New Issue: Manor Care sells $400 million convertible at 2.125% for five years, then 1.875%, up 20%

By Ronda Fears

Nashville, July 27 - Manor Care Inc. sold $400 million of 30-year convertible noted at par that will pay a 2.125% coupon for five years, then 1.875%, and a 20% initial conversion premium via sole bookrunner JPMorgan Securities.

The issue priced at the middle to expensive end of yield talk of 1.875% to 2.375% and the cheap end of premium guidance of 20% to 25%.

Proceeds will be used to fund a call spread overlay with underwriters, to fund $110 million in stock repurchases and to redeem its $100 million of 7.5% notes due 2006. The hedge transactions will effectively move the conversion premium to 60%, the company said.

Toledo, Ohio-based Manor Care operates long-term care centers and other medical facilities.

Issuer:	Manor Care Inc.
Issue:	Convertible senior notes
Bookrunner:	JPMorgan Securities
Amount:	$400 million
Maturity:	Aug. 1, 2035
Coupon:	2.125% for five years, then 1.875%
Price:	Par
Conversion premium:	20%
Conversion price:	$44.75
Conversion ratio:	22.35
Contingent conversion:	No
Contingent payment:	No
Dividend protection:	Yes
Takeover protection:	Yes
Call:	Non-callable for 5 years
Put:	In years 5, 10, 15, 20 and 25
Price talk:	1.875%-2.375%, up 20%-25%
Pricing date:	July 26, after the close
Settlement date:	Aug. 1
Distribution:	Rule 144A

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