Triad Hospitals closes new note offering, buys back most existing 11% bonds

New York, Nov. 12 - Triad Hospitals, Inc. (B2/BB-) said it closed on the recent sale of $600 million aggregate principal amount of new 7% senior subordinated notes due 2013 and used part of the proceeds to repurchase about 99% of its $325 million of outstanding 11% senior subordinated notes due 2009 under the terms of its previously announced tender offer for the notes and to and make consent payments in connection with the amendment of the related indenture.

The company also said that the previously executed supplemental indenture incorporating the proposed amendments became operative upon Triad's acceptance for purchase of the tendered 11% notes, and will be binding upon the holders of any 11% notes that are not tendered into the offer, which as previously announced will expire on Nov. 24.

As previously announced, Triad Hospitals, a Plano, Texas-based hospital operator, said on Oct. 27 that it had begun a cash tender offer to purchase any and all of its $325 million outstanding principal amount of 11% notes and was also soliciting noteholder consents to proposed indenture changes.

It set a now-expired consent deadline of 5 p.m. ET on Nov. 4 and said the tender offer would expire at 11.59 p.m. ET on Nov. 24, with both deadlines subject to possible extension.

Triad said that the total consideration to be paid for each note validly tendered before the consent deadline would be $1,102.22 per $1,000 principal amount, including a $30 per $1,000 principal amount consent payment. Holders tendering their notes after the consent deadline but before the offer expires would receive $1,072.22 per $1,000 principal amount.

Holders will also receive accrued interest up to, but not including, the date of payment.

The company said that among other things the proposed indenture amendments would eliminate most of the indenture's principal restrictive covenants and would amend certain other provisions contained in the indenture. Adoption of the proposed amendments would require the consent of the holders of at least a majority of the outstanding notes.

Holders tendering their notes would be required to consent to the proposed amendments and holders conversely could not deliver consents to the proposed amendments without tendering their notes in the tender offer. Tendered notes could be withdrawn and consents could be revoked at any time prior to the expiration of the consent solicitation, but not thereafter.

The company said the tender offer would be conditioned upon, among other things, a minimum tender condition, a requisite consents condition and the completion of a Rule 144A offering by Triad of at least $450 million of new senior subordinated notes (Triad was heard by high yield syndicate sources to have sold an upsized offering of $600 million new 7% senior subordinated notes due 2013 on Nov. 6).

On Nov. 5, Triad said that it had received the requisite tenders and consents from its 11% noteholders. The company said the consent solicitation expired as scheduled at 5 p.m. ET on Nov. 4, without extension; as of that deadline, holders of approximately 98% of the outstanding principal amount of the notes had tendered their notes and consented to the proposed amendments to the related indenture.

Triad said it planned to enter into a supplemental indenture to put into effect the proposed indenture amendments, although the amendments would not become operative, however, unless and until the notes tendered by the consenting holders were accepted and paid for pursuant to the terms of the tender offer. It said that once the proposed amendments to the related indenture became operative, they would be binding upon the holders of any notes not tendered into the offer.

Merrill Lynch & Co. (call 888 ML4-TNDR or collect at 212 449-4914) and Banc of America Securities LLC (call 888 292-0070 or collect at 704 388-4813) are acting as co-dealer managers and cosolicitation agents for the tender offer and the consent solicitation. The information agent is Georgeson Shareholder Communications Inc. (call 888 549-6627 or collect at 212 440-9800). The depositary for the tender offer is Citibank, NA.

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