Prospect Medical gets tenders for 99.31% of 12¾% notes by early date

By Susanna Moon

Chicago, May 2 - Prospect Medical Holdings, Inc. said it received tenders for $150.7 million, or about 99.31%, of its $151.8 million principal amount of outstanding 12¾% senior secured notes due 2014 by the consent expiration at 11:59 p.m. ET on May 1.

The company said it plans to execute a supplemental indenture to the notes to eliminate most of the restrictive covenants and some events of default. The amendments also delete any provisions from the collateral documents prohibiting the grant of liens to secure the company's proposed new debt financing arrangements and provide that the collateral securing the notes and the related guarantees secure the company's proposed new debt financing arrangements on a pari passu basis, according to a company press release.

The supplemental indenture will become operative when the company purchases the tendered notes on May 3. The early settlement date may occur at any time before May 15, which is the expiration date for the offer, the release noted.

The offer began on April 18.

As previously noted, consents were needed from the holders of at least two-thirds of the notes to amend the notes. Holders may not tender their notes without delivering consents or vice versa.

The company will pay $1,087.95 per $1,000 principal amount of notes tendered by the consent date, including a $30.00 premium per note.

Holders who tender their notes after the consent date will receive only the base payment of $1,057.95 per $1,000 principal amount.

The company will also pay accrued interest up to but excluding the payment date.

The offer is conditioned on the company obtaining enough financing, the execution of a supplemental indenture effecting the proposed amendments to the indenture and the execution of amendments to the collateral documents.

The dealer manager is Morgan Stanley & Co. LLC (800 624-1808 or 212 761-1057). The tender and information agent is D.F. King & Co., Inc. (800 431-9643 or, for banks and brokers, 212 269-5550).

Los Angeles-based Prospect Medical is a health-care services company.

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