By Goldblatt, Jennifer
American Banker , Vol. 162, No. 203
BancBoston Robertson Stephens--Contracts
Bankers Trust New York Corp.--Contracts
Bankers Trust New York Corp.--00300865
Kinetic Concepts Inc.--Finance
Kinetic Concepts Inc.--00323717
Medical equipment industry--Finance
The securities arms of Bankers Trust New York Corp. and BankAmerica Corp. have assembled financing to fund the buyout of medical equipment maker Kinetic Concepts Inc.
BT Alex. Brown Inc. and BancAmerica Robertson Stephens last Thursday began marketing a $200 million high-yield bond offering for Kinetic, a San Antonio-based company that makes therapeutic beds.
It is owned by private equity firms Fremont Partners LP and Richard C. Blum & Associates. The issue is expected to price the week of Oct. 27.
The securities firms' bank affiliates also led a $530 million multi-tranche facility for the transaction. Bank of America is administrative agent on the loan; Bankers Trust Co. is syndications agent.
In May, Kinetic hired Alex. Brown & Sons to explore its strategic options.
Fremont and Richard C. Blum, both based in San Francisco, separately pursued the purchase.
When the company was put up for auction, the firms submitted a joint bid.
Units of both Bankers Trust and BankAmerica have long-standing relationships with the buyout firms, and Bank of America is an established lender to Kinetic.
The deal underscores the presence of new teams of players in leveraged finance, formed by the spate of marriages between commercial and investment banks this year.
And for this transaction, BT Alex. Brown and BancAmerica Robertson Stephens have chosen a fertile field to harvest.
Health-care issuance has been climbing steadily over the past few years.
It currently represents only about 2.5% of the high-yield market, so investors are hungry for the paper to diversify their portfolios.
"Health-care issues are highly prized by investors," said Gary Goodenough, manager of the New England High-Income Fund. "People are very optimistic about the prospect of the overall health care industry, and since their stocks are performing very well, people feel very comfortable that the dynamics will continue to support the sector in the future. …