HealthSouth gets default notice from 7 5/8% notes' trustee

By Jeff Pines

Washington, May 25 - HealthSouth Corp. received a notice of technical default on Tuesday on behalf of the holders of its 7 5/8% senior notes due 2012 from the trustee.

The notice is related to HealthSouth's failure to file reports with the Securities and Exchange Commission and with the trustee.

HealthSouth has 60 days to fix the problem.

Meanwhile, the Birmingham, Ala.-based provider of outpatient surgery and other health services is still contending with noteholders in the Circuit Court of Jefferson County, Ala. Holders of the 7 5/8% notes are involved in this case, too.

The company is arguing that the previous default notices did not meet the requirements of the indenture and should not be considered effective.

In this case, HealthSouth is fighting to prevent a decision that could accelerate the maturity of its notes.

A hearing is scheduled for June 30.

HealthSouth is also conducting a consent solicitation seeking waivers of the requirements to file reports and other conditions from noteholders.

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