UPDATE 1-William Demant chosen "stalking horse" for HearUSA

* Demant says is first bidder for bankrupt HearUSA EAR.A

* Says deal sets lower limit for bid at $80 mln

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COPENHAGEN, May 16 (Reuters) - Danish hearing aid maker William Demant Holding WDH.CO said on Monday that it had been chosen as "stalking horse" bidder for the assets of bankrupt U.S. hearing aid distributor HearUSA EAR.A.

A stalking horse is a bidder chosen by a bankrupt company from a pool of potential bidders to make the first bid for its assets.

“The Asset Purchase Agreement defines a lower limit for the subsequent auction process over HearUSA’s business assets at $80 million, which includes $10 million debtor-in-possession financing plus certain assumed liabilities,” William Demant Holding A/S said in a statement.

Legal proceedings related to the sale are expected to be completed in about eight weeks with closing of the transaction shortly after bankruptcy court approval, it said.

Amex-listed HearUSA reported revenues of $83.5 million and an operating loss of $2.6 million in 2010 and it has a U.S. market share of about 2 percent, William Demant said.

It is a regional hearing aid distributor with 134 retail outlets in the states of Florida, New York, New Jersey, Michigan and other parts of the northeast region of the United States, William Demant said.

It said acquiring HearUSA’s assets would expand its U.S. distribution capabilities for its Bernafon hearing aid products and strengthen their market position.

William Demant said that its board has decided to raise the target for the company’s debt by 500 million Danish crowns ($95.29 million) to between 1.5 billion and 2.0 billion crowns. “Combined with the prospect of continued strong cash flows from operating activities, we expect in 2011 -- based on this development -- to resume our share buy-back programme suspended since autumn 2008,” it said.