Kinetic launches downsized $2.2 billion term B at Libor plus 575 bps

By Sara Rosenberg

New York, Oct. 5 - Kinetic Concepts Inc. launched its seven-year term loan B in New York on Wednesday at a size of $2.2 billion, down from the previously expected amount of $2.6 billion, and with price talk of Libor plus 575 basis points with a 1.25% Libor floor and an original issue discount of 95½ to 96, according to a market source.

The B loan has soft call protection of 102 in year one and 101 in year two, the source said.

The company's now $2.4 billion senior secured credit facility (Ba3/BB-), down from $2.8 billion, also includes a $200 million five-year revolver.

Financial covenants include a maximum total net leverage ratio and a minimum interest coverage ratio.

The deal was already presented to European investors with a bank meeting that took place in London on Monday.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., Credit Suisse Securities (USA) LLC and RBC Capital Markets LLC are the lead arrangers and bookrunners on the deal, and UBS Securities LLC is a co-manager.

Commitments are due on Oct. 19 and funding is expected on Nov. 4.

Proceeds will be used to help fund the buyout of the company by Apax Partners, Canada Pension Plan Investment Board and the Public Sector Pension Investment Board for $68.50 per share in cash in a transaction valued at $6.3 billion, including outstanding debt.

Other funds for the acquisition are expected to come from $2.55 billion of bonds, up from $2.15 billion as a result of the B loan downsizing, and about $1.75 billion of equity.

Closing is expected in the second half of this year, subject to certain conditions, including shareholder approval, which will be sought at a meeting on Oct. 28, and regulatory approval. It is not subject to financing.

Kinetic Concepts is a San Antonio-based medical technology company.

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