Iasis buys $226.5 million 13% notes, $100 million 8½% notes in tender

New York, June 22 - Iasis Healthcare Corp. said it bought all the $226.5 million of its 13% senior subordinated notes due 2009 and $100 million of its 8½% senior subordinated notes due 2009 that were tendered in its offer to purchase the notes.

The tender expired at 9 a.m. ET on Tuesday.

At its last announcement on June 18, Iasis said it set the price for its tender offer for its 13% and 8½% notes.

Using a previously announced formula based on the yield of designated reference securities, Iasis said that the total consideration for 13% notes validly tendered prior to the consent deadline would be $1,099.39 per $1,000 principal amount of notes tendered and accepted for payment, including a $30 consent payment. Holders tendering their 13% notes after the consent deadline but before the expiration would receive $1,069.39 per $1,000 principal amount.

It said that the total consideration for 8½% notes tendered by the consent deadline would be $1,139.36 per $1,000 principal amount, including the $30 consent payment. Holders tendering after the consent deadline would receive $1,109.36 per $1,000 principal amount.

All holders will also receive accrued interest up to but not including the settlement date.

As previously announced, Iasis, a Franklin, Tenn.-based hospital operator, said on May 6 it had begun a cash tender offer for any and all of its $230 million principal amount of 13% notes and its $100 million principal amount of 8½% notes and was also soliciting consents to amend the note indenture so as to eliminate substantially all of the restrictive covenants and certain events of default in the indentures.

It set a 5 p.m. ET May 19 consent deadline and initially said that the price would be set on June 1 and the offer would expire on June 3 (the pricing date and expiration were subsequently extended).

It said that the purchase price for the notes would be based on a fixed spread of 50 basis points over the yield on the pricing date of the 1 7/8% U.S. Treasury note due Sept. 30, 2004 for the 13% notes and the 4 5/8% U.S. Treasury note due May 15, 2006 for the 8½% notes. The total consideration calculated would include a $30 per $1,000 principal amount consent payment payable only to holders tending by the consent deadline. Holders tendering after the consent deadline would receive the total consideration without the consent payment.

The company said that notes could not be tendered without delivering consents or consents delivered without tendering.

Iasis said the offer would be subject to various conditions, including the receipt of financing and the refinancing of its credit facility.

On May 19, Iasis said it had received the required consents to the proposed indenture changes. As of 5 p.m. ET on May 19, when the consent deadline expired as scheduled without extension, holders of $226.5 million of the outstanding 13% notes, or about 98.5% of the outstanding principal amount, and $100 million of the 8½% notes, or all of the outstanding amount, had delivered valid tenders and consents.

The company said it and The Bank of New York, in its capacity as trustee under the indentures, executed supplemental indentures setting forth the proposed amendments on May 19, although it added that the amendments would not become operative until the notes were accepted and payment under the terms of the offer. It said that once the proposed amendments to the indentures became operative, they would be binding upon all noteholders, including those that did not tender into the offer.

On May 27, Iasis announced that it would sell $475 million principal amount of new senior subordinated notes due 2014 with the proceeds to be used to repurchase the 8½% and 13% notes (high-yield syndicate sources heard on June 10 that the Rule 144A deal had successfully priced).

Iasis announced extension of the pricing and expiration deadlines, first on May 28 and again on June 14, when the pricing date was set for 2 p.m. ET on June 17 and the expiration for 9 a.m. ET on June 22, subject to possible further extension. On June 14, it said that as of June 11, Iasis had received valid tenders of $226.5 million principal amount of the 13% notes (98.5% of the outstanding amount) and all $100 million of the outstanding 8½% notes, the same as at May 28, when the previous extension had been announced.

The information agent is Global Bondholder Services Corp. (866 937-2200 or collect at 212 430-3774). Banc of America Securities LLC is the dealer manager and solicitation agent (contact High Yield Special Products at 888 292-0070 or collect at 704 388-4813).

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