Kinetic Concepts trims term B to $1.9-$1.95 billion, adds term loan C

By Sara Rosenberg

New York, Oct. 17 - Kinetic Concepts Inc. downsized its seven-year term loan B to $1.9 billion to $1.95 billion from $2.2 billion and added a new $250 million to $300 million five-year term loan C, according to a market source.

Call protection on the B loan was changed to non-callable for one year and at 101 in year two, compared to original plans of soft call protection of 102 in year one and 101 in year two, the source said.

Price talk on the term loan B is still Libor plus 575 basis points with a 1.25% Libor floor and an original issue discount of 95½ to 96.

The term loan C is talked 75 bps inside the term loan B, the source continued. The tranche has a 1.25% floor, original issue discount talk of 95½ to 96 and 101 soft call protection for one year.

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

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 $1.65 billion in notes, $900 million in unsecured debt and about $1.75 billion of equity.

Total leverage is 6.0 times last-12-months EBITDA, and leverage through the first lien is 2.9 times.

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

A special meeting for shareholders has been set for Oct. 28.

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

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