A Medical Device Daily

Laboratory Corporation of America Holdings (LabCorp; Burlington, North Carolina) reported that it will exercise its option to redeem $369.1 million principal amount (at maturity) of its zero coupon convertible subordinated notes due 2021.

The company expects that the total cash used for this redemption will be nearly $289.6 million, which is expected to be funded from cash on hand. The company does not expect the redemption to have a significant impact on its net income, earnings per share or operating cash flow for 2009 and is maintaining its previously issued guidance for 2009.

"By redeeming this convertible debt with existing liquidity, LabCorp is able to strengthen its capital structure and reduce the uncertainty related to potential conversions of these securities in the future," said William Hayes, CFO. "By acting now, the company also expects to defer certain tax consequences of the redemption."

As of March 31, LabCorp had an aggregate of $576.3 million of accreted principal amount outstanding of the zero coupon notes and of the LYONs. As a result of the redemptions, LabCorp will reduce the outstanding accreted principal amount of this convertible debt by some $289.6 million, leaving about $286.7 million in accreted principal amount, or $369.1 million of principal amount at maturity, of the zero coupon notes outstanding.

The Bank of New York Mellon, as trustee under the indenture governing the notes, has informed LabCorp that it intends to redeem the notes pro rata and in accordance with the applicable indenture.