Hanger Orthopedic completes tender offer for 11¼% notes

New York, Oct. 8 - Hanger Orthopedic Group, Inc. (B2/B-) said it completed its previously announced tender offer for its 11¼% senior subordinated notes due 2009, which expired as scheduled at 5 p.m. ET on Oct. 3, without further extension. As of that deadline, all $134.438 million of the outstanding notes had been tendered.

The company also said that it had closed and funded a $250 million credit facility - one of the conditions of the tender offer - on Oct. 3.

As previously announced, Hanger, a Bethesda, Md.-based provider of orthotic and prosthetic patient-care services, said on Sept. 2 that it was beginning a tender offer for any and all of its $150 million outstanding 11¼% notes, and a related solicitation of noteholder consents to proposed indenture changes.

It initially set 5 p.m. ET on Sept. 15 as the consent deadline and said the tender offer would expire at 5 p.m. ET on Oct. 1 (both deadlines were subsequently extended).

The company was originally offering 110.5% of the principal amount for each note tendered, including a consent payment of 3% of the principal amount. It said that holders tendering after the consent deadline but before the offer expires would receive the tender price of 107.5% of the principal amount, but no consent payment. All tendering holders would additionally receive accrued and unpaid interest up to, but not including, the payment date.

On Sept. 15, Hanger increased the consent payment to 4% of the principal amount from the original 3% (effectively increasing the total consideration, though not the basic tender offer price).

Hanger said that tenders of notes made prior to the consent deadline could not be withdrawn, unless the company reduced the tender offer consideration or the consent payment or was otherwise required by law to permit withdrawal. Any notes tendered after the consent deadline could be properly withdrawn at any time until the scheduled expiration.

The company said the tender offer would be conditioned upon the consummation of a new $150 million term loan, which is entirely prepayable and expected to have a lower interest rate than the debt it will replace. Hanger intends to use the net proceeds from such financing to fund the purchase of the senior subordinated notes pursuant to this tender offer.

Lehman Brothers Inc. was the dealer manager for the tender offer and solicitation agent for the consent solicitation (call the Liability Management Group at 800 438-3242 or collect at 212 528-7581). D.F. King & Co. Inc. was the information agent (888 567-1626).

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