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Biotech / Medical : HEALTHSOUTH Corporation (HLSH)
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From: D. K. G.2/10/2005 8:27:04 AM
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HealthSouth Bank Deal
Shows Investors' Confidence

By SIMONA COVEL
DOW JONES NEWSWIRES
February 10, 2005; Page C4

As its former chief sits in a courtroom, charged with orchestrating a $2.7 billion accounting fraud, HealthSouth Corp.'s new management sits comfortably in bankers' offices and company boardrooms, facing investors eager to lend the company money.

The hospital and rehabilitation-center company is busy syndicating $715 million in new bank loans -- and much of the debt was scooped up by investors before the bankers even announced the deal in a formal meeting last week.

Portfolio managers are eager to buy into the Birmingham, Ala., company's credit, even though HealthSouth doesn't expect to be ready with its complete audited financials until 2006.

And investors' commitment to the new bank deal comes even though the company is still in technical default on some of its outstanding bank debt because it doesn't have those audited financials.

The new loan package consists of a $315 million term loan B -- which targets institutional investors -- a $150 million letter of credit and a $250 million revolving credit facility. All of the loans have a five-year maturity and carry a yield of 2.75 percentage points above the London interbank offered rate. Yesterday, Libor stood at 2.77%.

J.P. Morgan is the lead underwriter for the loan package. Neither the bank nor HealthSouth would comment. The new deal isn't rated, because of the lack of audited financial statements.

Write to Simona Covel at simona.covel@dowjones.com
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