A Medical Device Daily
Kinetic Concepts (KCI; San Antonio) reported that it is planning to offer $600 million of convertible senior notes due 2015, subject to market and other conditions.
The company said it may sell up to another $90 million of notes upon exercise of an over-allotment option that it expects to grant to the initial purchasers.
KCI said it intends to enter into convertible note hedge transactions with one or more of the offering's initial purchasers and/or their affiliates for the purpose of reducing the potential dilution upon future conversion of the notes. The company said it also intends to enter into warrant transactions with the same counterparties. The warrant transactions could have a dilutive effect on KCI's EPS to the extent that the price of KCI's common stock exceeds the strike price of the warrants at exercise, the company said.
The company said it intends to use a portion of the proceeds from the offering to pay the cost of the convertible note hedge transactions, taking into account the proceeds to KCI from the warrant transactions and use the balance of the net proceeds to fund a portion of the purchase price of the proposed $1.7 billion acquisition of Lifecell (Branchburg, New Jersey) (Medical Device Daily, April 8, 2008), repay certain indebtedness, provide working capital and provide for other general corporate purposes of the combined company.
KCI has been advised that, in connection with establishing the initial hedge of the convertible note hedge and warrant transactions described, its counterparties or their affiliates expect to enter into various derivative transactions which could adversely affect the value of its common stock and the value of consideration that holders may receive upon conversion of the notes.
Pathway Medical Technologies (Kirkland, Washington), a developer of endovascular treatments for peripheral arterial disease, reported securing a $24.5 million Series C-1 round of financing.
The financing was obtained from existing investors HLM Venture Partners, Latterell Venture Partners, Oxford Bioscience Partners, Forbion Capital Partners, Giza Venture Capital and individual investors.
The company said it will use the funds to prepare for commercialization, specifically to build a sales and manufacturing organization in anticipation of the market introduction of its Pathway PV Atherectomy System, a minimally invasive procedure designed to restore circulation in the peripheral arteries by removing both hard and soft diseased tissue.
In other financing news: HealthTronics (Austin, Texas) reported that it has entered into an agreement to amend its senior credit facility, increasing the revolving line of credit from $50 million to $60 million.
The company currently has no amounts outstanding under this revolving line of credit.
The amendment enables the company to repurchase up to $10 million of its common stock, whether through a repurchase program in the open market or otherwise.
The amendment increases the dollar amount of permitted acquisitions under the acquisitions negative covenant from $25 million to $30 million during any 12-month period and provides that the full $30 million is available on the date of the amendment.
It provides approval of the lenders for the company's previously disclosed acquisition of Advanced Medical Partners (Columbia, South Carolina), which the company anticipates will close this month, and will not count against the $30 million permitted acquisitions allowance (MDD, March 21, 2008).
HealthTronics provides a suite of healthcare services and technology, including urologist partnership opportunities, surgical and capital equipment, maintenance services offerings and anatomical pathology services.