Kinetic Concepts ups bond portion of LBO financing to $2.55 billion

By Paul A. Harris

Portland, Ore., Oct. 5 - Kinetic Concepts Inc. upsized its planned two-part offering of high-yield notes to $2.55 billion from $2.15 billion and concurrently downsized its term loan by an identical amount, reducing the loan to $2.2 billion from $2.6 billion, informed sources said on Wednesday.

The LBO financing deal is expected to feature an upsized $1.65 billion tranche of 7.5-year senior secured second-lien notes. The tranche was upsized from the previously anticipated $1.25 billion.

In addition, the notes portion of the financing is set to include a $900 million tranche of eight-year senior unsecured notes. The amount of the unsecured tranche is unchanged.

Timing remains to be determined, however the bond deal could hit the market in mid-October, a syndicate source said on Wednesday.

The effort to syndicate the $2.15 billion of bridge loans backing the original amount of bonds, which was set to conclude on Oct. 7, has become moot by the fact that the bond launch is near at hand, the source added.

Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and RBC Capital Markets will be the joint bookrunners.

Meanwhile, Kinetic Concepts' $2.6 billion term loan launched on Wednesday.

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 a $200 million revolver and about $1.75 billion of equity.

Closing is expected in the second half of this year, subject to certain conditions, including shareholder and regulatory approvals. It is not subject to financing.

A special meeting for shareholders to approve the transaction is set for Oct. 28.

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

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