Morgan Stanley and Credit Suisse First Boston hit the market last week with a $580 million recapitalization credit for medical device company Kinetic Concepts. An investor said the deal was not blowing out, but it should get completed. The credit includes a seven-year, $480 million "B" loan priced at LIBOR plus 23/4% and a six-year, $100 million revolver priced at LIBOR plus 21/2%. There is also a 50 basis point commitment fee on the revolver. Proceeds from the deal will be used in part to pay off the company's existing facility and to redeem Kinetic's 95/8% senior subordinated notes.
The company announced last Tuesday that it intends to offer $205 million in Series A subordinated notes due 2013. These notes will be offered concurrently with a private placement of convertible preferred stock. Calls to bankers at Morgan Stanley and CSFB were not returned.
Bank of America and Deutsche Bank lead Kinetic's existing facilities. The company completed a $400 million deal in November of 1997 and has since issued $152.5 million in add-on loans that aided in refinancing the original deal. Pricing on the previously instituted tranches ranges between LIBOR plus 21/4-31/8%. Kinetic became a private company in 1997 after being bought out by private equity firms Fremont Partners and Richard C. Blum and Associates. A Fremont spokesman declined to comment and Martin Landon, v.p. of finance, acting cfo and corporate controller of Kinetic, did not return calls.