Caremark Rx gets almost 98% of AdvancePCS 8½% notes in tender, extends offer

New York, March 15 - Caremark Rx Inc. (Baa3/BB+) said that as of 5 p.m. ET on March 12, holders of some 97.87% principal amount of the outstanding 8½% senior notes due 2008 of AdvancePCS (Ba2/BB) had validly tendered their notes and delivered related consents to proposed indenture changes, under Caremark Rx's previously announced tender offer for any and all of the outstanding Advance PCS notes and the related consent solicitation, which were undertaken as part of the planned merger of the two companies.

Caremark also said that its Cougar Merger Corp. subsidiary, the entity involved in the merger, which is officially running the tender offer and consent solicitation for the Advance PCS notes, has extended the expiration date of the offer to 9 a.m. ET on March 23, subject to possible further extension, from the originally announced deadline at 9 a.m. ET on March 17.

The tender offer and consent solicitation for the notes is being extended to allow AdvancePCS's stockholders to vote on March 22, among other things, to approve the merger between Caremark and AdvancePCS, while Caremark stockholders will vote, among other things, to approve the issuance of shares of Caremark common stock to AdvancePCS stockholders in the merger. Completion of the proposed merger is one of the conditions to the succcessful completion of the tender offer and consent solicitation.

Caremark said that since the consideration to be paid for the notes tendered in the tender offer will be calculated at 2 p.m. ET on the second business day immediately preceding the expiration date, as extended, the consideration to be paid for the notes tendered in the offer is therefore expected to be calculated at 2 p.m. ET on March 19, subject to possible further extension.

As previously announced, Caremark Rx, a Nashville-based pharmacy prescription benefit management company, said on Feb. 18 that it had begun a tender offer to purchase for cash any and all of the outstanding 8½% notes of AdvancePCS, an Irving, Texas-based competitor, as part of the previously announced pending acquisition of AdvancePCS by Caremark Rx.

It said the tender offer was being carried out through Caremark Rx's wholly owned subsidiary, Cougar Merger Corp, which also began soliciting AdvancePCS noteholder consents to eliminate most of the restrictive covenants from the indenture under which Advance PCS issued $200 million of the notes in March 2001. AdvancePCS is being merged into Cougar Merger Corp., with AdvancePCS surviving the merger and becoming a wholly owned subsidiary of Caremark.

Caremark set a now-expired consent deadline of 5 p.m. ET on March 2 and an expiration date of 9 a.m. ET on March 17, subject to possible extension. Notes tendered prior to the consent deadline could be withdrawn and the related consents revoked at any time up to the consent deadline. Notes tendered after the deadline may not be withdrawn.

Caremark said it expected to pay for any notes purchased through the tender offer and consent solicitation in same-day funds on a date promptly following expiration of the tender offer and consent solicitation.

It said the purchase price to be paid for tendered notes would be set according to a formula, based on the present value of the redemption price of $1,042.50 per $1,000 principal amount of notes on April 1, 2005, the first date on which the notes are redeemable, discounted at a rate equal to 50 basis points over the yield on the reference security, the 1.625% U.S. Treasury note due March 31, 2005.

It said that holders tendering their notes by the consent deadline and thus consenting to the proposed indenture changes would receive a consent payment of $20 per $1,000 principal amount of notes as part of their total consideration. Holders tendering their notes after the consent deadline would not receive the consent payment. Holders tendering notes would be required to consent to the proposed amendments to the indenture.

Caremark Rx said that among other conditions, the tender offer and consent solicitation would be subject to the successful completion of the proposed merger between Caremark and AdvancePCS.

UBS Investment Bank will act as dealer manager for the tender offer and consent solicitation (contact the Liability Management Group at UBS by calling collect at 203 719-4210 or at 888 722-9555 x4210). Georgeson Shareholder Communications Inc. is the information agent (call collect at 212 440-9800 or 866 399-8771. The Bank of New York Trust Co. NA is the depositary for the offer.

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