Hanger Inc. recently announced an amendment and restatement of the terms of its previously announced consent solicitation to its $200,000,000 principal amount 7⅛% senior notes due 2018. According to a company press release, the amendment and restatement amends the consent fees payable pursuant to the consent solicitation as well as the proposed increased interest rate on the notes and the consent solicitation’s expiration date.
The proposed amendment and waiver is effective as of Nov. 15, 2015 and will amend the reporting covenant to extend Hanger’s deadline to deliver to noteholders and the trustee periodic reports required to be filed or furnished with the Securities and Exchange Commission (SEC) until either Hanger is current on its filings with the SEC or Hanger fails to timely pay a second consent fee if due on May 15, 2016 and Sept. 15, 2016 — whichever occurs first, according to the press release.
The proposed amendment and waiver will wave through Sept. 15, 2016 any default or event of default under the indenture that may occur or exist as a result of or in connect with Hanger’s failure to timely deliver or file its delayed SEC reports. The amendment also will cause any notice of default relating to Hanger’s covenant under the indenture to become null and void and deemed to have been withdrawn. If Hanger receives the requisite consents to approve its proposed amendment and waiver, it will increase the interest rate on its notes to 9.125%, effective Nov. 15, 2015. If Hanger is not current on its filing obligations with the SEC as of May 15, 2016, it will further increase the interest rate on the notes by an additional 1½% per annum to 10.625%, effective May 15, 2016. The provision regarding the increased interest rates will not expire along with the proposed amendment and waiver.
The company reported it received a notice of default from a single noteholder who holds more than 25% in aggregate principal amount of the notes due to its failure to comply with the financial reporting covenant under the indenture on Nov. 25, 2015. Failure to comply with this covenant for a period of 90 days after its notice of default will result in an event of default for Hanger. If this occurs, unless the notice of default is deemed null and void through the approval of the proposed amendment and waiver, or otherwise before the expiration of that 90-day period, the true or holders of not less than 25% in aggregate principal amount of the notes may choose to exercise their remedies under the senior notes, including declaration of all amounts on the notes to be due and payable immediately.
Hanger’s bank credit agreement contains cross-default provisions for its senior notes. According to the terms of its bank credit agreement, the notes of default constitutes an event of default without regard to any otherwise applicable notice or cure or grade period, but receipt of a notice of default should not constitute an event of default if the notice is withdrawn and not reinstated within 30 days after its receipt. According to the bank credit agreement, a notice of default under the agreement could lead to the lenders accelerating Hanger’s borrowings under the agreement.
The consent solicitation will expire at 5 p.m. EST on Dec. 9, 2015. The original expiration date was set for Dec. 3. Only holders of record of the notes as of 5 p.m. EST, on Nov. 18 are eligible to deliver consents to the proposed amendment and waiver in the consent solicitation. According to the proposed amendment and waiver, Hanger will pay to the holders who delivered valid and unrevoked consents prior to the expiration time a cash payment of $20 per $1,000 principal amount of notes for which consents have been delivered by such holder, subject to the satisfaction or waiver of all the conditions of the consent solicitation. If Hanger is not current in its filings with the SEC on May 15, 2016, then the company also will pay a cash payment of $5 per $1,000 principal amount of notes to the holders who delivered valid and unrevoked consents prior to Dec. 9, 2015.
The right to receive consent fees is not transferrable with the notes, according to the press release.
Copies of the Amended and Restated Notice of Consent Solicitation, the consent form and other related documents may be obtained by contacting D.F. King & Co., the information and tabulation agent, at 212-269-5550 or 866-796-1245, or via email at firstname.lastname@example.org. Holders of the notes are urged to review the Notice of Consent Solicitation and the procedures for consenting to the proposed amendment and waiver.
For more information: Any persons with questions regarding the consent solicitation should contact the Solicitation Agent, Wells Fargo Securities, at 704-410-4760 or 866-309-6316.