Kinetic Concepts, Inc. (NYSE: KCI) today announced the pricing of
its offering of $600 million aggregate principal amount of 3.25%
convertible senior notes due 2015. KCI has also granted an option to
the initial purchasers of the notes to purchase up to an additional
$90 million aggregate principal amount of notes to cover
over-allotments.
-- The coupon on the notes will be 3.25% per year on the
principal amount. Interest will accrue from April 21, 2008
and will be payable semi-annually in arrears on April 15 and
October 15 of each year, beginning October 15, 2008.
-- The notes will mature on April 15, 2015, unless previously
converted or repurchased in accordance with their terms. The
notes are not redeemable by KCI prior to the maturity date.
-- Upon conversion, holders will receive cash up to the aggregate
principal amount of the notes being converted and shares of
KCI common stock in respect of the remainder, if any, of KCI´s
conversion obligation in excess of the aggregate principal
amount of the notes being converted. The initial conversion
rate for the notes will be 19.4764 shares of KCI common stock
per $1,000 principal amount of notes, which is equivalent to
an initial conversion price of approximately $51.34 per share
of common stock and represents a 27.5% conversion premium over
the last reported sale price of KCI´s common stock on April
15, 2008, which was $40.27 per share. The conversion rate and
the conversion price will be subject to adjustment in certain
events, such as distributions of dividends or stock splits.
-- In connection with the offering, KCI entered into convertible
note hedge and warrant transactions with financial
institutions that are affiliates of two of the offering´s
initial purchasers to increase the effective conversion price
of the notes to approximately $60.41, which is approximately
50% higher than the closing price of KCI´s common stock on
April 15, 2008.
KCI intends to use a portion of the net proceeds from the offering
to pay the estimated $42.3 million cost of the convertible note hedge
transactions, taking into account the proceeds to KCI from the warrant
transactions, and to use the balance of the net proceeds to fund a
portion of the purchase price of the proposed acquisition of LifeCell
Corporation, repay certain indebtedness of KCI, provide ongoing
working capital and provide for other general corporate purposes of
the combined company. The closing of the sale of the notes is expected
to occur on April 21, 2008, subject to the satisfaction of various
customary closing conditions.
KCI has been advised that, in connection with establishing their
initial hedge of the convertible note hedge and warrant transactions
described above, KCI´s counterparties or their affiliates expect to
enter into various derivative transactions with respect to KCI common
stock concurrently with or shortly after the pricing of the notes.
These activities could have the effect of increasing, or preventing a
decline in, the price of KCI common stock concurrently with or shortly
after the pricing of the notes. KCI has been further advised that its
counterparties or their affiliates may modify their respective hedge
positions by entering into or unwinding various derivative
transactions with respect to KCI common stock and/or by purchasing or
selling KCI common stock in secondary market transactions during the
term of the notes. In particular, such hedge modification transactions
are likely to occur during an observation period related to any
conversions of the notes, which may have a negative effect on the
amount or value of the consideration received in relation to the
conversion of those notes. Any of these activities could adversely
affect the value of KCI common stock and the value of consideration
that holders may receive upon conversion of the notes.
The notes and the shares of common stock underlying the notes have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any applicable state securities laws, and will
be offered only to qualified institutional buyers pursuant to Rule
144A promulgated under the Securities Act. Unless so registered, the
notes may not be offered or sold in the United States except pursuant
to an exemption from the registration requirements of the Securities
Act and applicable state securities laws.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor shall there be
any sale of these securities in any state in which such offer
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any state.
Forward-Looking Statements
This communication contains forward-looking statements, which may
be identified by words such as "believes", "expects", "anticipates"
"estimates", "projects", "intends", "should", "seeks", "future"
"continue", or the negative of such terms, or other comparable
terminology. Forward-looking statements are subject to risks
uncertainties, assumptions and other factors that are difficult to
predict and that could cause actual results to vary materially from
those expressed in or indicated by them. Such forward-looking
statements include, but are not limited to, statements about the
proposed transaction, KCI´s ability to implement its strategic and
business initiatives, including its proposed acquisition of LifeCell
Corporation, financial expectations and intentions and other
statements that are not historical facts. Additional risks and factors
are identified in KCI´s filings with the U.S. Securities Exchange
Commission (the "SEC"), including its Report on Form 10-K for the
fiscal year ending December 31, 2007, which is available on the SEC´s
website at http://www.sec.gov. KCI undertakes no obligation to revise
or update any forward-looking statement, or to make any other
forward-looking statements, whether as a result of new information
future events or otherwise.
