Kinetic Concepts' $750 million 12½% notes talked with 12¾% yield

By Paul A. Harris

Portland, Ore., Feb. 8 - Dealers set yield talk for a $750 million tranche of Kinetic Concepts, Inc. and KCI USA, Inc.'s 12½% senior notes due Nov. 1, 2019 (Caa1/CCC+) in the 12¾% area, implying a reoffer price of 98.75, according to an informed source.

The deal is set to price on Thursday.

Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and RBC Capital Markets are the joint bookrunners. UBS Securities LLC is the co-manager.

The Rule 144A and Regulation S with registration rights notes become callable on Nov. 1, 2015 at 106.25. They feature a 35% equity clawback at 112.50 until Nov. 1, 2014.

Proceeds will be used as part of the financing backing the buyout of the company by Apax Partners, Canada Pension Plan Investment Board and the Public Sector Pension Investment Board.

The 12½% notes were sold to the underwriters in October, at which time a $1.75 billion issue of 10½% second-lien senior secured notes due Nov. 1, 2018 was successfully syndicated.

Kinetic Concepts is a San Antonio-based medical technology company.

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