SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(Amendment No. 1)
KINETIC CONCEPTS, INC.
(NAME OF ISSUER)
KINETIC CONCEPTS, INC.
FREMONT PURCHASER II, INC.
RCBA PURCHASER I, L.P.
JAMES R. LEININGER, M.D.
FREMONT INVESTORS, INC.
RICHARD C. BLUM & ASSOCIATES, INC.
RICHARD C. BLUM
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
49460W-01-0
(CUSIP NUMBER OF CLASS OF SECURITIES)
DENNIS E. NOLL
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
KINETIC CONCEPTS, INC.
8023 VANTAGE DRIVE
SAN ANTONIO, TEXAS 78230
TELEPHONE: (210)524-9000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
With Copies to:
DAVID W. HELENIAK, ESQ. STEPHEN D. SEIDEL, ESQ.
SHEARMAN & STERLING COX & SMITH INCORPORATED
599 LEXINGTON AVENUE 112 E. PECAN STREET, SUITE 1800
NEW YORK, NEW YORK 10022 SAN ANTONIO, TEXAS 78205
(212) 848-4000 (210)554-5500
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or
Rule 13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the
Securities Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
CALCULATION OF FILING FEE
______________________________________________________________________
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$654,293,626.90 $130,858.73
______________________________________________________________________
*For purposes of calculating fee only. This transaction applies to an
aggregate of 35,440,157 shares (sum of (i) 32,633,971 outstanding
shares of common stock (not including 186,824 treasury shares or
6,064,155, 100,000 and 3,837,890 shares of common stock held by James
R. Leininger, M.D., Peter A.Leininger, M.D. and Richard C. Blum &
Associates, L.P., respectively, to remain outstanding after the Offer)
and (ii) 2,806,186 outstanding options to purchase shares of Common
Stock).
Except as otherwise noted, the per unit price or other underlying value
of transaction computed pursuant to Exchange Act Rule 0-11 is $19.25 per
unit. The per unit price with respect to 723,300 options to purchase
shares of Common Stock is $19.9375 per unit.
The proposed maximum aggregate value of transaction is $654,293,626.90
(sum of (i) product of 32,633,971 shares of Common Stock and $19.25,
(ii) product of (A) 2,082,886 options to purchase shares of Common
Stock and (B) the difference between $19.25 and the exercise price of
such options and (iii) product of (A) 723,300 options to purchase
shares of Common Stock and (B) the difference between $19.9375 and the
exercise price of such options).
The total fee is $130,858.73 paid by wire transfer on October 7, 1997
to the designated lockbox depository maintained by the Commission at
Mellon Bank. The amount of the filing fee, calculated in accordance
with Rule 0-11 promulgated under the Securities Exchange Act of 1934,
as amended, equals 1/50 of one percent of the Common Stock to be
acquired.
[x] Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2)and identify the filing with which the
offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
Amount Previously Paid: $130,858.73
Form or Registration No.: SC13E4
Filing Party: Kinetic Concepts, Inc.
Date Filed: October 8, 1997
_______________________________________________________________________
INTRODUCTION
This Amendment No. 1 to the Rule 13e-3 Transaction Statement
(the "Statement") on Schedule 13E-3 (the "Schedule 13E-3") is being
filed by Kinetic Concepts, Inc., a Texas corporation (the "Company"),
Fremont Purchaser II, Inc. ("F Purchaser"), RCBA Purchaser I, L.P.
("B Purchaser"), Fremont Investors, Inc. ("Fremont"), Richard C. Blum
& Associates, Inc. ("RCBA"), Richard C. Blum ("Blum" (and, together with
B Purchaser, F Purchaser, Fremont, and RCBA, "Purchasers"), James R.
Leininger, M.D. ("Dr. James Leininger"), pursuant to Section 13(e) of
the Securities Exchange Act of 1934, as amended, and Rule 13e-3 there-
under in connection with the tender offer by the Company for all the
issued and outstanding shares of its common stock, $.001 par value per
share (the "Shares"), upon the terms and subject to the conditions
set forth in the Offer to Purchase dated October 8, 1997 (the "Offer to
Purchase") and the related Letter of Transmittal (which together
constitute the "Offer"), copies of which were attached to the Statement
as Exhibits (d)(1) and (d)(2), respectively. The Statement was initially
filed with the Securities and Exchange Commission on October 8, 1997.
This Amendment No. 1 to the Statement is being filed in part to reflect
the addition of Fremont, RCBA and Blum as additional parties filing the
Statement.
Capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Offer to Purchase and the Statement.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2 is hereby amended and supplemented to reflect the
addition of Fremont, RCBA and Blum as additional parties filing
the Statement.
Item 2(a) - (d) and (g) are amended to reflect the information
regarding Blum set forth in the Offer to Purchase under "THE
TENDER OFFER -- Section 14. Certain Information Concerning Purchasers"
which is incorporated herein by reference.
Item 2(e) and (f) are hereby amended and supplemented as follows:
None of RCBA, Blum and Fremont during the past five years, to
its knowledge, (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which any such person was
or is subject to a judgment, decree or final order enjoining
further violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
ITEM 4. TERMS OF THE TRANSACTION.
Item 4(a) is hereby amended and supplemented by the following:
The following two paragraphs are hereby inserted into the Offer
to Purchase immediately following the first paragraph under "THE
TENDER OFFER -- Section 8. Financing of the Transactions":
"The funds to be provided by F Purchaser in the Stock Purchase
have come from the following sources: Fremont Partners, L.P., Fremont
Offshore Partners, L.P. and Fremont Partners Side-By-Side, L.P.. The
total amount of the funds is currently available in a bank account
maintained for F Purchaser.
The funds to be provided by B Purchaser in the Stock Purchase
will come from RCBA-KCI Capital Partners, L.P., which has binding
commitments from its investors to provide such funds. The total amount
of the funds will be funded into a bank account maintained for B
Purchaser prior to the Stock Purchase."
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
Item 6(a) and (c) are hereby amended and supplemented to
incorporate by reference the amendment to Item 4(a) set forth above.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
Item 7(b) is hereby amended and supplemented by the following:
The second-to-last paragraph of the sub-section entitled
"Recommendation of the Disinterested Directors and the Board" under
"SPECIAL FACTORS -- Recommendation of the Disinterested Directors and
the Board" contained in the Offer to Purchase is hereby amended and
restated to read in its entirety as follows:
"In connection with its deliberations, the Board did not consider,
and did not request that BT Alex. Brown evaluate, the Company's
liquidation value. The Board did not view the Company's liquidation
value to be a relevant measure of valuation, given that the Per Share
Amount significantly exceeded the book value per Share of the Company
on June 30, 1997, and it was the Board's view that the Company is far
more valuable as a going concern than its net book value per share
of $5.26 as of June 30, 1997. However, book value per share is a
historical accounting number, and an evaluation of liquidation value
could produce a higher valuation than book value per share.
Additionally, there can be no assurance that the liquidation value
would not produce a higher valuation of the Company than its value as
a going concern."
Item 7(b) is hereby further amended and supplemented by the
following:
The following paragraph is hereby inserted into the Offer
to Purchase immediately following the third-to-last paragraph of
the sub-section entitled "Recommendation of the Disinterested
Directors and the Board" under "SPECIAL FACTORS --
Recommendation of the Disinterested Directors and the Board;
Fairness of the Transactions":
"With respect to the fairness of the Per Share Amount from
a financial point of view, the Board and the Disinterested
Directors specifically noted that the multiples of certain financial
data implied for the Company based on the Per Share Amount
generally were within the ranges of corresponding multiples
derived for comparable companies and transactions (see "Opinion
of BT Alex. Brown Incorporated - Analysis of Selected Public
Company Trading and Financial Information" and "Analysis of Selected
Merger and Acquisition Transactions"). The Board and the
Disinterested Directors also noted that while the estimated equity
reference range for the Company based on a discounted cash flow
analysis utilizing internal estimates of the Company's management
exceeded the Per Share Amount (see Case I discussion under "Opinion
of BT Alex. Brown Incorporated Discounted Cash Flow Analysis"), the
Per Share Amount was within the estimated equity reference range
for the Company after taking into account adjustments for certain
risks and other factors (see Case II discussion under "Opinion of
BT Alex. Brown Incorporated - Discounted Cash Flow Analysis").
Specifically, Case I did not take into account the fact that an
increasing amount of the Company's revenue growth was projected to
result from new products, the risks inherent in successfully
marketing new products, the risks presented by the recently adopted
Balanced Budget Act of 1997 (which has not been fully implemented),
the risks of other changes in reimbursement policy or increased
pricing pressure from the Company's customers, the risks of
increased shift in customer preference from high margin products
to lower margin products, potential increases in regional and
corporate overhead expenses and general inflation. The Board
and the Disinterested Directors also noted that the Per Share Amount
had been agreed upon through arms-length negotiations following an
extensive auction process. The views of the Board and the
Disinterested Directors were based on the totality of factors and
analyses considered, with no single factor or analysis being
dispositive of the Board's or the Disinterested Directors' fairness
determination."
ITEM 8. FAIRNESS OF THE TRANSACTION.
Item 8(a) is hereby amended and supplemented to incorporate
by reference the amendment to Item 7(b) set forth above.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
Item 9(a)-(c) are hereby amended and supplemented to
incorporate by reference the amendment to Item 7(b) set forth above.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS
WITH REGARD TO THE TRANSACTION.
Item 12(a)-(b) are hereby amended and supplemented to
incorporate by reference the amendment to Item 7(b) set forth above.
ITEM 16 ADDITIONAL INFORMATION.
Item 16 is hereby amended and supplemented to incorporate by
reference the amendment to Item 7(b) set forth above.
Item 16 is hereby further amended as follows:
1. The definition of "Purchasers" contained in the Offer to
Purchase is hereby amended to include Fremont, RCBA and Blum.
2. The first sentence of the paragraph entitled "Discounted Cash
Flow Analysis" under "SPECIAL FACTORS -Opinion of BT Alex. Brown
Incorporated" contained in the Offer to Purchase is hereby amended
and restated to read in its entirety as follows:
"BT Alex. Brown performed a discounted cash flow analysis
of the Company to estimate the present value of the stand-alone,
unlevered, after-tax free cash flows that the Company could
generate over the years 1997 through 2001, based both on internal
estimates of the management of the Company ("Case I") and
adjustments to such internal estimates based on discussions with
potential acquirors who had declined to proceed with a transaction
with the Company to reflect certain factors which potential acquirors
might consider in estimating the value of the Company ("Case II").
Case II assumed lower compound annual growth rates and EBITDA
margins for the Company than Case I. Specifically, Case I did not take
into account adjustments for certain risks and other factors, including
the fact that an increasing amount of the Company's revenue
growth was projected to result from new products, the risks inherent
in successfully marketing new products, the risks presented by the
recently adopted Balanced Budget Act of 1997 (which has not been fully
implemented), the risks of other changes in reimbursement policy or
increased pricing pressure from the Company's customers, the risks of
increased shift in customer preference from high margin products to
lower margin products, and potential increases in regional and
corporate overhead expenses and general inflation."
3. The last sentence of the paragraph entitled "Purchasers" under
"SPECIAL FACTORS -- Position of Purchasers and Dr. James Leininger
Regarding Fairness of the Transactions" contained in the Offer to
Purchase is hereby deleted and the following is hereby inserted in
its place:
"With respect to the fairness of the Per Share Amount from a financial
point of view, the Purchasers noted that the multiples of certain
financial data implied for the Company based on the Per Share Amount
were generally within the ranges of corresponding multiples derived
for comparable companies and transactions. The Purchasers also noted
that the Per Share Amount was within the estimated equity
reference range for the Company based on a discounted cash flow
analysis after taking into account adjustments for certain risks and
other factors, including the fact that an increasing amount of the
Company's revenue growth was projected to result from new products,
the risks inherent in successfully marketing new products, the risks
presented by the recently adopted Balanced Budget Act of 1997 (which
has not been fully implemented), the risks of other changes
inreimbursement policy or increased pricing pressure from the Company's
customers, the risks of increased shift in customer preference
from high margin products to lower margin products, and potential
increases in regional and corporate overhead expenses and general
inflation. Finally, the Purchasers noted that the Per Share Amount
had been agreed upon through arms-length negotiations following
an extensive auction process. The views of the Purchasers were based
on the totality of factors and analyses considered, with no single
factor or analysis being dispositive of the Purchasers' fairness
determination and should not be construed as a recommendation by them
to the Company's shareholders to tender their Shares or vote to
approve the Transaction Agreement and the Merger."
4. The last sentence of the paragraph entitled "Dr. James Leininger"
under "SPECIAL FACTORS -- Position of Purchasers and Dr. James
Leininger Regarding Fairness of the Transactions" contained in the
Offer to Purchase is hereby deleted and the following is hereby
inserted in its place:
"With respect to the fairness of the Per Share Amount from a financial
point of view, Dr. James Leininger noted that the multiples of certain
financial data implied for the Company based on the Per Share Amount
were generally within the ranges of corresponding multiples derived
for comparable companies and transactions. Dr. James Leininger
also noted that the Per Share Amount was within the estimated equity
reference range for the Company based on a discounted cash flow
analysis after taking into account certain risks and other factors,
including the fact that an increasing amount of the Company's revenue
growth was projected to result from new products, the risks inherent in
successfully marketing new products, the risks presented by the
recently adopted Balanced Budget Act of 1997 (which has not been
fully implemented), the risks of other changes in reimbursement
policy or increased pricing pressure from the Company's customers,
the risks of increased shift in customer preference from high margin
products to lower margin products, and potential increases in regional
and corporate overhead expenses and general inflation. Finally, the
Purchasers noted that the Per Share Amount had been agreed upon
through arms-length negotiations following an extensive auction process.
The views of Dr. James Leininger were based on the totality of
factors and analyses considered, with no single factor or analysis
being dispositive of Dr. James Leininger's fairness determination and
should not be construed as a recommendation by him to the Company's
shareholders to tender their Shares or vote to approve the Transaction
Agreement and the Merger."
5. The paragraph under "SPECIAL FACTORS -- Cautionary Statement
Concerning Forward-Looking Statements" contained in the Offer to
Purchase, is hereby amended and restated to read in its entirety as
follows:
"Certain matters discussed herein are forward-looking statements
that involve risks and uncertainties. Forward-looking statements
include the projections set forth below (collectively, the "Projections").
Such information has been included in this Offer to Purchase for
the limited purpose of giving the Company's shareholders access to
financial projections made by the Company's management in connection
with the Transactions and the Debt Financing. Such information was
prepared by the Company's management for internal use and not with a
view to publication. The Projections were based on assumptions
concerning the Company's products and business prospects in
1997 through 2002, including the assumption that the Company
would continue to operate under the same ownership structure as then
existed. The Projections were also based on other revenue and
operating assumptions. Information of this type is based on
estimates and assumptions that are inherently subject to significant
economic and competitive uncertainties and contingencies, all of which
are difficult to predict and many of which are beyond the Company's
control. Accordingly, there can be no assurance that the projected
results would be realized or that actual results would not be
significantly higher or lower than those set forth above. In
addition, the Projections were not prepared with a view to public
disclosure or compliance with the published guidelines of the
Securities and Exchange Commission (the "Commission"), or the guidelines
established by the American Institute of Certified Public Accountants
regarding projections and forecasts and are included in this Offer to
Purchase only because such information was made available to Purchasers
by the Company. Neither Purchasers' nor the Company's independent
accountants have examined, compiled or applied any agreed upon
procedures to this information and, accordingly, assume no
responsibility for this information."
6. The lead-in paragraph under "THE TENDER OFFER -- Section 11.
Certain Conditions to the Offer" contained in the Offer to Purchase
is hereby amended and restated to read in its entirety as follows:
"Notwithstanding any other provision of the Offer, the Company
shall not be required to accept for payment or pay for any Shares
tendered pursuant to the Offer, if (v) the Minimum Condition shall
not have been satisfied prior to the Expiration Date, (w) any applicable
waiting period under the HSR Act (as defined herein) shall not have
expired or been terminated prior to the expiration of the Offer,
(x) the Debt Financing shall not have been obtained prior to the
Expiration Date, (y) the Closing shall not have occurred prior to the
Expiration Date or (z) at any time on or after the date of the
Transaction Agreement, and prior to the Expiration Date, any of the
following conditions shall exist:"
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is
true, complete and correct.
November 3, 1997
Kinetic Concepts, Inc.
By: /s/ DENNIS E.NOLL
-------------------
Name: Dennis E. Noll
Title: Senior Vice President
Fremont Purchaser II, Inc.
By: /s/ R.S. KOPF
-------------------
Name: R.S. Kopf
Title: General Counsel and
Secretary
RCBA Purchaser I, L.P.
By Richard C.Blum & Associates, L.P.,
its General Partner
By: /s/ MURRAY A. INDICK
--------------------
Name: Murray A.Indick
Title: Managing Director
and General Counsel
/s/ DENNIS E. NOLL
----------------------
James R. Leininger, M.D.
By: Dennis E. Noll, Attorney-in-Fact
Fremont Investors, Inc.
By: /s/ R.S. KOPF
---------------------
Name: R.S. Kopf
Title: Managing Principal,
General Counsel and
Secretary
/s/ MURRAY A. INDICK
----------------------
Richard C. Blum
By: Murray A. Indick,
Attorney-in-Fact
Richard C. Blum & Associates, Inc.
By: /s/ MURRAY A. INDICK
--------------------
Name: Murray A. Indick
Title: Managing Director, General
Counsel and Secretary
