oct. 26.

The amendments to the note indenture eliminate substantially all restrictive covenants, except some relating to asset sale and change-of-control offers; eliminate some events of default; modify some provisions relating to the merger and consolidation of Encore; and modify some terms of the defeasance, satisfaction and discharge provisions.

Banc of America Securities LLC (888 292-0070 or 704 388-9217) was the dealer manager and solicitation agent for the offer. D.F. King & Co., Inc. (800 769-7666 or 212 269-5550) was the information agent.

Under the merger agreement, Encore Medical's stockholders will receive $6.55 in cash per share. Encore Medical's common shares ceased trading on the Nasdaq Global Market at market close on Friday and will soon be delisted, the company said.

The transaction was financed through a combination of equity contributed by Blackstone, cash on hand at Encore Medical, senior secured credit facilities and new 11¾% senior subordinated notes due 2014. The total value of the transaction is roughly $887 million.

Encore Medical is an orthopedic device company based in Austin, Texas.

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