Select Medical Holdings Corporation and Concentra Group Holdings Parent, Inc. Announce Commencement of Offering of $750 Million of Senior Notes by Concentra Escrow Issuer Corporation
Select Medical Holdings (NYSE: SEM) and Concentra Group Holdings Parent, Inc. announced the commencement of a $750 million senior notes offering by Concentra Escrow Issuer , a subsidiary of Concentra Health Services, Inc. The offering supports Select's plan to separate Concentra from its business.
The Issuer will merge with Concentra Health Services, Inc. Upon merger, Concentra and its subsidiaries will guarantee the notes. The proceeds, held in escrow, will be used for corporate purposes and dividends to Select Medical
If the merger isn't completed by September 30, 2024, the notes will be redeemed at 100% of their issue price, plus interest.
- Commencement of a $750 million senior notes offering.
- Proceeds will support Concentra's corporate operations and pay dividends to Select Medical
- Escrow arrangement provides some security for investors.
- Completion of the merger is uncertain; may not occur by September 30, 2024.
- If the merger fails, notes will be mandatorily redeemed, potentially impacting investor returns.
Insights
The announcement of Concentra Group Holdings Parent, Inc. offering $
Senior notes are a form of debt security that takes priority over other unsecured or subordinated debt in case of a default. This means that the investors of these notes will be paid before other creditors in the event of liquidation. The offering is a private placement, targeted at institutional buyers under Rule 144A, which allows for more flexibility and a quicker capital-raising process compared to a public offering.
The use of proceeds is critical here. Concentra plans to allocate $
However, the offering's success hinges on the completion of the Separation and the Merger. If these transactions do not occur by September 30, 2024, the notes will be subject to mandatory redemption, which adds a layer of uncertainty. For retail investors, it is essential to consider the potential impact of the separation on Select Medical's stock and the associated risks.
From a legal perspective, this announcement involves complex structures and conditions. The separation of Concentra from Select Medical is legally intricate, requiring the issuance of senior notes, followed by a merger of the Issuer into CHSI. The notes will then be unconditionally guaranteed on a senior unsecured basis by Concentra and certain subsidiaries, ensuring stronger legal backing for the investors.
Regulation S and Rule 144A under the Securities Act are important here, as these regulations permit the offering to be conducted without the need for registration, thereby expediting the process. However, these notes are restricted securities, meaning they cannot be freely sold or traded in the U.S. market without adherence to specific conditions. This restriction can affect the liquidity of the notes.
Furthermore, the special mandatory redemption clause adds a safeguard for investors, ensuring that their capital is returned with accrued interest if the Merger does not materialize by the specified date. This clause is designed to protect the investors' interests but also points to the uncertainties surrounding the Separation and Merger.
Retail investors should understand these legal mechanisms and their implications on the potential return and risk of these notes. The complexity and conditions associated with this offering highlight the importance of thorough legal scrutiny before any investment decision.
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@selectmedical.com
SOURCE - Select Medical Holdings Corporation
FAQ
What is the purpose of Concentra's $750 million notes offering?
When is the merger of Concentra Escrow Issuer expected to be completed?
What happens if the merger is not completed by September 30, 2024?