By Rebecca Melvin
New York, April 15 - Kinetic Concepts Inc. priced $600 million of seven-year convertible senior notes to yield 3.25%, with an initial conversion premium of 27.5% after the market close Tuesday, according to a syndicate source.
The notes priced at the cheap end of talk for the coupon, which was 2.75% to 3.25%, and towards the cheap end of talk for the initial conversion premium, which was 25% to 35%.
There was a $90 million over-allotment option on the Rule 144A deal, sold via bookrunners J.P. Morgan and Banc of America Securities.
The bonds are non-callable, and have dividend and takeover protection, as well as contingent conversion, subject to a 130% hurdle.
Kinetic Concepts said it will enter into convertible note hedge transactions with initial purchasers aimed at reducing dilution upon future conversion of the notes.
The medical technology company will also enter into warrant transactions with the same counterparties, which could have a dilutive effect on Kinetic Concepts earnings per share if the stock price exceeds the strike price of the warrants.
The cost of the convertible note hedge transactions will be paid for with proceeds from the warrant transactions and the convertibles offering.
The balance of convertibles proceeds is for partial funding of the proposed $1.7 billion acquisition of LifeCell Corp., repaying indebtedness, providing ongoing working capital and for general corporate purposes.
Earlier this month, Kinetic Concepts announced that a convertibles offering could be part of the permanent financing for the LifeCell acquisition. LifeCell makes AlloDerm, which is used to repair damaged tissue in hernias and breast reconstruction
San Antonio, Tex.-based Kinetic Concepts designs and makes advanced wound care and therapeutic support products.
| Issuer: | Kinetic Concepts Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $600 million
|
| Greenshoe: | $90 million
|
| Maturity: | April 15, 2015
|
| Coupon: | 3.25%
|
| Price: | Par
|
| Yield: | 3.25%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $51.34
|
| Price talk: | 2.75% to 3.25%, up 25% to 35%
|
| Call: | Non callable
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Contingent conversion: | Yes, subject to a 130% hurdle
|
| Bookrunner: | JP Morgan and Banc of America
|
| Pricing date: | April 15
|
| Settlement: | April 21
|
| Distribution: | Rule 144A
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
