Two groups of HealthSouth Corp. bondholders said they have rejected an offer from the Birmingham, Ala.-based company that would pay them to waive certain financial-reporting conditions on the bonds. The rehabilitation provider has not reported financial results since the third quarter of 2002, a technical default under the bond agreements, and does not expect to report any until 2005 because of massive accounting fraud at the company. The allegations of accounting fraud surfaced in March 2003, before HealthSouth reported its fiscal 2002 results. The bondholders groups said they make up a majority of holders of two issues of bonds and want more compensation from HealthSouth for the lack of financial statements. HealthSouth previously increased its consent offer in hopes of winning over bondholders. About 90% of bondholders in two other bond issues have consented to the offer, HealthSouth said. -- by Vince Galloro
HealthSouth's battle with bondholders continues
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