Ardent Health gets required consents and financial reporting default waivers from 10% 2013 noteholders

By Paul Deckelman

New York, Jan. 3 - Ardent Health Services LLC said that its subsidiary, Ardent Health Services Inc., had received consents to a proposed indenture amendment and a related financial reporting covenant default waiver from the holders of a majority of its 10% senior subordinated notes due 2013 under its previously announced consent solicitation, which expired as scheduled at 5 p.m. ET on Dec. 31, without extension.

As previously announced, Ardent Health Services LLC, a Nashville, Tenn.-based hospital operator, said on Dec. 20 that Ardent Health Services Inc. had begun soliciting consents from the holders of its 10% notes to an amendment to the financial reporting covenant in the notes' indenture that would allow Ardent to not have to comply with the covenant until May 2. The company said it was also seeking a waiver of all existing defaults arising from the financial reporting covenant and was in talks with its bank lenders on securing a similar extension.

Ardent set an expiration deadline for the solicitation of 5 p.m. ET on Dec. 31, subject to possible extension. Noteholders delivering their consents by that deadline would be eligible to receive a consent payment of $5 per $1,000 principal amount of notes for which consents are delivered, subject to the satisfaction of certain conditions, among them a requirement that the company would have to obtain consents representing a majority of the outstanding notes and execute a supplemental indenture incorporating the desired changes.

Ardent explained that it had not filed its 10-Q quarterly report for the third quarter of 2004 with the Securities and Exchange Commission by the Nov. 15 deadline because the company's board of directors ordered an independent review of accounting practices at Ardent's Lovelace Sandia Health System Inc. facility in Albuquerque, N.M.

Based on the preliminary findings of its review, announced on Nov. 30, the board's audit committee said Ardent will restate its financial results for the year ended Dec. 31, 2003 and for the first and second quarters of 2004. At that time, Ardent announced that it expected to file the delayed form 10-Q and certain restated financial statements for fiscal year 2003 and the first and second quarters of 2004 with the SEC by the end of the first quarter of 2005. However, Ardent subsequently said it would require further time to complete the historical and current financial statements, expecting that the third quarter 10-Q form and the restated financial statements will be filed with the SEC by May 2, the date to which it was asking the noteholders to extend the filing deadline requirement.

Ardent has been in contact with the SEC and promised to provide information concerning issues identified in the review. It also intends to provide the noteholders preliminary unaudited financial information relating to its results of operations for the 2004 fiscal year by Feb. 15.

Ardent said that if the proposed amendment to the financial reporting covenant were to be approved and the existing defaults waived by the noteholders, the company might enter into certain previously announced divestitures.

It further said that it was in discussions with its senior bank lenders regarding a proposed amendment to its senior secured credit agreement which would, among other things, extend the deadline for the delivery of its financial statements for the 2004 third quarter and the 2004 fiscal year to May 2.

Citigroup Global Markets Inc. (call the Liability Management Group at 800 558-3745 or call collect at 212 723-6106) and Banc of America Securities LLC (call High Yield Special Products at 888 292-0070 or collect at 704 388-9217) were the solicitation agents. Global Bondholder Services Corp. was the information agent and tabulation agent (call 800 470-3800 or call collect at 212 430-3774).

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