Kindred Healthcare, Inc. (“Kindred”) (NYSE:KND) announced that it has completed the previously announced acquisition of RehabCare Group, Inc. (“RehabCare”) (formerly NYSE:RHB) (the “Merger”). Upon consummation of the Merger, each issued and outstanding share of RehabCare common stock was converted into the right to receive 0.471 of a share of Kindred common stock and $26 per share in cash, without interest (the “Merger Consideration”). Kindred will issue approximately 12 million shares in connection with the Merger.

As a result of the Merger, Kindred is the largest and most diversified post-acute healthcare services company in the United States based upon revenues with operations in 46 states. On June 1, 2011, the combined company operated 121 long-term acute care (“LTAC”) hospitals, 118 inpatient rehabilitation facilities (“IRFs”) (primarily hospital-based units), 224 nursing and rehabilitation centers and is the largest provider of rehabilitation therapy contract services with approximately 1,870 rehabilitation therapy contracts. Following the Merger, Kindred will have approximately 76,000 employees.

New Credit Facilities

In connection with the Merger, Kindred announced today that it entered into a new $650 million senior secured asset-based revolving credit facility (the “ABL Facility”), a new $700 million senior secured term loan facility (the “Term Loan Facility”) and successfully completed its private placement of $550 million senior notes due 2019 (the “Notes”). Kindred used proceeds from the ABL Facility, the Term Loan Facility and the Notes to pay the Merger Consideration, repay all amounts outstanding under Kindred’s and RehabCare’s existing credit facilities and to pay transaction costs. The ABL Facility and the Term Loan Facility have incremental facility capacity in an aggregate amount between the two facilities of $200 million, subject to meeting certain conditions, including a specified senior secured leverage ratio.

All obligations under the ABL Facility and the Term Loan Facility are fully and unconditionally guaranteed, subject to certain exceptions, by substantially all of Kindred’s existing and future direct and indirect domestic 100% owned subsidiaries, as well as certain non-100% owned domestic subsidiaries as Kindred may determine from time to time in Kindred’s sole discretion. The Notes are guaranteed by substantially all of Kindred’s domestic 100% owned subsidiaries.

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