LabCorp says LYONs due 2021 will be convertible for fourth quarter

By Laura Lutz

Des Moines, Oct. 2 - Laboratory Corp. of America Holdings announced that its $744 million of zero-coupon subordinated Liquid Yield Option Notes due 2021 are convertible for the quarter that began on Oct. 1.

Holders may convert the LYONs at a rate of 12.4108 shares per $1,000 principal amount of the notes.

On Sept. 19, the company announced that the notes would accrue contingent interest for the period Sept. 12, 2006 to March 11, 2007.

Under their terms, the notes will accrue interest at a rate of at least 0.125% of the average market price of a LYON for the five trading days ended Sept 7, in addition to the original issue discount.

On Sept. 22, the company said it began an exchange offer for the notes.

The company will issue new zero-coupon convertible subordinated notes due Sept. 11, 2021 and will also pay an exchange fee of $2.50 per $1,000 principal amount at maturity of LYONs.

LabCorp said that the new notes will add a net share settlement feature, which will allow the company to use cash for a portion of its obligation due upon conversion. The company added that this will reduce the likelihood and extent of share dilution to its stockholders.

In addition, the new notes will provide that LabCorp will eliminate its option to issue shares in lieu of paying cash upon note repurchases.

The exchange offer ends at 5 p.m. ET on Oct. 23.

Lehman Brothers Inc. is the dealer manager and D.F. King & Co., Inc. is the information agent (call collect 212 269-5550 or 800 859-8508).

Burlington, N.C.-based LabCorp develops diagnostic technologies through genomic testing.

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