UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 28, 2004
HEALTHSOUTH Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-10315 63-0860407
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(Commission File Number) (IRS Employer Identification No.)
One HealthSouth Parkway, Birmingham, Alabama 35243
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(Address of Principal Executive Offices, Including Zip Code)
(205) 967-7116
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(Registrant's Telephone Number, Including Area Code)
ITEM 5. Other Events and Required FD Disclosure.
On April 29, 2004, HEALTHSOUTH Corporation ("HEALTHSOUTH") announced
that it is extending until 11:59 p.m., New York City Time, on May 13, 2004,
its solicitation of consents from holders of its 6.875% Senior Notes due 2005,
7.375% Senior Notes due 2006, 7.000% Senior Notes due 2008, 8.500% Senior
Notes due 2008, 8.375% Senior Notes due 2011, 7.625% Senior Notes due 2012 and
10.750% Senior Subordinated Notes due 2008. The consent solicitations, which
commenced on March 16, 2004, were previously scheduled to expire at 11:59
p.m., New York City Time, on April 28, 2004.
In connection with the extension of the consent solicitations,
HEALTHSOUTH is also amending certain of the terms of the consent
solicitations, including increasing the consent fee that it will pay to
holders who deliver valid and unrevoked consents prior to the expiration of
the consent solicitations to $13.75 per $1,000 principal amount of notes for
which consents have been delivered, which represents an increase of $3.75 per
$1,000 from the amount it originally offered. HEALTHSOUTH is also modifying
certain of the terms of the proposed amendments that it is seeking to the
indentures governing its Senior Notes and Senior Subordinated Notes.
A copy of the press release announcing the extension of the consent
solicitations is attached hereto as Exhibit 99.1 and incorporated herein by
reference and a copy of the form of supplement to the consent solicitation
statement, which includes as Exhibit A thereto an amended form of supplemental
indenture relating to the proposed amendments, is attached hereto as Exhibit
99.2 and incorporated herein by reference.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
See Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
HEALTHSOUTH CORPORATION
By: /s/ Gregory L. Doody
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Name: Gregory L. Doody
Title: Executive Vice President,
General Counsel and Secretary
Dated: April 29, 2004
Exhibit Index
Exhibit No. Description
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99.1 Press release of HEALTHSOUTH Corporation dated April 29, 2004.
99.2 Form of Supplement to the Consent Solicitation Statement dated
April 29, 2004.
Exhibit 99.1
News From
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HEALTHSOUTH
FOR IMMEDIATE RELEASE
April 29, 2004
HEALTHSOUTH CORPORATION INCREASES
CONSENT FEE BY 37.5%, MODIFIES TERMS OF AND EXTENDS
CONSENT SOLICITATIONS
BIRMINGHAM, Ala. - HEALTHSOUTH Corp. (OTC Pink Sheets: HLSH) today announced
that it is extending until 11:59 p.m., New York City Time, on May 13, 2004,
its solicitation of consents from holders of its 6.875% Senior Notes due 2005,
7.375% Senior Notes due 2006, 7.000% Senior Notes due 2008, 8.500% Senior
Notes due 2008, 8.375% Senior Notes due 2011, 7.625% Senior Notes due 2012 and
10.750% Senior Subordinated Notes due 2008. The consent solicitations, which
commenced on March 16, 2004, were previously scheduled to expire at 11:59
p.m., New York City Time, on April 28, 2004.
HEALTHSOUTH also announced that it is increasing the consent fee that it will
pay to holders who deliver valid and unrevoked consents prior to the
expiration of the consent solicitations to $13.75 per $1,000 principal amount
of notes for which consents have been delivered, which represents an increase
of $3.75 per $1,000 from the amount originally offered. The payment of the
consent fee remains conditioned upon the proposed amendments to the indentures
becoming operative. Holders who previously delivered valid consents and do not
revoke those consents will receive the increased consent fee if the conditions
to their consent solicitation are satisfied or waived.
HEALTHSOUTH said that it continues to be encouraged by the significant
positive response that it has received in the consent solicitations. However,
the Company continues to believe that it is in the best interest of its
stakeholders to minimize the extent of litigation over this matter and is
increasing the consent fee in order to consensually resolve the matters in the
litigation on a fair and commercially reasonable basis in order to facilitate
its continuing restructuring efforts.
Other Terms
HEALTHSOUTH is also modifying certain of the terms of the proposed amendments
that it is seeking to the indentures governing its Senior Notes and Senior
Subordinated Notes. Each holder of notes who consents to the proposed
amendments will also be waiving all alleged and potential defaults under the
indentures arising out of events occurring on or prior to the effectiveness of
the proposed amendments.
The proposed amendments will become effective only upon satisfaction or waiver
by HEALTHSOUTH of certain conditions which include receipt of valid and
unrevoked consents from holders representing not less than a majority in
aggregate principal amount of outstanding notes for a series. Consents for any
series of notes may be revoked at any time prior to the date on which the
trustee under the indenture for that series receives evidence that the
requisite consents have been obtained. In order to provide holders with
sufficient time to consider the proposed amendments, as modified today,
HEALTHSOUTH will not provide to the trustee evidence that requisite consents
for any series of notes have been obtained prior to May 6, 2004.
HEALTHSOUTH continues to be engaged in litigation with holders, the trustees
and persons claiming to be beneficial owners of our Senior Notes and Senior
Subordinated Notes seeking to prevent the acceleration of the indebtedness
outstanding under such notes. At an April 23, 2004 status conference, the
Court scheduled a hearing for HEALTHSOUTH's motion for partial summary
judgment for June 30, 2004. At that hearing HEALTHSOUTH will argue that the
noteholder's purported default notices were invalid and that HEALTHSOUTH is
not required to pay a "make-whole premium" to holders of its Senior Notes and
Senior Subordinated Notes upon acceleration of the notes. The Court stated
that if any issues remain unresolved after that hearing, the Court will
schedule a trial. The Court also noted that if holders take action prior to
that time, and the Court determines that the persons doing so were not
entitled to do so, those persons face serious liability exposure.
This news release is not a solicitation of consents with respect to any
securities. The consent solicitations are being made only pursuant to the
terms and conditions of the consent solicitation statements relating to each
series of Notes and the accompanying documents. These documents can be
obtained from Innisfree M&A Incorporated, the information agent, at
212-750-5833 (Banks and Brokers Call Collect) or 888-750-5834 (Noteholders
Call Toll-Free). Questions regarding the solicitations should be directed to
Credit Suisse First Boston, the solicitation agent, at 800-820-1653.
About HealthSouth
HealthSouth is the nation's largest provider of outpatient surgery, diagnostic
imaging and rehabilitative healthcare services, with nearly 1,700 locations
nationwide and abroad. HealthSouth can be found on the Web at
www.healthsouth.com.
Statements contained in this press release which are not historical facts are
forward-looking statements. In addition, HealthSouth, through its senior
management, may from time to time make forward-looking public statements
concerning the matters described herein. Such forward-looking statements are
necessarily estimates based upon current information, involve a number of
risks and uncertainties and are made pursuant to the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. HEALTHSOUTH's actual
results may differ materially from the results anticipated in these
forward-looking statements as a result of a variety of factors. While it is
impossible to identify all such factors, factors which could cause actual
results to differ materially from those estimated by HealthSouth include, but
are not limited to: the investigations by the Department of Justice and the
Securities Exchange Commission into HEALTHSOUTH's financial reporting and
related activity; HEALTHSOUTH's statement that as a result of the
investigations, the Company's previously filed financial statements should no
longer be relied upon and may result in the Company restating its prior
financial statements; the withdrawal by HEALTHSOUTH's former accountants of
their audit reports on all of the Company's previously filed financial
statements; the outcome of pending litigation relating to these matters;
significant changes in HEALTHSOUTH's management team; HEALTHSOUTH's ability to
successfully amend, restructure and/or renegotiate its existing indebtedness
or cure or receive a waiver of alleged defaults under such agreements, the
inability of which may result in HealthSouth filing a voluntary petition for
bankruptcy; HEALTHSOUTH's ability to continue to operate in the ordinary
course and manage its relationships with its creditors, including its lenders,
bondholders, vendors and suppliers, employees and customers; changes, delays
in or suspension of reimbursement for HEALTHSOUTH's services by governmental
or private payors; changes in the regulation of the healthcare industry at
either or both of the federal and state levels; changes to the implementation
of the prospective payment system for inpatient rehabilitation services;
competitive pressures in the healthcare industry and HEALTHSOUTH's response
thereto; HEALTHSOUTH's ability to obtain and retain favorable arrangements
with third-party payors; general conditions in the economy and capital
markets; and other factors which may be identified from time to time in the
Company's SEC filings and other public announcements.
###
For more information contact Andy Brimmer at 205-410-2777.
EXHIBIT 99.2
FORM OF
SUPPLEMENT TO
CONSENT SOLICITATION STATEMENT
HEALTHSOUTH CORPORATION
Solicits Consents and Waivers Relating to its
$[____] Aggregate Principal Amount of [__]% Senior [Subordinated] Notes due [__]
(CUSIP No. [______])
This Supplement (the "Supplement") of HEALTHSOUTH Corporation ("we"
or "us") supplements and amends our Consent Solicitation Statement dated March
16, 2004 (the "Consent Solicitation Statement") and related Consent Form (the
"Consent Form") pursuant to which we are soliciting (the "Consent
Solicitation") consents ("Consents") of Holders (as defined below) as of the
Record Date (as defined below) of the $[_____] outstanding aggregate principal
amount of our [_____]% Senior [Subordinated] Notes due [_____] (the "Notes")
to proposed amendments (as amended and supplemented hereby, the "Proposed
Amendments") to certain provisions of the Indenture dated as of [_____] (the
"Indenture"), between HEALTHSOUTH, as issuer, and [_____] (the "Trustee").
The term "Record Date" means 5:00 p.m., New York City time, on March
15, 2004, and the term "Holder" means (1) each person shown on the records of
the registrar for the Notes as a holder on the Record Date or (2) any other
person who has been authorized by proxy or in any other manner acceptable to
HEALTHSOUTH to vote the applicable Notes on behalf of such Holder.
In this Supplement, we are supplementing and amending the Consent
Solicitation to:
o extend the Expiration Date until 11:59 p.m., New York City
Time, on May 13, 2004 (the "Expiration Date"), unless
further extended by us,
o increase the amount of the cash payment that we will pay to
Holders who deliver valid and unrevoked Consents prior to
the Expiration Date to $13.75 per $1,000 principal amount of
Notes for which Consents have been delivered by such Holder
(the "Consent Fee");
o amend the definition of "Permitted Investments" to include
any investment arising from or relating to a transfer or
sale of assets by us in connection with our Digital
Hospital;
o further clarify the terms under which we propose to suspend
our obligation to file with the Securites and Exchange
Commission (the "SEC") and furnish to the Trustee and
Holders of Notes periodic and other reports required under
the Exchange Act;
o limit the right of Holders to declare an event of default in
connection with an acceleration of indebtedness under our
other series of Senior Notes and Senior Subordinated Notes
under certain circumstances; and
o eliminate the Proposed Amendment that would have suspended
our obligation to furnish compliance certificates to the
Trustee.
Except as set forth herein, no other terms of the Consent
Solicitation have been amended or supplemented and remain as set forth in the
Consent Solicitation Statement. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings given to them in the Consent
Solicitation Statement.
In the event that the Conditions described in the Consent
Solicitation Statement are satisfied or waived, including the receipt of the
Requisite Consents (i.e., consent of Holders of not less than a majority in
outstanding principal amount of Notes), we will pay to Holders who deliver
valid and unrevoked Consents prior to the Expiration Date the Consent Fee,
which represents an increase of $3.75 per $1,000 from the amount we originally
offered in the Consent Solicitation Statement. Holders of Notes for which no
Consent is delivered will not receive a Consent Fee, even though the Proposed
Amendments and Waivers, if approved, will bind all Holders and their
transferees.
Each Holder who Consents to the Proposed Amendments will also be
waiving all alleged and potential defaults under the Indenture relating to
events occurring on or prior to the effectiveness of the Proposed Amendments
and any and all rights to cause the principal of, and accrued interest on, the
Notes to become immediately due and payable as a result of such alleged and
potential defaults (the "Waivers"). Except where the context otherwise
requires, references in this Supplement to Consents to the Proposed Amendments
will also include Consents to the Waivers.
Holders who have previously delivered properly executed Consent Forms
to the Information Agent may revoke such Consents at anytime prior to the date
on which the Trustee under the Indenture receives evidence that the Requisite
Consents have been obtained in accordance with the terms of the Indenture (the
"Consent Date"). In order to provide Holders with sufficient time to consider
the Proposed Amendments and Waivers, the Consent Date shall not occur prior to
May 6, 2004. Holders who have previously delivered properly executed Consent
Forms to the Information Agent and do not revoke such Consents will receive
the increased Consent Fee if the Conditions to the Consent Solicitation are
satisfied or waived.
Regardless of the outcome of the Consent Solicitation, the Notes will
continue to be outstanding and will continue to bear interest as provided in
the Indenture. The changes included in the Proposed Amendments will not alter
our obligation to pay the principal of or interest on the Notes or alter the
stated interest rate, maturity date or redemption provisions of the Notes.
As disclosed in the Consent Solicitation Statement, in response to a
complaint that we filed on March 11, 2004, against holders, the trustees and
persons claiming to be beneficial owners of our Senior Notes and Senior
Subordinated Notes, the Circuit Court of Jefferson County, Alabama granted a
temporary restraining order preventing acceleration of any of our Senior Notes
and Senior Subordinated Notes. See "Litigation and Regulatory Developments -
Litigation - Litigation Against Certain Bondholders" in the Consent
Solicitation Statement for a more detailed discussion of this litigation. On
March 30th and 31st, a hearing regarding our motion for a preliminary
injunction was held before Judge Allwin Horn III. At the hearing, Judge Horn
extended the temporary restraining order and stated that he would issue an
order regarding our motion for a preliminary injunction on April 14, 2004.
On April 14, 2004, Judge Horn issued an order setting a status
conference for April 23, 2004 to schedule an expedited hearing to determine
the merits of certain issues; in particular, the validity of the default
notices purportedly given by certain of the holders of our Senior Notes and
Senior Subordinated Notes and whether we are obligated to pay a "make-whole
premium" upon acceleration of such notes under the facts and circumstances of
the case. Although the Court did not grant our request for a preliminary
injunction and dissolved our temporary restraining order against acceleration
by holders of our Senior Notes and Senior Subordinated Notes, the Court
expressly stated that the parties should not consider that the Court has
determined that the default notices are validly and legally issued. In
addition, at that time, counsel for the holders of our Senior Notes and Senior
Subordinated Notes stated in a letter to the Court that the holders of our
Senior Notes and Senior Subordinated Notes that were defendants in the action
would not issue any notice of acceleration for at least thirty days so long as
we engage in good faith negotiations during that time.
At the April 23, 2004 status conference, the Court scheduled a
hearing for our motion for partial summary judgment for June 30, 2004. At that
hearing HEALTHSOUTH will argue that the noteholders' purported default notices
were invalid and that HEALTHSOUTH is not required to pay a "make-whole
premium" to holders of our Senior Notes and Senior Subordinated Notes upon
acceleration of our notes. The Court stated that if any issues remain
unresolved after that hearing, the Court will schedule a trial. The Court also
noted that if holders take action prior to that time, and the Court determines
that the persons doing so were not entitled to do so, those persons face
serious liability exposure.
We continue to believe that it is in the best interest of our
stakeholders to minimize the extent of litigation over this matter.
Accordingly, we have determined to increase the Consent Fee as described in
this Supplement in order to consensually resolve the matters in the litigation
on a fair and prompt basis in order to facilitate our continuing restructuring
efforts.
Prior to delivering any consent, you are encouraged to read and
consider carefully this supplement in conjunction with the Consent
Solicitation Statement and the Consent Form previously distributed to you.
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WE HAVE NOT FILED ANY QUARTERLY OR ANNUAL REPORT WITH THE SEC FOR PERIODS
AFTER SEPTEMBER 30, 2002, AND WE HAVE CAUTIONED THAT THE FINANCIAL
INFORMATION CONTAINED IN PREVIOUSLY FILED REPORTS SHOULD NOT BE RELIED UPON.
ACCORDINGLY, NO FINANCIAL STATEMENTS ARE AVAILABLE FOR ANY PRIOR PERIOD, AND
YOU SHOULD NOT RELY ON OUR FINANCIAL STATEMENTS AND REPORTS PREVIOUSLY FILED
WITH THE SEC.
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The Solicitation Agent for the Consent Solicitation is:
Credit Suisse First Boston
See "Risk Factors" beginning on page 36 of the Consent Solicitation
Statement for a discussion of some of the risks you should consider before you
consent to the Proposed Amendments and Waivers.
The date of this Supplement is April 29, 2004.
MODIFICATION TO THE CONSENT SOLICITATION
Increase in the Consent Fee
The terms of the Consent Solicitation are hereby modified so that the
Consent Fee that we will pay to Holders who deliver valid and unrevoked
Consents prior to the Expiration Date (including valid and unrevoked Consents
received prior to the date hereof) is increased to $13.75 per $1,000 principal
amount of Notes for which Consents have been delivered by such Holder, which
represents an increase of $3.75 per $1,000 from the amount we originally
offered in the Consent Solicitation Statement.
Extension of Expiration Date
On April 14, 2004, we announced the extension of the Expiration Date
to 11:59 p.m., New York City Time, on April 28, 2004. The Expiration Date of
the Consent Solicitation is hereby further extended to 11:59 p.m., New York
City Time, on May 13, 2004, unless further extended by us.
Revocation
Consents may be revoked at any time prior to the Consent Date. All
prior Consents that are not validly revoked prior to the Consent Date by the
Holder granting such Consent in accordance with the procedures set forth in
the Consent Solicitation Statement will be valid Consents. In order to provide
Holders with sufficient time to consider the Proposed Amendments and Waivers,
the Consent Date shall not occur prior to May 6, 2004.
Further Amendments to the Indenture and Clarification of Previously Proposed
Amendments
Holders are urged to read the description of the Proposed Amendments
included in the Consent Solicitation Statement dated March 16, 2004. As used
herein, the terms "Proposed Amendments and Waivers" and "Proposed Amendments"
will include all amendments proposed in this Supplement. The Proposed
Amendments and Waivers constitute a single proposal and a consenting Holder
must Consent to the Proposed Amendments and Waivers as an entirety and may not
consent selectively with respect to certain of the Proposed Amendments or
Waivers.
Amendment to the Definition of Permitted Investments
We are amending the Consent Solicitation so that the Proposed
Amendments would expand the definition of "Permitted Investments" to include
any investment arising from or relating to a transfer or sale of assets made
in connection with our Digital Hospital. This Proposed Amendment would provide
us with greater flexibility in structuring a sale, joint venture, sale
leaseback or other related financing transaction involving our Digital
Hospital. We believe that such additional flexibility in structuring a
transaction involving our Digital Hospital is beneficial to HEALTHSOUTH.
Further Amendment to Clarify our Reporting Obligations
The Indenture currently requires that, so long as the Notes are
outstanding, we must furnish to the SEC, the Trustee and Holders of the Notes
certain periodic and other reports required by the Exchange Act. As previously
described in the Consent Solicitation Statement dated March 16, 2004, we have
not filed our quarterly and annual reports with the SEC for periods after
September 30, 2002, and we have cautioned that the financial information
contained in our previously filed reports should not be relied upon. We are
currently reconstructing our financial records for prior periods and,
therefore, we cannot currently furnish such reports.
As initially submitted to Holders in the Consent Solicitation
Statement dated March 16, 2004, the Proposed Amendments would have suspended
our obligation under the Indenture to furnish to the SEC, the Trustee and
Holders of Notes annual and quarterly reports and other information, documents
and reports required to be furnished to the SEC under the Exchange Act until
the Report Date, which is the date on which we actually file our Annual Report
on Form 10-K for the fiscal year ending December 31, 2004, but which date
cannot be later than December 31, 2005.
We are seeking to modify this Proposed Amendment to the Indenture to
clarify that the suspension of our obligation under the Indenture to furnish
to the SEC, the Trustee and Holders of Notes annual and quarterly reports and
other information, documents and reports required to be furnished to the SEC
under the Exchange Act will remain in effect until the due date of our Annual
Report on Form 10-K for the fiscal year ending December 31, 2005 and will be
effective for all filings due for periods ending on or after December 31,
2005. Notwithstanding this provision, the Proposed Amendments provide that our
failure to file our Annual Report on Form 10-K for the fiscal year ending
December 31, 2003 by June 30, 2005 or our Annual Report on Form 10-K for the
fiscal year ending December 31, 2004 by December 31, 2005 shall constitute an
Event of Default under the Indenture.
We believe that the suspension of our reporting requirements under
the Indenture until the due date of our Annual Report on Form 10-K for the
year ending December 31, 2005, will provide us with the time required to
reconstruct our financial records and file reports containing audited
financial statements for our prior periods.
Cross Default to Other Indebtedness
In addition to the Consent Solicitation, we are concurrently
soliciting consents of holders of our other issues of Senior Notes and Senior
Subordinated Notes to proposed amendments to, and waivers under, the
indentures governing such notes that are substantially similar to the Proposed
Amendments and Waivers, to the extent applicable. This Consent Solicitation is
independent of each of the other consent solicitations for any other issue of
our outstanding notes, other than the consent solicitation for our [_____]%
Senior Notes due [_____]. This Consent Solicitation is conditioned, among
other things, upon the success of the consent solicitation for those [_____]%
Senior Notes due [_____].
The Indenture currently provides that an Event of Default includes,
among other things, a default under any indenture for indebtedness of
HEALTHSOUTH, if (1) the default results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable, (2) the principal amount of any other such indebtedness which
has been so accelerated, aggregates $25 million or more and (3) such
indebtedness is not discharged or such acceleration is not rescinded within
ten days.
If the Proposed Amendments are approved, but our solicitation of
consents of holders of any or all of our other issues of Senior Notes and
Senior Subordinated Notes that are independent of the Consent Solicitation are
not successful, then the Proposed Amendments would limit the right of Holders
to declare an Event of Default for defaults of indebtedness under an indenture
governing our other Senior Notes or Senior Subordinated Notes that result in
acceleration of such indebtedness until:
o the trustee or the requisite number of registered holders of
such indebtedness have made a demand for payment to the
Company, and
o the trustee or the requisite number of registered holders of
such indebtedness have obtained a judgment from a court of
competent jurisdiction ordering the Company to pay all
amounts owing under such other series of our Senior Notes or
Senior Subordinated Notes, as the case may be, that has
effectively accelerated such indebtedness in accordance with
the terms of the applicable indenture.
Clarification on Our Ability to Secure Bank Debt
As set forth in the Consent Solicitation Statement dated March 16,
2004, the Proposed Amendments would add a new exception under Section 4.11(b)
of the Indenture to permit HEALTHSOUTH to incur, repay and reborrow
Indebtedness consisting of Bank Debt provided that the aggregate principal
amount of such Bank Debt may not at any time outstanding exceed $750 million.
This Proposed Amendment would allow us to repay all or a portion of Bank Debt
with available cash and reborrow amounts up to an aggregate of $750 million
thereafter. We currently have $374 million of Bank Debt outstanding (including
$59 million of letter of credit support).
In this Supplement, we are clarifying that the Proposed Amendment
would also allow us to secure all or a portion of the $750 million of
available Bank Debt that we would be permitted to incur under the Indenture,
as amended by the Supplemental Indenture. Neither our Bank Debt nor any
indebtedness under our Senior Notes or Senior Subordinated Notes is currently
secured. We believe that this Proposed Amendment will provide us with the
flexibility to enter into a new credit facility on terms acceptable to us.
Elimination of Amendment Relating to Compliance Certificates
The Indenture currently requires that, so long as the Notes are
outstanding, we will furnish to the Trustee within 90 days after the end of
each fiscal year an Officer's Certificate stating whether to the best of such
officer's knowledge any Default or Event of Default has occurred, listing all
Restricted Payments for such year, and if a Default or Event of Default has
occurred, describing such Defaults or Events of Default and what action
HEALTHSOUTH is taking with respect thereto.
As set forth in the Consent Solicitation Statement dated March 16,
2004, the Proposed Amendments would have suspended our obligation to furnish
to the Trustee the compliance certificate required under Section 4.04(a) until
the Report Date. In this Supplement, we are eliminating the Proposed Amendment
that would have suspended our obligation to furnish to the Trustee compliance
certificates under Section 4.04(a) of the Indenture, so that, following the
execution of the Supplemental Indenture, Section 4.04(a) shall remain
unchanged.
A copy of the revised Form of Supplemental Indenture, marked to
indicate changes from the Form of Supplemental Indenture attached to the
Consent Solicitation Statement dated March 16, 2004, is attached hereto as
Exhibit A.
EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NO OTHER TERMS OF THE
CONSENT SOLICITATION HAVE BEEN SUPPLEMENTED OR AMENDED AND REMAIN AS SET FORTH
IN THE CONSENT SOLICITATION STATEMENT. COPIES OF THE INDENTURE ARE AVAILABLE
FROM THE INFORMATION AGENT UPON REQUEST.
CONSENT SOLICITATION MATTERS
Holders who have previously delivered Consents in accordance with the
procedures set forth in the Consent Solicitation Statement and who still wish
to Consent with respect to their Notes in the Consent Solicitation, as
modified and amended by the Supplement, do not need to take any further
action.
WE ARE DELIVERING A SUPPLEMENTAL CONSENT FORM TO HOLDERS; HOWEVER,
HOLDERS MAY CONTINUE TO USE THE CONSENT FORM DELIVERED TO HOLDERS WITH THE
CONSENT SOLICITATION STATEMENT DATED MARCH 16, 2004. Holders who wish to
Consent must deliver their properly completed and executed Consent Form to the
Information Agent at the address set forth on the back cover page of this
Supplement, the Consent Solicitation Statement and in the Consent Form in
accordance with the instructions set forth in the Consent Solicitation
Statement and the Consent Form.
CONSENTS SHOULD NOT BE DELIVERED TO HEALTHSOUTH, THE TRUSTEE OR THE
SOLICITATION AGENT. HOWEVER, WE RESERVE THE RIGHT TO ACCEPT ANY CONSENT
RECEIVED BY HEALTHSOUTH, THE TRUSTEE OR THE SOLICITATION AGENT.
Subject to applicable laws, we reserve the right, in our sole
discretion and regardless of whether any of the Conditions have been
satisfied, at any time prior to the Expiration Date, to (1) extend the
Expiration Date, (2) amend the terms of the Consent Solicitation or (3) modify
the form or amount of the consideration to be paid pursuant to the Consent
Solicitation. In addition, we reserve the right, in our sole discretion, to
extend, amend or modify any or all of the consent solicitations for our other
Senior Notes and Subordinated Notes in any manner we deem appropriate,
including paying higher or lower consent fees than the Consent Fee proposed to
be paid hereunder. If we make a material change to the terms of the Consent
Solicitation, we will promptly disclose such change in a manner reasonably
calculated to inform the Holders of such change and extend the Consent
Solicitation for a period we deem to be adequate to permit Holders to deliver
and/or revoke their Consents.
You should direct any questions concerning the terms of the Consent
Solicitation to the Solicitation Agent at the address or telephone number set
forth on the back cover page hereof.
You should direct any requests for assistance in completing and
delivering Consent Forms or requests for additional copies of this Supplement,
the Consent Solicitation Statement, the Consent Form or other related
documents to the Information Agent at the address or telephone number set
forth on the back cover page hereof.
In making a decision in connection with the Consent Solicitation,
Holders must rely on their own examination of HEALTHSOUTH and the terms of the
Consent Solicitation, including the merits and risks involved. Holders should
not construe the contents of this Supplement or the Consent Solicitation
Statement as providing any legal, business, financial or tax advice. Each
Holder should consult with its own legal, business, financial and tax advisors
with respect to any such matters concerning this Supplement or the Consent
Solicitation Statement and the Consent Solicitation contemplated hereby and
thereby.
Exhibit A
FORM OF
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
as of [ ], 2004, among HealthSouth Corporation, a Delaware corporation (the
"Company"), and [_______], as trustee under the Indenture referred to below
(the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of [_______], providing for
the issuance of an aggregate principal amount of $[____] million of [____]%
Senior Notes due [____] (the "[____] Notes") and an aggregate principal amount
of $[____] million of [____]% Senior Notes due 2011 (the "[____] Notes," and
together with the [____]Notes, the "Notes");
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company to authorize and approve the
amendments to the Indenture (the "Proposed Amendments") set forth in this
Supplemental Indenture;
WHEREAS, Section 8.02 of the Indenture provides that the Company and
the Trustee may amend the Indenture with the written consent of the Holders of
a majority in principal amount of the then outstanding Notes ("Requisite
Consent");
WHEREAS, the Company has distributed Consent Solicitation Statements,
dated March 16, 2004 (as supplemented and amended, the "Solicitation
Statements"), and accompanying Consent Forms to the Holders of the Notes in
connection with the Proposed Amendments as described in the Solicitation
Statements;
WHEREAS, the Requisite Consent to the Proposed Amendments to the
provisions of the Indenture have been received by the Company and the Trustee
and all other conditions precedent, if any, provided for in the Indenture
relating to the execution of this Supplemental Indenture have been complied
with as of the date hereof; and
WHEREAS, the execution and delivery of this Supplemental Indenture
have been duly authorized by the Company and all conditions and requirements
necessary to make this instrument a valid and binding agreement have been duly
performed and complied with;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. DEFINITIONS.
(a) Section 1.01 of the Indenture is hereby amended to include the
following new definitions:
""Digital Hospital" means the planned 219-bed acute care hospital
located on Highway 280 in Birmingham, Alabama replacement for the HealthSouth
Medical Center.
"Digital Hospital Transaction" means any sale, joint venture, sale
leaseback or other related financing transaction involving the Digital
Hospital.
"Fiscal Year" means the twelve month period ending on December 31.
"Historical Reports" means Annual Report(s) on Form 10-K containing
audited financial statements required to be filed with the Commission for any
Fiscal Year ended on or prior to December 31, 2003.
"Report Date" means the date on which the Company shall deliver the
Supplemental Report.
"Senior Notes" means our [____]% Senior Notes due [____], 7.000%
Senior Notes due [____],[____]% Senior Notes due [____] and [____]% Senior
Notes due [____].
["Senior Subordinated Notes" means our 10.75% Senior Subordinated
Notes due 2008.]
"Supplemental Report" means the Annual Report on Form 10-K for the
Fiscal Year ending December 31, 2004, containing audited financial statements
required to be filed with the Commission pursuant to the Exchange Act for the
Fiscal Year ending on December 31, 2004."
(b) Section 1.01 of the Indenture is hereby amended to replace the
period at the end of the existing definition of "Attributable Indebtedness"
with a semicolon and to insert thereafter the following new language:
"and provided further, that Attributable Indebtedness
incurred in connection with the Digital Hospital Transaction shall be
limited to Indebtedness incurred on a recourse basis by the Company
or a Subsidiary of the Company (other than a Joint Venture formed for
the purpose of owning, running, operating or managing the Digital
Hospital) or Indebtedness with respect to which the Company or any
such Subsidiary is otherwise liable on a recourse basis."
(c) Section 1.01 of the Indenture is hereby amended to replace the
period at the end of the existing definition of "Refinancing Indebtedness"
with a semicolon and to insert thereafter the following new language:
"and provided further that: so long as (y) the Company
designates such Indebtedness as Refinancing Indebtedness and (z) the
net proceeds of such Refinancing Indebtedness are not used for any
purpose other than refinancing existing indebtedness or a repayment
of revolving Bank Debt, such Indebtedness shall constitute
Refinancing Indebtedness notwithstanding that it is not immediately
applied to the refunding, refinancing, repurchase or extension of
other Indebtedness."
(d) Section 1.01 of the Indenture is hereby amended to delete the
"and" at the end of existing clause (iv) of the existing definition of
"Permitted Investments", to replace the period at the end of the existing
clause (v) with a semicolon and to insert thereafter the following new clause
(vi):
"and (vi) any Investment arising from the transfer of assets
made pursuant to the Digital Hospital Transaction."
3. REPORTS. Section 4.02 of the Indenture is hereby amended by
deleting the section in its entirety and replacing it with the following:
"From and after the Report Date and for all periods ending on or
after December 31, 2005, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding,
the Company shall file with the Commission, to the extent such
filings are accepted by the Commission, and shall furnish (within 15
days after such filing) to the Trustee and to the Holders all
quarterly and annual reports and other information, documents and
reports that would be required to be filed with the Commission
pursuant to Section 13 of the Exchange Act if the Company were
required to file under such section. In addition to the foregoing,
the Company shall file the Historical Reports with the Commission on
or prior to June 30, 2005 and the Supplemental Report on or prior to
December 31, 2005. The Company shall also furnish to the Trustee and
to the Holders all other quarterly and annual reports and other
information, documents and reports required to be filed with the
Commission promptly after such reports and other information and
documents are filed with the Commission. In addition, the Company
shall make such information available to prospective purchasers of
the Notes, securities analysts and broker-dealers who request it in
writing. Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt
of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein,
including the Company's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on
Officers' Certificates)."
4. LIMITATION ON EXISTING INDEBTEDNESS AND SUBSIDIARY PREFERRED
STOCK. Section 4.11(b) of the Indenture is hereby amended to delete the "and"
at the end of existing clause (v) and to replace the existing clause (vi) with
the following new clauses (vi) and (vii):
"(vi) the Company may incur Indebtedness consisting of Bank Debt in
an aggregate principal amount at any time outstanding not to exceed
$750,000,000; and (vii) the Subsidiaries of the Company may incur
Indebtedness, including all Refinancing Indebtedness incurred in
exchange for, or the net proceeds of which are applied to refund,
refinance or extend, any Indebtedness incurred pursuant to this
clause (vii), in an aggregate principal amount at any time
outstanding not to exceed $250,000,000, in addition to Existing
Indebtedness and other Indebtedness permitted to be incurred by
Subsidiaries of the Company pursuant to the foregoing clauses (ii) -
(vi)."
5. EVENTS OF DEFAULT.
(a) Section 6.01(e) of the Indenture is hereby amended to insert the
following new language immediately following the semicolon at the end of
existing Section 6.01(e):
"provided however, that from and after the date upon which
this Supplemental Indenture becomes effective in accordance with the
terms of the Indenture, any such acceleration by holders of our
Senior Notes or Senior Subordinated Notes shall not constitute an
Event of Default under this Section 6.01(e) until (i) the trustee or
the requisite number of registered holders of such indebtedness have
made a demand for payment to the Company and (ii) the trustee or the
requisite number of registered holders of such indebtedness have
obtained a judgment from a court of competent jurisdiction ordering
the Company to pay all amounts owing under such other series of our
Senior Notes or Senior Subordinated Notes, as the case may be, that
has effectively accelerated such indebtedness in accordance with the
terms of the applicable indenture;"
(b) Section 6.01 of the Indenture is hereby amended to delete the
word "or" from the end of existing paragraph (f), to replace the period at the
end of existing paragraph (g) with a semi-colon and to include the following
new paragraphs (h) and (i):
"(h) the Company shall fail to file the Historical Reports with the
Commission on or prior to June 30, 2005; or
(i) the Report Date does not occur on or prior to December 31,
2005."
6. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
7. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
9. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company. The Trustee accepts the
trusts created by the Indenture, as amended and supplemented by this
Supplemental Indenture, and agrees to perform the same upon the terms and
conditions of the Indenture, as amended and supplemented by this Supplemental
Indenture.
10. RATIFICATION OF INDENTURE; SUPPLEMENTAL PART OF INDENTURE. Except
as specifically amended and supplemented by this Supplemental Indenture, the
Indenture shall remain in full force and effect and is hereby ratified and
confirmed. This Supplemental Indenture shall form a part of the Indenture for
all purposes, and every holder of a Note heretofore or hereafter authenticated
and delivered shall be bound hereby. This Supplemental Indenture shall become
effective as of the date hereof at such time as executed counterparts of this
Supplemental Indenture have been delivered by each party hereto to the other
party hereto.
11. VALIDITY; ENFORCEABILITY. In case any provisions in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
12. THIRD-PARTY BENEFICIARY. Nothing in this Supplemental Indenture,
express or implied, shall give to any Person, other than the parties hereto
and their successors under the Indenture and the Holders of the Notes, any
benefit or any legal or equitable right, remedy or claim under the Indenture.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of [ ], 2004.
HEALTHSOUTH CORPORATION
By: _______________________________
Name:
Title:
[ ], AS TRUSTEE
By: _______________________________
Name:
Title:
Delivery of a Consent Form to an address other than the address
listed below or transmission of instructions by facsimile other than as set
forth below is not valid delivery of the Consent Form. However, we reserve the
right to accept Consent Forms delivered by any reasonable means or in any form
that reasonably evidences the giving of Consent. The Consent Form and any
other required documents should be sent or delivered by each Holder or such
Holder's broker, dealer, commercial bank, trust company or other nominee to
the Information Agent at its address or facsimile number set forth below.
The Information Agent for the Consent Solicitation is:
INNISFREE M&A INCORPORATED
Delivery to Innisfree M&A Incorporated, the Information Agent for the Consent
Solicitation:
By Regular or Certified Mail: By Hand or by Overnight Mail or Courier:
Innisfree M&A Incorporated Innisfree M&A Incorporated
P.O. Box 5143 501 Madison Avenue, 20th Floor
New York, NY 10150-5143 New York, NY 10022
By Facsimile
(Eligible Guarantor Institutions Only):
212-750-5799
To Confirm Facsimile Receipt by Telephone
(Eligible Guarantor Institutions Only)
212-750-5833
For Information:
Noteholders Call Toll-Free:
888-750-5834
Banks and Brokers Call Collect:
212-750-5833
Questions and requests for assistance or for additional copies of the
Supplement, the Consent Solicitation Statement and Consent Form may be
directed to the Information Agent at its telephone numbers and locations
listed above. All questions regarding the terms of the Consent Solicitation
shall be directed to the Solicitation Agent at the telephone number and
address set forth below. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Consent
Solicitation.
The Solicitation Agent for the Consent Solicitation is:
CREDIT SUISSE FIRST BOSTON LLC
11 Madison Avenue
New York, NY 10010
U.S. Toll Free:
1-800-820-1653
Attn: Liability Management Group