By Toni Weeks
San Luis Obispo, Calif., Nov. 20 – Kindred Healthcare Inc. priced $150 million of mandatory convertibles, or 150,000 tangible equity units at $1,000 each, after the market close on Wednesday. The offering has a 13-day over-allotment option for an additional 22,500 tangible equity units.
Pricing with a 7.5% dividend and 17.5% initial conversion premium represented the cheap end of talk.
Concurrently with the registered offering of mandatories, Kindred priced 5 million shares of common stock at $19.75 each. The stock offering has a 30-day greenshoe of an additional 750,000 shares.
Each tangible equity unit is comprised of a prepaid stock purchase contract and a share of mandatory redeemable preferred stock. Each stock purchase contract is scheduled to settle on Dec. 1, 2017 for between 43.0918 and 50.6329 shares of common stock based upon the applicable market value of the stock.
The mandatories will have an initial liquidation preference of $201.58 and will be entitled to quarterly preferred stock installment payments at an annual rate of 7.5%. The initial conversion price is $23.21.
When the offering was announced on Monday, the company had planned to issue 1.5 million tangible equity units at $100.00 each.
Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Guggenheim Securities, LLC and Morgan Stanley & Co. LLC are the joint bookrunning managers for the concurrent offerings.
Proceeds are expected to be used to pay the cash portion for the previously announced Gentiva Health Services merger, to repay Gentiva’s existing debt and to pay related fees and expenses.
If the merger is not completed, proceeds may be used to redeem the purchase contracts and, if required, the mandatory redeemable preferred stock or for general corporate purposes.
Louisville, Ky.-based Kindred is a diversified post-acute health care provider.
| Issuer: | Kindred Healthcare Inc.
|
| Issue: | Tangible equity units
|
| Amount: | $150 million
|
| Greenshoe: | $22.5 million
|
| Maturity: | Dec. 1, 2017
|
| Bookrunners: | Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Guggenheim Securities, LLC, Morgan Stanley & Co. LLC
|
| Co-managers: | BMO Capital Markets, Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc.
|
| Initial liquidation preference: | $201.58
|
| Distribution rate: | 7.5%
|
| Price: | Par of $1,000
|
| Initial conversion premium: | 17.5%
|
| Initial conversion price: | $23.21
|
| Minimum settlement rate: | 43.0918 shares
|
| Maximum settlement rate: | 50.6329 shares
|
| Pricing date: | Nov. 19
|
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