Caremark Rx extends tender offer, pricing date for Advance PCS 8½% notes

New York, March 19 - Caremark Rx, Inc. (Ba2/BB+) extended its previously announced tender offer and consent solicitation for the outstanding 8½% senior notes due 2008 of AdvancePCS (Ba2/BB), which is being conducted as part of Caremark's pending acquisition of Advance PCS.

Caremark said that its Cougar Merger Corp. subsidiary, which is officially running the tender offer, extended it to 9 a.m. ET on March 24, subject to possible further extension, from the previous deadline of 9 a.m. ET on March 23. The new deadline is expected to coincide with the anticipated March 24 closing of the merger between the two companies, one of the conditions for the successful completion of the tender offer.

Caremark also pushed back the date on which it will determine the tender offer and total consideration to be paid under the terms of the offer; since the consideration is to be calculated at 2 p.m. ET on the second business day immediately preceding the expiration date, as extended, the pricing is therefore expected to be set at 2 p.m. ET on March 22, subject to possible further extension; previously, it had been expected to take place on March 19.

All other terms and conditions of the tender offer and consent solicitation are unchanged.

As previously announced, Caremark Rx, a Nashville-based pharmacy prescription benefit management company, said on Feb. 18 that it had begun a tender offer to purchase for cash any and all of the outstanding 8½% of AdvancePCS, an Irving, Tex.-based competitor.

It said the tender offer was being carried out through Caremark's wholly owned subsidiary, Cougar Merger Corp, which also began soliciting AdvancePCS noteholder consents to eliminate most of the restrictive covenants from the indenture under which Advance PCS issued $200 million of the notes in March 2001.

AdvancePCS is being merged with and into Cougar Merger Corp., with AdvancePCS surviving the merger and becoming a wholly owned subsidiary of Caremark.

Caremark set a now-expired consent deadline of 5 p.m. ET on March 2, and initially set an expiration date of 9 a.m. ET on March 17, which was subsequently extended. It said notes tendered prior to the consent deadline could be withdrawn and the related consents revoked at any time up to the consent deadline. Notes tendered after the deadline may not be withdrawn.

Caremark said the purchase price to be paid for tendered notes would be set according to a formula based on the present value of the redemption price of $1,042.50 per $1,000 principal amount on the first call date April 1, 2005, discounted at 50 basis points over the yield on the reference security, the 1.625% U.S. Treasury note due March 31, 2005.

It said that holders tendering their notes by the consent deadline and thus consenting to the proposed indenture changes would receive a consent payment of $20 per $1,000 principal amount of notes as part of their total consideration. Holders tendering their notes after the consent deadline would be paid the tender price as determined by the company, but would not receive the consent payment. Holders tendering notes would be required to consent to the proposed amendments to the indenture.

Caremark said that among other conditions, the tender offer and consent solicitation would be subject to the successful completion of the proposed merger between Caremark and AdvancePCS.

On March 15, Caremark said that as of 5 p.m. ET on March 12, holders of some 97.87% principal amount of the outstanding 8½% notes had validly tendered them and delivered their consents.

It also announced the extension of the offer expiration date to 9 a.m. ET on March 23, subject to possible further extension, from the originally announced deadline at 9 a.m. ET on March 17. The company said the tender offer and consent solicitation was extended to allow AdvancePCS's stockholders to vote on March 22, among other things, to approve the merger between Caremark and AdvancePCS, while Caremark stockholders were scheduled to vote, among other things, to approve the issuance of shares of Caremark common stock to AdvancePCS stockholders in the merger. Completion of the proposed merger is one of the conditions to the successful completion of the tender offer and consent solicitation.

Caremark said that since the consideration to be paid for the notes tendered in the tender offer would be calculated at 2 p.m. ET on the second business day immediately preceding the expiration date, as extended, the consideration to be paid for the notes tendered in the offer would be therefore expected to be calculated at 2 p.m. ET on March 19, subject to possible further extension.

UBS Investment Bank is dealer manager (contact Liability Management Group collect at 203 719-4210 or at 888 722-9555 x 4210). Georgeson Shareholder Communications Inc. is the information agent (collect at 212 440-9800 or at 866 399-8771. The Bank of New York Trust Co. NA is the depositary.

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