A Medical Device Daily

Kinetic Concepts (KCI; San Antonio) reported the closing of the private sale of an additional $90 million aggregate principal amount of its 3.25% convertible senior notes due 2015 following the exercise of the over-allotment option granted to the initial purchasers 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, and is payable semi-annually in arrears on April 15 and Oct. 15 of each year, beginning next fall.

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.

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 about $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, 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 about 50% higher than the closing price on April 15, the warrant transaction will have a dilutive effect on the company's earnings per share.

KCI said it 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, and to use the balance of the proceeds to fund a portion of the purchase price of the proposed $1.7 billion acquisition of LifeCell (Branchburg, New Jersey) that was disclosed last month (Medical Device Daily, April 8, 2008).

The proceeds also will be used to repay certain indebtedness of KCI, provide ongoing working capital and provide for other general corporate purposes of the combined company.

KCI develops wound care and therapeutic support systems.

Aethlon Medical (San Diego) reported that it has entered into a private placement agreement with Fusion Capital Fund II for the sale of 1 million shares of its common stock for an aggregate purchase price of $500,000.

The company said it did not grant any registration rights or issue any warrants in connection with this transaction. It also noted that the private placement agreement does not contain any anti-dilution provisions or restrictions on future financings.

The company said the funds will be used for working capital and general corporate purposes.

In addition, Aethlon said that it has mutually agreed with Fusion Capital to terminate a March 2007 common stock purchase agreement.

"Fusion has so far provided Aethlon with almost $4 million in funding over our four-year relationship," said CEO James Joyce. "Fusion remains a large shareholder and we value and appreciate our long-standing relationship and their continued support of our endeavors."

Aethlon is the developer of the Hemopurifier, a device designed to treat infectious disease. The system provides real-time therapeutic filtration of infectious viruses and immunosuppressive particles, and is positioned to address the treatment of drug and vaccine resistant viruses. Additionally, the device holds promise in cancer care, the company said.

In other financing news, LifeStem International (Laguna Hills, California) formerly known as CalbaTech, reported on Friday that it officially changed its name, obtained a new trading symbol, effected a 3,000-for-1 reverse stock split, and launched its new web site at www.lifesteminternational.com.

LifeStem is focused on the collection and banking of adult stem cells for possible future therapeutic uses.