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April 11, 2008 |
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KINETIC: US$1.7BB LifeCell Deal Cues S&P to Hold 'BB' Rating Standard & Poor's Ratings Services affirmed its ratings, including the 'BB' corporate credit rating, on San Antonio, Texas-based Kinetic Concepts Inc. The outlook is stable. This follows KCI's announcement that it will acquire tissue repair products company LifeCell Corp. forUS$1.7 billion in cash. S&P had already factored a debt-financed acquisition of this size into S&P's ratings on KCI. Therefore, the ratings are unaffected. Details surrounding the proposed financing of the transaction remain largely undisclosed; S&P will assign debt ratings to the proposed financing when more information becomes publicly available. S&P likely will withdraw its ratings on the company's existing US$500 million revolving credit facility due 2012 at the close of the transaction. "The rating on KCI reflects the company's still significant dependence on its vacuum assisted closure device for hard-to- heal wounds, which subjects it to competitive technological developments and potential third-party pricing pressure on its VAC device," said Standard & Poor's credit analyst Jesse Juliano. These concerns are offset partially by the strong sales momentum and cash flow related to the VAC device, the product diversification from LifeCell and future acquisitions, and the company's willingness to maintain an appropriate financial profile while executing its acquisition strategy. About Kinetic Concepts Headquartered in San Antonio, Kinetic Concepts Inc. (NYSE: KCI) -- http://www.kci1.com/ -- designs, manufactures, markets and services a wide range of proprietary products that can improve clinical outcomes and can help reduce the overall cost of patient care. KCI has an infrastructure across all health care settings, including acute care hospitals, extended care facilities and patients' homes in the United States, Canada, Australia and most major European countries. |
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