Hanger Announces Amendment to Amended and Restated Consent Solicitation
AUSTIN, Texas,
Dec. 7, 2015 /PRNewswire/ -- Hanger, Inc. (NYSE: HGR) (the "Company") today announced an amendment to the terms of its previously announced consent solicitation (as amended, and as previously amended and restated, the "Consent Solicitation") relating to its
$200,000,000 aggregate principal amount 7¿% Senior Notes due 2018 (the "Notes") to (i) amend the definition of the termination date of the Proposed Amendment and Waiver to provide that
August 31, 2016 is the latest termination date, (ii) include a revision to the definition of "permitted liens" in the indenture, which revision will limit, subject to certain exceptions, the Company's ability to incur secured debt to an amount not to exceed
$375.0 million, except as is incurred to refinance the Notes, until such time as the Company is current in its periodic reporting obligations with the Securities and Exchange Commission (the "SEC"), (iii) include in the indenture a new reporting covenant relating to certain cash flows and other data, if the Company in its sole determination concludes that providing such information can be done in compliance with its obligations under applicable securities laws, until such time as the Company is current in its periodic reporting obligations with the SEC, and (iv) amend the expiration date of the Consent Solicitation to
December 11, 2015.
Pursuant to the Consent Solicitation, the proposed amendment and waiver (the "Proposed Amendment and Waiver") to the indenture pursuant to which the Notes were issued will amend, effective as of November 15, 2015, the reporting covenant in the indenture to extend the Company's deadline to deliver to the noteholders (with copies to the trustee) periodic reports required to be filed or furnished with the SEC until the earliest of such time as the Company is current in its filings with the SEC, the Company fails to timely pay a second consent fee if due on
May 15, 2016, and
August 31, 2016 (the "Termination Date"). The Proposed Amendment and Waiver will waive through the Termination Date any default or event of default under the indenture that may occur or exist as a result of or in connection with the Company's failure to timely deliver to the noteholders (with copies to the trustee), or file with the SEC, its delayed SEC reports. The Proposed Amendment and Waiver will also result in any notice of default relating to the Company's reporting covenant under the indenture becoming null and void and deemed to have been withdrawn. Additionally, if the Company receives the requisite consents to approve the Proposed Amendment and Waiver, then it will increase the interest rate on the Notes to 9.125%, effective as of
November 15, 2015, and if the Company is not current in 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 as of
May 15, 2016. The provision regarding the increased interest rates will not terminate at the time of the expiration of the Proposed Amendment and Waiver.
Pursuant to the Proposed Amendment and Waiver, the definition of "permitted liens" in the indenture will limit the ability of the Company to incur certain secured indebtedness to an amount not to exceed
$375.0 million, except as such may be incurred to refinance the Notes, until such time as the Company is current in its periodic reporting obligations with the SEC.
Additionally, pursuant to the Proposed Amendment and Waiver, the indenture will include a covenant of the Company to, until such time as it is current in its filing obligations with the SEC, use its commercially reasonable efforts to provide within 40 days after the end of the fiscal quarter and 60 days after the end of a fiscal year certain preliminary, estimated and unaudited cash flows and other data in a form substantially consistent with the information the Company previously provided in its Current Report on Form 8-K dated
November 12, 2015. This obligation of the Company is subject to the Company's sole determination, after consulting with legal counsel, that filing or furnishing such information with the SEC can be made in compliance with all applicable laws and regulations, including federal and state securities laws and regulations.
In connection with the Company's failure to comply with the financial reporting covenant under the indenture, on
November 25, 2015 (the "Notice Date"), the Company received a notice of default (the "Notice of Default") from a single noteholder who holds greater than 25% in aggregate principal amount of the Notes. Pursuant to the terms of the indenture, the failure of the Company to comply with this covenant for a period of 90 days after the Notice Date will constitute an event of default under the indenture. At that time, and unless the Notice of Default is deemed to be null and void through the approval of the Proposed Amendment and Waiver or otherwise before the expiration of that 90 day period, the trustee or the holders of not less than 25% in aggregate principal amount of the Notes may choose to exercise their remedies under the indenture, which include the declaration of all amounts on the Notes to be due and payable immediately.
The Company's bank credit agreement contains cross-default provisions relating to the Notes. Pursuant to the terms of the Company's bank credit agreement, the Notice of Default constitutes an event of default without regard to any otherwise applicable notice or cure or grace period; provided, however, that receipt of such Notice of Default shall not constitute an event of default under the bank credit agreement if it is withdrawn (and not reinstated) within 30 days after its receipt. If an event of default exists under the bank credit agreement, the lenders may accelerate the Company's borrowings under the bank credit agreement.