Hanger Orthopedic Group, Inc. Announces Settlement With NovaCare
BETHESDA, Md., Jul 5, 2000 /PRNewswire via COMTEX/ -- Hanger Orthopedic Group,
Inc. (NYSE: HGR) ("Hanger") announced today that it has reached a settlement
with NAHC, Inc. ("NAHC") (formerly NovaCare, Inc.) over issues related to the
$25 million recently awarded to Hanger in a binding arbitration proceeding. The
arbitration decision, rendered by KPMG, LLP on May 22, 2000, determined that
NAHC owed Hanger $25,103,918 as a result of a shortfall in Adjusted Working
Capital in the orthotics and prosthetics business purchased by Hanger from NAHC
on July 1, 1999.
Of that award, $15 million had been released from escrow to Hanger and the
balance was due on June 21, 2000. NAHC commenced litigation in Delaware to
challenge the escrow release and stated its intention to challenge the
arbitration award. As a result of the settlement, NAHC has paid $6 million of
the balance owed to Hanger and has executed a collateralized promissory note to
pay an additional $3.7 million, plus 7% interest, monthly over the next six
months. The litigation is being dismissed and Hanger and NAHC have executed a
mutual release relating to any currently unknown matters arising from the
acquisition.
Ivan R. Sabel, President and CEO of Hanger, stated that, "While Hanger was
confident that it would have prevailed in the litigation, the time involved in
obtaining a favorable result, combined with the inability of NAHC to pay more
than $6 million at this time, made it prudent to settle the matter." Hanger gave
NAHC a $400,000 discount from the remaining $10.1 million NAHC owed Hanger in
exchange for the immediate payment of $6 million and the greater certainty of
receiving $3.7 million through the promissory note.
Headquartered in Bethesda, Maryland, Hanger is the only national public company
specializing exclusively in patient-care services for orthotics and prosthetics
("O&P"). The Company now provides O&P services in 603 patient- care centers
located in 46 states including the District of Columbia and is the largest
distributor of O&P supplies and components in the country. Hanger also is
engaged in the manufacturer and distribution of components and finished
patient-care products in the O&P industry, and through its OPNET program,
provides O&P services to over 600 managed care programs.
Certain statements included in this press release are forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Please refer to the Company's SEC filings for factors that could cause actual
results to differ materially from the Company's expectations.
SOURCE Hanger Orthopedic Group, Inc.
CONTACT: Ivan R. Sabel, 301-986-0701, or Richard A. Stein, 302-986-070
,
both for Hanger Orthopedic Group, Inc.
URL: hanger.com |
