Chemed Corporation Announces the Issuance of $200 Million Senior Convertible Notes
May 14 2007 - 3:39PM
Business Wire
Chemed Corporation �Chemed� (NYSE:CHE) today announced it has
issued $200 million aggregate principal amount of senior
convertible notes due 2014 (the �Notes�) in a private offering to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the �Securities Act�). The
Notes are unsecured, unsubordinated obligations of the Company,
will pay interest semi-annually at a rate of 1.875% per annum, 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. The Notes will have an
initial conversion rate of 12.3874 shares of capital stock per
$1,000 principal amount of the Notes. This represents an initial
conversion price (which is subject to adjustment in certain
circumstances) of approximately $80.73 per share, representing a
22.5% conversion premium based on the closing price of $65.90 per
share on May 8, 2007. 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 Company estimates
that the net proceeds from the offering will be approximately $194
million, after deducting estimated discounts and expenses. The
Notes will mature on May 15, 2014. In connection with the offering,
the Company has entered 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 cost of the convertible note
hedge transactions. The Company has also entered into separate
warrant transactions with the hedge counterparties, which have
partially offset the cost of the convertible note hedge
transactions. The convertible note hedge and warrant transactions
increase the effective conversion price of the notes to over
$105.00 per common share. In connection with the convertible note
hedge and warrant transactions, the hedge counterparties have
advised the Company that they or their affiliates expect to 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,
concurrent with the issue of the Notes, the Company repurchased
approximately 1.3 million shares of its capital stock in negotiated
transactions with institutional investors amounting to
approximately $86 million. The repurchase price of the shares is
$65.90 per share, the closing price of the Company's capital stock
on May 8, 2007. The Company anticipates that approximately $14
million of the remaining net proceeds of the offering will be used
within approximately 30 days after the issue of the Notes for
additional purchases of its capital stock in the open market or in
negotiated transactions. The balance of the net proceeds will be
used to repay borrowings under its revolving credit facility. The
Notes and the shares of capital stock issuable upon conversion of
the Notes have not been 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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