Labcorp, a leading global life sciences company, announced that Fortrea Holdings Inc., a wholly owned subsidiary of Labcorp, has launched an offering of senior secured notes due 2030, subject to market conditions and other customary factors, in connection with the previously announced spinoff of Fortrea into a separate publicly traded company.
Fortrea intends to use the proceeds of the issuance of the Notes being offered by it to fund a portion of an expected approximately $1,605 million cash distribution to Labcorp as partial consideration for the assets that will be contributed to Fortrea in connection with the Spinoff and funding a portion of the fees and expenses related to this offering and the transactions related to the Spinoff.
Upon closing, Fortrea will deposit the gross proceeds of the Notes in an escrow account until the date that certain conditions are satisfied. The proceeds will be released (such date, the “Release Date”) on the day of and prior to, among other things, the consummation of the Spinoff; provided, however, that, in the event that, among other things, (i) certain conditions have not occurred by September 30, 2023 or (ii) Labcorp decides to no longer pursue the Spinoff, Fortrea will be required to redeem the Notes at 100% of the issue price of the Notes, plus accrued and unpaid interest to, but excluding, the redemption date.
Prior to the Release Date, the Notes will be secured on a first-priority basis by a lien on the escrow account in which the proceeds will be deposited. Upon the consummation of the Spinoff, the notes will be jointly and severally guaranteed, on a senior secured basis, by each of Fortrea’s existing and subsequently acquired or organized direct or indirect wholly owned subsidiaries organized in the United States or England and Wales (subject to certain exceptions) and will be secured, subject to certain exceptions and permitted liens, by a first priority lien on substantially all tangible and intangible personal property and material real property of Fortrea and the subsidiary guarantors, other than certain excluded assets. The closing of the offering of the Notes is expected to occur on or about June 27, 2023, subject to customary closing conditions.
The Notes will be offered, in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), only to persons reasonably believed to be qualified institutional buyers and, pursuant to Regulation S under the Securities Act, to non-U.S. persons outside the United States. The Notes will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or in a transaction not subject to the registration requirements of the Securities Act or any state securities laws.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. Any offers of the Notes will be made only by means of a private offering memorandum.