The bank facilities that provided financing for the acquisition are unsecured and consist of a short-term facility of $200 million at LIBOR plus 100 basis points, a five year facility of $230 million at initial funding rates of LIBOR plus 175 basis points plus an additional revolving facility of $20 million LIBOR plus 125 basis points. These facilities were used to repay Dictaphone's existing bank debt and cover closing costs and the remaining committed amount will cover Dictaphone's senior subordinated notes, should they be put to the company by the noteholders as permitted by the terms of the notes.
By integrating Dictaphone's assets with its own, L&H gains important additional resources to develop next generation solutions for health care information management, call centres and other commercial applications. In particular, Lernout & Hauspie expects to leverage Dictaphone's strong brand recognition, its large US customer base, its successful digital dictation technologies and its call recording and management solutions to facilitate these development efforts. L&H plans to apply its strong international presence, particularly in Europe and Asia, to help expand the sale of Dictaphone solutions worldwide.
"Dictaphone's leading solutions for medical and legal dictation, patient record management and call centre systems complement existing resources and provide us with additional assets to further develop comprehensive, leading solutions for our key markets", commented Gaston Bastiaens, president and CEO of L&H. "By combining Dictaphone's strengths with L&H's own expertise in speech and language technology we plan to deliver solutions that will help effectively manage patient information, reduce transcription costs enterprise-wide and increase call centre productivity, he added.
L&H company purchased all of the outstanding stock of Dictaphone for approximately 4.7 million shares of L&H Common Stock (pre-split). Dictaphone was controlled by a fund managed by Stonington Partners, a New York private investment fund. Stonington has agreed to hold about 1.8 million shares it received for a period of two years and has assigned voting rights to these shares during this two-year period to an entity controlled by Messrs. Lernout and Hauspie. In connection with this transaction, L&H assumed or paid-off approximately $430 million of Dictaphone debt and other obligations. L&H will use the purchase method to account for this acquisition.
"Dictaphone's assets, particularly its health care, call centre and also commercial dictation solutions, as well as its strong management team, are combined with L&H's speech technologies and international presence to create a powerful new entity", stated John Duerden, chairman, chief executive officer and president of Dictaphone. "This new entity will have the resources to become the worldwide leader in addressing telephony, speech and language applications and the $10 billion health care market opportunity." More detailed news on this subject is available in the VMW April 2000 article Dictaphone Corporation acquisition offers L&H resources to establish stronghold in health care solutions.