Select Medical Holdings Corporation and Concentra Group Holdings Parent, Inc. Announce Pricing of Offering of $650 Million of 6.875% Senior Notes due 2032 by Concentra Escrow Issuer Corporation
Select Medical Holdings (NYSE: SEM) and Concentra Group Holdings Parent announced that Concentra Escrow Issuer has priced an offering of $650 million in senior notes due in 2032 at an interest rate of 6.875%.
This offering is part of Select's plan to separate from Concentra, its wholly-owned occupational health services business. Conditions include securing additional financing and merging Issuer with Concentra Health Services, Inc. (CHSI). Upon merging, CHSI will assume Issuer’s obligations under the notes.
The offering is set to close independently of the merger, which is expected in Q3 2024. Proceeds will be held in escrow until the merger completion. If the merger does not occur by September 30, 2024, the notes will be redeemed at 100% of their issue price plus accrued interest. Concentra plans to use $50 million from the offering for corporate purposes and the remainder to pay dividends to Select Medical These notes are available only to qualified institutional buyers and are not registered under the Securities Act.
- Concentra Escrow Issuer has priced $650 million in senior notes at 6.875%, securing significant funding.
- The proceeds will be used for corporate purposes and dividend payments, potentially benefiting shareholders.
- The offering proceeds are held in escrow pending merger completion, ensuring financial security.
- The merger's completion is uncertain and if not done by September 30, 2024, the notes will be mandatorily redeemed.
- The offering depends on additional required financing, adding an element of risk.
Insights
The announcement regarding Concentra's $650 million senior notes offering due 2032 at a rate of
The proceeds' partial use for general corporate purposes and to pay dividends to Select Medical Corporation signals a dual focus on operational needs and shareholder returns. However, the reliance on securing additional financing and the potential for mandatory redemption if the merger does not occur by September 30, 2024, introduces uncertainty. For retail investors, understanding the terms and risks associated with these senior notes is important before making investment decisions.
From a market perspective, the issuance of senior notes often indicates a company's need to raise capital for strategic initiatives. The separation of Concentra from Select Medical Holdings is significant as it could lead to a more focused business strategy for both entities. Concentra can concentrate on its core occupational health services, while Select Medical could streamline its operations without the occupational health division. The market typically views such separations positively if they result in value creation for shareholders.
However, the success of this strategy hinges on the successful consummation of the merger and the efficient use of the raised capital. If the merger fails to happen, the special mandatory redemption could lead to return of funds with minimal gains for investors. Retail investors should monitor updates regarding the merger's progress and assess the potential long-term benefits against the short-term risks.
The closing of this offering is not conditioned on the consummation of the Merger. The gross proceeds of the offering will be held in escrow pending the consummation of the Merger, which is currently expected to occur in the third quarter of 2024, although there can be no assurance that such consummation will not be delayed or that it will occur at all. If the Merger is not consummated on or prior to September 30, 2024, then the notes will be subject to a special mandatory redemption at a price of
Concentra intends to use
The notes and related guarantees are being offered in a private placement, solely to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), or to persons other than "
This notice does not constitute an offer to sell the notes, nor a solicitation for an offer to purchase the notes, in any jurisdiction in which such offer or solicitation would be unlawful. Any offer of the notes will be made only by means of a private offering memorandum. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.
Cautionary Statement Regarding Forward-Looking Statements
This release contains forward-looking statements. Forward-looking statements use words such as "expect," "anticipate," "outlook," "intend," "plan," "confident," "believe," "will," "should," "would," "potential," "positioning," "proposed," "planned," "objective," "likely," "could," "may," and words of similar meaning, as well as other words or expressions referencing future events, conditions or circumstances. Statements that describe or relate to Select's or Concentra's plans, goals, intentions, strategies, financial outlook, Select's or Concentra's expectations regarding the Merger or the Separation, the aggregate principal amount of the notes to be sold or the intended use of proceeds from the offering of the notes, and statements that do not relate to historical or current fact, are examples of forward-looking statements. Forward-looking statements are based on our current beliefs, expectations and assumptions, which may not prove to be accurate, and involve a number of known and unknown risks and uncertainties, many of which are out of the Select's and Concentra's control. Forward-looking statements are not guarantees of future performance and there are a number of important factors that could cause actual outcomes and results to differ materially from the results contemplated by such forward-looking statements. Additional information concerning these and other factors can be found in Select's filings with the
Investor inquiries:
Joel T. Veit
717-972-1100
ir@selectmedicalcorp.com
SOURCE Select Medical Holdings Corporation
FAQ
What is the interest rate on the senior notes offered by Concentra Escrow Issuer ?
When is the merger between Concentra Escrow Issuer and Concentra Health Services, Inc. expected to occur?
What will happen if the merger is not completed by September 30, 2024?
How much of the net proceeds will Concentra use for general corporate purposes?
Where will the senior notes offered by Concentra Escrow Issuer be placed?