Encompass has consents for one series, extends solicitation for three

Chicago, Dec. 16 – Encompass Health Corp. announced that it has received sufficient consents for one series of notes in its consent solicitation for four series of notes to prepare for a spinoff of its home health and hospice business, according to a press release.

The other three series that are part of the consent solicitation still need a consenting majority of noteholders. To provide more time to build a majority, Encompass Health is extending the deadline for consents to 5 p.m. ET on Jan. 12 from 5 p.m. ET on Dec. 15.

Specifically, the company received the required consents for the 5¾% senior notes due 2025. The indenture trustee has executed a supplemental indenture that will become operative if the company makes the consent payment.

The company is still soliciting consents for its 4½% senior notes due 2028, 4¾% senior notes due 2030 and 4 5/8% senior notes due 2031.

All of the other terms of the consent solicitation remain unchanged.

As previously reported, the proposed amendments seek to amend the indenture to allow the potential spinoff or other distribution of at least 80.1% of the capital stock of the home health and hospice business to Encompass Health’s stockholders, with no initial public offering or other public listing of the capital stock of the home health and hospice business. The terms of the amendment would state that this is conditioned on net leverage not being more than 3.5x on a pro forma basis after giving effect to the spinoff.

The spinoff transaction is targeted for the first half of 2022. Regardless of whether consents are received, the separation may not happen. However, the transaction is also not contingent upon the success of the consent solicitation.

Noteholders of a majority of the outstanding principal amount of each series must consent.

A consent payment will be paid to holders who deliver, and do not validly revoke, consents to the proposed amendments. Noteholders of the 2025 notes will receive $2.50 per $1,000 note and noteholders of the three other series will receive $5.00 per $1,000 note.

The consent payment will only be paid if the required consents are received and if Encompass Health does indeed decide to go ahead with the spinoff transaction.

If those things happen, the proposed amendments will become operative after Encompass Health makes the consent payment.

The transaction must be consummated by Dec. 9, 2022 for the consent solicitation to be relevant.

Citigroup Global Markets Inc. (800 558-3745, 212 723-6106, ny.liabilitymanagement@citi.com) and Goldman Sachs & Co. LLC (800 828-3182, 212 902-5962, GS-LM-NYC@gs.com) are the solicitation agents.

Global Bondholder Services Corp. (866 470-3700, 212 430-3774, 212 430-3775/3779, contact@gbsc-usa.com) is the information, tabulation and paying agent.

The health care services provider is based in Birmingham, Ala.

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