Henry Schein, Inc. (Nasdaq: HSIC), the largest provider of health care products and services to office-based practitioners, today announced that it has entered into new $400 million private placement shelf facilities with two insurance companies.
These shelf facilities are uncommitted and will, subject to the terms and conditions set forth, respectively, therein, allow the Company to issue senior promissory notes to the lenders at fixed rate economic terms to be agreed upon at the time of issuance, from time to time during a three year issuance period until August 2013. The term of each possible issuance will be selected by Henry Schein and will range from five to 15 years (with an average life no longer than 12 years). The proceeds of any issuances under the facilities will be used for general corporate purposes, including working capital and capital expenditures, to refinance existing indebtedness and/or to fund potential acquisitions.
Additionally, on August 9, 2010, in accordance with the Indenture dated as of August 9, 2004, Henry Schein has notified the Trustee that the Company is calling its outstanding 3.00% convertible contingent notes due 2034 (the "Convertible Notes") for redemption on September 3, 2010 (the "Redemption Date"). The Indenture provides that any holder of Convertible Notes called for redemption may elect to convert such notes into cash and shares of Henry Schein common stock at a rate specified in the Indenture.
Henry Schein expects to pay $240 million in cash and to issue approximately 780,000 shares of its common stock in connection with its redemption of the Convertible Notes. From and after the Redemption Date, the Convertible Notes will no longer be outstanding.
"These shelf facilities provide us with attractive terms and financing rates, additional resources in financing corporate initiatives, as well as flexibility in managing our long-term capital structure," said Steven Paladino, Executive Vice President and Chief Financial Officer. "Redeeming the Convertible Notes will eliminate one of our more expensive sources of capital, and will avoid the potential for future dilution on our earnings per share."