Team Health tenders for 12% notes

New York, Feb. 25 - Team Health Inc. (B2/B+) said that it has begun a cash tender offer for any and all its $100 million principal amount of outstanding 12% senior subordinated notes due 2009 and is soliciting noteholder consents to proposed indenture changes that would eliminate substantially all of the restrictive covenants.

The company set a consent deadline of 5 p.m. ET on March 8. The tender offer will expire at midnight ET on March 22, with both deadlines subject to possible extension.

Team Health, a Knoxville, Tenn., provider of outsourced physician services to hospitals, said that holders validly tendering their notes by the consent deadline will receive $1,082.50 per $1,000 principal amount of notes accepted for purchase by the company, which includes a $20 per $1,000 principal amount consent payment. Holders who validly tender their notes after the consent deadline but before the tender offer expires will receive $1,062.50 per $1,000 principal amount but will not receive the consent payment. All tendering holders will also be paid accrued and unpaid interest up to, but not including, the payment date for the notes.

Holders tendering their notes will be required to consent to the proposed amendments to the indenture. They may not tender their notes without also delivering consents or deliver consents without also tendering their notes.

In addition to the tender offer and consent solicitation, Team Health said that it also intends to undertake several refinancing transactions; it plans to consummate a private offering of a new series of senior subordinated notes; enter into new senior secured credit facilities; redeem its outstanding preferred stock; and pay a dividend to holders of the company's common stock, if the latter step is approved by the company's board of directors.

Team Health said that its tender offer and consent solicitation would be subject to certain conditions, including the company's receipt of tenders of notes representing a majority of the outstanding principal amount; and the completion of the refinancing transactions.

It expects to finance the tender offer by a combination of the proceeds from the proposed placement of the new senior subordinated notes and borrowings under the planned new credit facilities.

Team Health said that upon the closing of the new senior subordinated notes offering and the new credit facilities, it plans to call for redemption all notes which may remain outstanding following the tender offer.

J.P. Morgan Securities Inc. (call Chad Joplin collect at 212 270-1171) and Banc of America Securities LLC (call the High Yield Special Products division at 888 292-0070 or collect at 212 847-5834) will be the dealer managers and solicitation agents in connection with the offer. Georgeson Shareholder Communications is the information agent for the offer (call 212 440-9800 or toll-free at 866 399-8793).

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