By Ronda Fears
Nashville, March 10 - ResCare, which just called its 6% convertibles in January, on Wednesday said it sold $50.5 million of series A convertible preferred shares to Onex Partners LP.
Onex also bought 3.7 million shares at $8.90 a share from ResCare founder James R. Fornear and two other insiders which, along with the 4.8 million shares associated with the convertible, gives Onex a 30% equity stake in ResCare.
"We intend to use the proceeds from this transaction to fund ResCare's growth, which for the past several years has been intentionally constrained due to limited availability of capital," said ResCare chief executive Ronald Geary, in a statement.
He said the Louisville, Ky.-based provider of services to people with developmental disabilities and youth with special needs should start benefiting from this capital infusion in late 2004 and early 2005.
In January, ResCare called its 6% convertible subordinated notes due December 2004 for $87 million, following a successful consent solicitation from its junk bond holders. Funding for the redemption came from existing cash and part of the proceeds of a new bank facility.
Holders of more than a majority of ResCare's 10.625% senior notes due 2008 consented to the redemption of the convertibles and the replacement of its existing $80 million senior secured credit facility with a new $135 million senior secured credit facility.
Onex Partners LP is controlled by Onex Corp., which has consolidated assets of $12 billion, including investments in Celestica Inc., Loews Cineplex Entertainment Corp. and Radian Communication Services Corp., among several others.
Terms of the deal are:
| Issuer: | ResCare
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| Issue: | Convertible preferred shares
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| Adviser: | Piper Jaffray
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| Amount: | $50.5 million
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| Maturity: | Perpetual
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| Coupon: | None
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| Conversion price: | $10.50
|
| Conversion ratio: | 100
|
| Sale date: | March 10
|
| Settlement date: | Third quarter
|
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