Omnicare to exchange $256.95 million 3.75% convertibles for new notes

By Marisa Wong

Madison, Wis., March 29 - Omnicare, Inc. entered into separate, privately negotiated exchange agreements on Thursday. The company will retire $256,946,000 of its outstanding 3.75% convertible senior subordinated notes due Dec. 15, 2025 in exchange for $390 million of new 3.75% convertible senior subordinated notes due April 1, 2042, according to an 8-K filing with the Securities and Exchange Commission.

Following these transactions, $318,054,000 of the existing notes will remain outstanding.

The new notes will bear regular cash interest at a rate of 3.75% per year, payable semiannually.

Beginning on April 1, 2020, the notes will also pay contingent interest based on their then current trading price.

The notes are callable on or before April 1, 2016 if the daily volume-weighted average price of Omnicare's stock is at least 150% of the conversion price for 20 days out of any 30 consecutive trading day period. The notes would be redeemed at par plus a make-whole amount and accrued interest.

After April 1, 2016, the company may redeem all or a portion of the notes at par plus accrued interest.

Under certain circumstances, the notes will be convertible into cash and, if applicable, shares of the company's common stock at an initial conversion rate of 24.09639 shares per $1,000 principal amount of notes or, equivalently, an initial conversion price of $41.50 per share. The conversion price represents a 22.3% premium over the $33.94 closing share price on March 28.

Holders may convert the new notes under any of the following circumstances:

• Prior to April 1, 2040, if the closing price of Omnicare stock for at least 20 of the 30 consecutive trading days ending on the last trading day of the previous calendar quarter is more than 130% of the conversion price;

• At any time on or after April 1, 2040;

• If the new notes have been called for redemption;

• If specified distributions to shareholders are made or specified corporate events occur; or

• During the five business days after any five consecutive trading day period in which the trading price of the notes is less than 98% of the product of the closing price of the company's stock and the conversion rate.

In addition, holders may require the company to repurchase all or a portion of their notes upon a fundamental change at par plus accrued interest.

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