Fremont Partners today announced that its Fund II limited partners will receive liquidity on a portion of their investment in portfolio company Kinetic Concepts, Inc. (“KCI” or the “Company”), as a result of the Company's $1 billion recapitalization. KCI is repurchasing shares at $17.00 per share, a 3.5 times cash-on-cash return on the shares being sold. Fremont Partners and its Fund II limited partners will incur only moderate dilution as a result of the recapitalization. In addition to returning capital to the Company's existing shareholders, the proceeds from KCI's recapitalization will allow the Company to continue to successfully execute its long-term business plan while refinancing its existing credit facilities.

“The combination of all-time low interest rates and supportive debt markets presented a unique and attractive opportunity to recapitalize KCI. This transaction represents a win-win for KCI and Fremont Partners' LPs. Not only are our Fund II limited partners receiving substantial liquidity on their original investment, but they will also continue to participate in KCI’s future prospects and growth. For KCI, the recapitalization provides them with capital that allows the company to continue to expand their business. Since our original investment, KCI has nearly doubled its revenues and operating profits while significantly reducing its debt,” said Jim Farrell, Managing Partner of Fremont Partners and a Director of KCI.

The recapitalization consists of a $480 million term loan and $205 million of Series A 73/8 % Senior Subordinated Notes. Additionally, KCI issued approximately $264 million in convertible preferred stock. Net proceeds from the recapitalization were used to redeem all of the Company’s existing 95/8% senior subordinated notes, repay and terminate the Company's existing senior credit facility and for general corporate purposes, while also returning capital to existing equity holders of KCI. Morgan Stanley Senior Funding, Inc. and Credit Suisse First Boston served as underwriters for both the term loan and senior subordinated notes.

Fremont Partners, through its $605 million Fund II (1996), Blum Capital and Dr. James Leininger, KCI’s founder, led the Company’s previous recapitalization, taking KCI private, in November 1997. Since that time, KCI has been firmly established as a leading global medical device company and has grown its revenues from $309.9 million in 1997 to $663.8 million through June 30, 2003. In the same time period, KCI’s operating income has grown from $64.4 million to $127.6 million.

About Kinetic Concepts, Inc.
Kinetic Concepts, Inc., is a global medical device company with leadership positions in (i) advanced wound care and (ii) therapeutic surfaces that treat and prevent complications resulting from patient immobility. KCI designs, manufactures, markets, and services a wide range of proprietary products that can significantly improve clinical outcomes while reducing the overall costs of patient care by accelerating the healing process or preventing complications. The Company has an infrastructure designed to meet the specific needs of medical professionals and patients across all health care settings including acute care hospitals, extended care facilities and patients’ homes. www.kci1.com

About Fremont Partners
Fremont Partners is a San Francisco-based private equity firm focused solely on investments in middle market companies. Typically, Fremont Partners makes substantial equity investments in operating companies with enterprise values up to $1 billion, looking to deploy a minimum of $75 million in each transaction. Fremont Partners invests across a diverse range of industries, including food and consumer products, healthcare and medical devices, building products, business services, specialty packaging, specialty finance, and industrial manufacturing. Fremont Partners has invested over $1 billion in 18 primary acquisitions, representing a total transaction value of approximately $4 billion. www.fremontpartners.com