Kinetic Concepts, Inc. (NYSE:KCI) today announced the closing of the
private sale of an additional $90 million aggregate principal amount of
its 3.25% convertible senior notes due 2015 pursuant to the exercise in
full of the over-allotment option granted to the initial purchases of
the notes. This brings the total amount of the notes issued to $690
million.
The coupon on the notes is 3.25% per year on the principal amount.
Interest will accrue from April 21, 2008, and is 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
is 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 (the day of pricing of the notes)
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 sale of the additional notes, KCI entered into
additional convertible note hedge transactions with financial
institutions that are affiliates of two of the offering´s initial
purchasers for the purpose of reducing the potential dilution upon
future conversion of the notes. KCI also entered into additional
warrant transactions with the same counterparties. In the event the
price of KCI´s common stock at exercise
exceeds $60.41 per share, which is approximately 50% higher than the
closing price of KCI´s common stock on April
15, 2008, the warrant transaction will have a dilutive effect on KCI´s
earnings per share. At expiration, the warrants will be settled in
shares or, subject to certain conditions, in cash at our election.
KCI intends to use a portion of the net proceeds from the sale of the
additional notes to pay the estimated cost of the additional convertible
note hedge transactions, taking into account the proceeds to KCI from
the additional 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.
KCI has been advised that, in connection with establishing their initial
hedge of the convertible note hedge and warrant transactions entered
into in connection with the initial sale of notes and in connection with
the sale of the additional notes, KCI´s
counterparties or their affiliates entered into various derivative
transactions with respect to KCI common stock. 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 were 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.
About KCI
KCI is a global medical technology company with leadership positions in
advanced wound care and therapeutic support systems. We design
manufacture, market and service a wide range of proprietary products
that can improve clinical outcomes and can help reduce the overall cost
of patient care. Our advanced wound care systems incorporate our
proprietary Vacuum Assisted Closure®, or V.A.C.® Therapy technology, which has been demonstrated clinically to promote
wound healing through unique mechanisms of action and can help reduce
the cost of treating patients with serious wounds. Our therapeutic
support systems, including specialty hospital beds, mattress replacement
systems and overlays, are designed to address pulmonary complications
associated with immobility, to reduce skin breakdown and assist
caregivers in the safe and dignified handling of obese patients. We have
an infrastructure designed to meet the specific needs of medical
professionals and patients across all healthcare settings, including
acute care hospitals, extended care organizations and patients´ homes
in 19 countries in the United States and abroad. For more information
visit our web site at www.kci1.com.
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 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.
