Concentra gets consents, extends consent deadline, sets pricing in amended offer for 9 1/8%, 9½% notes

By Jennifer Chiou

New York, June 8 - Concentra Operating Corp. said it amended its offer to issue cash and $185 million of new senior subordinated notes due 2017 in exchange for its $155 million of 9 1/8% senior subordinated notes due 2012 and $180 million of 9½% senior subordinated notes due 2010.

The new notes will now bear interest at 10 1/8%, instead of 9 7/8%.

Concentra is also soliciting consents to amend the indentures governing its outstanding senior subordinated notes.

As of 5 p.m. ET on June 7, the original consent deadline, holders of $211.320 million total of old notes had submitted consent, which will allow the company to execute a supplemental indenture.

For each $1,000 principal amount, those who tender will receive $1,075.31 for the 9 1/8% notes and $1,052.57 for the 9½% notes, plus accrued interest to the settlement date.

As of 2 p.m. ET on June 7, the reference yield on the 4 7/8% Treasury due May 31, 2008 was 5.056%, used for the 9 1/8% notes, while the reference yield on the 3¼% Treasury due Aug. 15, 2007 was 4.789%, which was used for the 9½% notes. Both determinations used a fixed spread of 50 basis points.

For each $1,000 principal amount of exchanged old notes, the company will pay a consent payment of $20.00 to those who tender by the extended consent expiration, which is 5 p.m. ET on June 12. The consent payment is included in the payout.

As already reported, the company's newly formed, wholly owned subsidiary, Viant Holdings, Inc., will issue the new notes and will also pay an amount in cash.

The offer ends at midnight ET on June 21. It began on May 24.

The company said the offer is linked to the separation of its two principal operating segments, Health Services and Network Services.

In order to finance a portion of the transactions, Concentra plans to borrow about $485 million of term debt, of which about $330 million would be senior, first-lien debt, and the remainder being second lien.

Concentra will additionally obtain a $75 million revolving credit facility and Viant would borrow about $275 million in senior secured debt and would obtain a $50 million revolving credit facility.

Concentra also intends to retire its current senior secured debt using the cash proceeds received from Viant and a portion of the cash proceeds borrowed under Concentra's new senior credit facilities.

Under the separation, Concentra will additionally pay a cash dividend to its stockholders of about $350 million and would distribute to its stockholders as a dividend all of the Viant common stock pro rata to complete the separation of its Network Services business from its Health Services and Auto Injury Solutions businesses.

The new notes will be Viant's general unsecured obligations and will be subordinated to all existing and future senior debt. Concentra's new senior credit facilities would replace its existing revolver and term loan facilities.

The company said that if it obtains tenders in excess of $185 million of notes, it will accept securities on a pro rata basis.

Concentra noted that the settlement date is expected to be June 25.

The information agent is Global Bondholder Services Corp. (866 470-4200 or call collect 212 430-3774).

Citi (800 558-3745 or call collect 212 723-6106) and UBS Investment Bank (888 722-9555, ext. 4210 or call collect 203 719-4210) are the lead dealer managers, and Banc of America Securities LLC (888 292-0700 or call collect 704 388-9217) and JPMorgan (800 245-8812) are co-dealer managers.

Concentra is an Addison, Texas, provider of services designed to contain health care and disability costs.

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