Chemed Corporation Announces Proposed Offering of $160 Million Senior Convertible Notes
May 07 2007 - 5:20PM
Business Wire
Chemed Corporation ("Chemed")(NYSE:CHE) today announced that it
intends to offer, subject to market conditions and other factors,
up to $160 million aggregate principal amount of senior convertible
notes due 2014 (the "Notes") to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"). The Company also intends to grant the
initial purchasers an option to purchase an additional $24 million
aggregate principal amount of such Notes. As this offering is a
private placement, it will not be made to the general public. The
Notes will be unsecured, unsubordinated obligations of the Company,
will pay interest semi-annually, and will be convertible upon
satisfaction of certain conditions. The Notes will be convertible
into cash up to the principal amount of the Notes and, with respect
to any excess conversion value, into shares of the Company's
capital stock. Holders of the Notes will have the right to require
the Company to repurchase for cash all or some of their Notes upon
the occurrence of certain events. The interest rate, conversion
rate and other terms are to be determined by negotiations between
the Company and the initial purchasers. The Company expects to
enter into convertible note hedge transactions with affiliates of
the initial purchasers of the Notes (the "hedge counterparties")
and intends to use a portion of the net proceeds from this offering
to pay for the convertible note hedge transactions. The Company
also expects to enter into separate warrant transactions with the
hedge counterparties, which would result in additional proceeds to
the Company, and would partially offset the cost of the convertible
note hedge transactions. In connection with the convertible note
hedge and warrant transactions, the hedge counterparties have
advised the Company that they or their affiliates may enter into
various derivative transactions with respect to the capital stock
of the Company, concurrently with or shortly following pricing of
the Notes. These activities could have the effect of increasing or
preventing a decline in the price of the capital stock of the
Company concurrently or following the pricing of the Notes. In
addition, the hedge counterparties or their affiliates may from
time to time, following the pricing of the Notes, enter into or
unwind various derivative transactions with respect to the capital
stock of the Company and/or purchase or sell capital stock of the
Company in secondary market transactions. These activities could
have the effect of decreasing the price of the capital stock of the
Company and could affect the price of the Notes during any
averaging period related to the conversion of Notes. In addition,
the Company expects to use a portion of the net proceeds of this
offering to repurchase approximately $100 million of its capital
stock in negotiated transactions from institutional investors
concurrently with this offering and in open market transactions
after the completion of the offering. On April 30, 2007, the
Company announced that its Board of Directors increased the
Company's stock repurchase authorization to $163.6 million. On May
3, 2007 and May 4, 2007, respectively, the Company purchased an
aggregate of 118,500 shares of its capital stock for approximately
$6.9 million at prices ranging from $57.12 per share to $59.00 per
share. As a result of purchases since April 30, 2007, $156.7
million is available for future Chemed stock repurchases. The
Company intends to continue such repurchases, subject to market
conditions and other factors. The Company intends to use the
remaining net proceeds to repay borrowings under its revolving
credit facility. If the initial purchasers exercise their
over-allotment option, or if the Company otherwise has proceeds
remaining, the Company may use a portion of such net proceeds for
general corporate purposes, or to enter into additional convertible
note hedge transactions, or to repurchase additional shares of its
capital stock in the open market or in negotiated transactions. The
Notes and the shares of capital stock issuable upon conversion of
the Notes will not be registered under the Securities Act or the
securities laws of any other jurisdiction and may not be offered or
sold in the United States absent registration or an applicable
exemption from the registration requirements of the Securities Act.
This announcement does not constitute an offer to sell or the
solicitation of offers to buy any security and shall not constitute
an offer, solicitation or sale of any security in any jurisdiction
in which such offer, solicitation or sale would be unlawful.
Statements in this press release or in other Chemed communications
may relate to future events or Chemed�s future performance. Such
statements are forward-looking statements and are based on present
information Chemed has related to its existing business
circumstances. Investors are cautioned that such forward-looking
statements are subject to inherent risk that actual results may
differ materially from such forward-looking statements. Further,
investors are cautioned that Chemed does not assume any obligation
to update forward-looking statements based on unanticipated events
or changed expectations.
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