Encompass again extends consent solicitation for three senior notes

Chicago, Jan. 13 – Encompass Health Corp. pushed back the deadline roughly another week and a half in its consent solicitation for its 4½% senior notes due 2028, 4¾% senior notes due 2030 and 4 5/8% senior notes due 2031, according to a press release.

The new expiration time is 5 p.m. ET on Jan. 24, moved from Jan. 12 and previously from Dec. 15.

The company is conducting the solicitation to prepare for a spinoff of its home health and hospice business, as previously reported.

Initially, there were four notes but the company received the required consents for the 5¾% senior notes due 2025 by the first deadline.

All of the other terms of the consent solicitation remain unchanged.

As previously reported, the proposed amendments seek to amend the indenture to allow the potential spinoff or other distribution of at least 80.1% of the capital stock of the home health and hospice business to Encompass Health’s stockholders, with no initial public offering or other public listing of the capital stock of the home health and hospice business. The terms of the amendment would state that this is conditioned on net leverage not being more than 3.5x on a pro forma basis after giving effect to the spinoff.

The spinoff transaction is targeted for the first half of 2022. Regardless of whether consents are received, the separation may not happen. However, the transaction is also not contingent upon the success of the consent solicitation.

Noteholders of a majority of the outstanding principal amount of each series must consent.

A consent payment will be paid to holders who deliver, and do not validly revoke, consents to the proposed amendments. Noteholders of the 2025 notes will receive $2.50 per $1,000 note, and noteholders of the three other series will receive $5.00 per $1,000 note.

The consent payment will only be paid if the required consents are received and if Encompass Health does indeed decide to go ahead with the spinoff transaction.

If those things happen, the proposed amendments will become operative after Encompass Health makes the consent payment.

The transaction must be consummated by Dec. 9, 2022 for the consent solicitation to be relevant.

Citigroup Global Markets Inc. (800 558-3745, 212 723-6106, ny.liabilitymanagement@citi.com) and Goldman Sachs & Co. LLC (800 828-3182, 212 902-5962, GS-LM-NYC@gs.com) are the solicitation agents.

Global Bondholder Services Corp. (866 470-3700, 212 430-3774, 212 430-3775/3779, contact@gbsc-usa.com) is the information, tabulation and paying agent.

The health care services provider is based in Birmingham, Ala.

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