Will HealthSouth Have Good News Today?

BondWeek is the leading news publication for fixed-income professionals, covering new deals, structures, asset-backed securities, industry and market activity.

  • 07 Jul 2003
Email a colleague
Request a PDF

There are high expectations in some quarters regarding today's 3 p.m. presentation by scandal-plagued HealthSouth Corp. Some observers see the highly public nature of the meeting, which will involve creditors, stockholders and top executives and board members, as a sign that the company has very positive news, and may well escape a Chapter 11 filing. It will be the company's first formal meeting with investors since March, when it was charged with overstating some $2.5 billion in earnings going back to 1986.

"Why would you hold a big public meeting and have equity there only to say 'Thanks equity for showing up, we'll get your parking tickets validated and we'll give you a bagel?' I tend to interpret this as a bullish sign," says an involved investor.

Elie Radinsky, analyst at Jefferies & Co., has raised his price target to 80 for the 10 3/4% senior subordinated notes of '08 (C/D) and the 3 1/4% convertibles notes of '03 (WR/D). As BW went to press last Thursday, both issues were already edging up on a Wall Street Journal report that the company was seeking an injection of new capital. The senior subordinated issue, which is in default on its interest payments, opened at 60, and the convertibles, which have already matured and are in default on their principal, were trading at 61. Radinsky says both issues will likely be restructured, probably with an equity component. The $2.3 billion in senior bonds trade in the 80's, and Radinsky believes HealthSouth will catch up on missed interest payments and meet future payments according to the schedule set forth at the time of issue. He believes the total value of HealthSouth's businesses is enough to cover its total net debt with money to spare. He expects the company to announce an EBITDA run rate of $575 million--a figure he says would be well received by investors.

Bondholders are likely to be pleased with a reinstatement of the senior bonds and a restructuring of the senior subordinated and convertible notes, according to Leo Dierckman, analyst at Conseco Capital Management. Conseco has a "long-term position" in the bonds, Dierckman says, declining to specify the amount. "We have been convinced and remain convinced that all debt is covered," he says.

  • 07 Jul 2003

New! GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 7,171 21 10.72
2 Bank of America Merrill Lynch (BAML) 6,901 20 10.32
3 JP Morgan 4,776 10 7.14
4 Credit Suisse 4,718 9 7.05
5 Lloyds Bank 4,420 14 6.61

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Wells Fargo Securities 68,611.22 170 11.38%
2 Bank of America Merrill Lynch 59,056.08 169 9.80%
3 JPMorgan 56,861.85 163 9.43%
4 Citi 56,521.05 165 9.38%
5 Credit Suisse 44,888.95 123 7.45%