Alaris tender for 7¼% notes expires; holders tender 94% of notes

New York, Aug. 4 - Cardinal Health Inc. said its Alaris Medical Systems Inc.(Ba3/A-) subsidiary's previously announced tender offer and consent solicitation for Alaris' 7¼% senior subordinated notes due 2011 expired as scheduled at midnight ET on Aug. 3, without extension.

As of that time noteholders had tendered a total of $164.5 million of notes for purchase by the company, representing about 94% of the outstanding principal amount. That was up slightly from the $164.425 million of the notes which had been tendered by the consent deadline expiration on July 20.

As previously announced, Cardinal Health, a Dublin, Ohio-based provider of products and services to the health care industry, said on July 7 that its recently acquired Alaris Medical Systems subsidiary had started a tender offer and consent solicitation for any and all of Alaris' $175 million principal amount of 7¼% notes.

It set a consent deadline of July 20 and said the tender would end at midnight ET on Aug. 3, subject to possible extension.

Cardinal said that the tender price would be determined using a formula and would reflect that Alaris has the right to exercise the equity claw for 35% of the notes.

It said that for each $1,000 principal amount of notes, holders tendering by the consent deadline would receive the sum of 35% of the equity clawback price and 65% of the fixed spread price. The equity clawback price is $1,072.50 per $1,000 principal amount. The company said the fixed spread price would be the present value on Aug. 3 of all future cash flows on the notes to the first call date of July 1, 2007. Holders tendering after the consent deadline but before the expiry would receive the same amount but would not receive the extra $30 per $1,000 principal amount consent payment as part of their consideration. Cardinal said Alaris would also pay all tendering holders accrued interest up to but excluding the payment date.

Holders tendering by the consent deadline would be deemed to have given consents, and consents could not be given without tendering.

Cardinal Health said the offer would be subject to, among other things, the receipt of the necessary consents.

On July 20, Cardinal said that Alaris had established the pricing for its tender offer using a reference yield, according to a previously announced formula.

Assuming a payment date of Aug. 4, the total consideration for each $1,000 principal amount of notes tendered and accepted for payment under the terms of the tender offer would be $1,116.18, plus accrued interest up to but not including the payment date. Holders tendering after the consent deadline would not receive the consent payment to be paid to holders tendering by the deadline (in addition to the basic tender consideration set on July 20).

On July 21, Cardinal said Alaris had received sufficient consents to the proposed indenture changes from its 7¼% noteholders by the tender offer's consent deadline, which expired as scheduled at midnight ET on July 20, without extension. As of that deadline, the company had received valid tenders and consents from holders of $164.425 million of the notes, or about 94% of the outstanding principal amount of the notes, thus satisfying the tender offer's consent condition.

Cardinal said notes tendered by the consent deadline could no longer be withdrawn and the related consents could not be revoked, except in limited circumstances described in the official offer to purchase documents.

Accordingly, Cardinal said that Alaris and the notes' indenture trustee would promptly execute and deliver a supplemental indenture containing the proposed amendments, which would eliminate substantially all restrictive covenants and certain event of default provisions. However, it said that the amendments would not become operative unless and until Alaris were to accept the notes for purchase. If the proposed amendments were to become operative, holders of all the notes then outstanding would be bound by the amendments.

MacKenzie Partners Inc. (800 322-2885, banks and brokers call collect 212 929-5500) was the information agent for the tender offer and consent solicitation.

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