Kindred Healthcare raised nearly $250 million for its acquisition strategy. It issued roughly $100 million in stock and $150 million in tangible equity units. Also, the company amended its term loan facility to pay a higher interest rate in return for relaxed debt covenants. For a 0.25% interest rate increase Kindred's leverage can now be as high as 6 to 1. That's 85% debt to 15% equity for the next six quarters.
The Company intends to use the net proceeds of these offerings, combined with proceeds from additional financing transactions, to fund the previously announced acquisition of Gentiva.Debt financing will be $1.7 to 1.9 billion according to corporate documents. Gentiva's senior executives will garner huge sums via golden parachute compensation, change of control agreements, severance agreements, ordinary course bonuses, transaction bonuses of $10 million, in the money options, restricted stock, deferred stock units and performance cash awards. It looks like Gentiva executive engorgement could easily eat up $50 million. That'll be the topic of my next letter.
Anonymous (from Gentiva)