Kinetic Concepts launches downsized $1.3 billion credit facility at Libor plus 325 bps

By Sara Rosenberg

New York, April 17 - Kinetic Concepts Inc. launched all tranches under its downsized $1.3 billion senior secured credit facility (BBB-) with price talk of Libor plus 325 basis points on Thursday morning, according to a market source.

Tranching on the deal is comprised of a $300 million five-year revolver, an $800 million five-year term loan A and a $200 million six-year term loan B, the source said.

Originally, the term loan A was expected to be sized at $1 billion and the term loan B was expected to be sized at $600 million, but they were reduced as a result of the company's recent pricing of a $600 million convertible senior notes offering.

The term loan B is being offered to investors at an original issue discount of 98. Upfront fees on the revolver and the term loan A differ based on commitment size, the source added.

The revolver has a 50 bps commitment fee.

There is a 3.25% Libor floor for all tranches.

Bank of America and JPMorgan are the joint lead arrangers and joint bookrunners on the deal, with Bank of America the administrative agent and JPMorgan the syndication agent.

Financial covenants include a maximum leverage ratio and a minimum fixed-charge coverage ratio.

Proceeds will be used to help fund the acquisition of LifeCell Corp. Under the purchase agreement, Kinetic will commence a cash tender offer to acquire all outstanding shares of LifeCell's common stock at a price of $51 per share. The transaction is valued at $1.7 billion in cash.

Pro forma 2007, total debt to EBITDA is 3.0 times.

The transaction is expected to close in the first half of 2008, subject to the tender of at least a majority of the fully diluted LifeCell shares, completion and funding financing, and the satisfaction of regulatory and other customary conditions.

Commitments are due on May 1 and closing is targeted for May 19.

Kinetic is a San Antonio-based medical technology company. LifeCell is a Branchburg, N.J.-based provider of biological products for soft tissue repair.

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