American Retirement Corporation Amends Terms of Exchange Offer, Makes Series B Notes Fully Convertible and Extends Expiration Date.Business Editors NASHVILLE, Tenn.--(BUSINESS WIRE)--Sept. 12, 2002 American Retirement Corporation (NYSE NYSE See: New York Stock Exchange :ACR See riser card. ), a leading national provider of senior living housing and care, today announced that it is amending its offer to exchange its 5 3/4% Convertible Subordinated Debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before due 2002 and extending the expiration date Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. of the exchange offer. The Amended and Restated Exchange Offer As a result of discussions with certain holders of the Company's 5 3/4% Convertible Subordinated Debentures due 2002 ("Old Debentures"), the Company has elected to make its Series B Notes fully convertible and to amend the terms of its exchange offer. Pursuant to the revised exchange offer, for each $1,000 principal amount of Old Debentures that the Company accepts in the exchange, tendering holders will receive a total of $1,029 principal amount of new notes consisting of: -- not less than $839 and not more than $902 principal amount of new 5 3/4% Series A Senior Subordinated Notes Due September 30, 2002, and -- not more than $190 and not less than $127 principal amount of new 10% Series B Convertible Senior Subordinated Notes Due April 1, 2008. The relative amount of the Series A Notes and the Series B Notes to be received in the exchange will be determined based upon the total number of Old Debentures tendered. The Company will limit the amount of Series B Notes issued in the exchange to a maximum of $16.0 million. Consequently, as the total number of Old Debentures tendered in the exchange offer increases, the proportion of Series A Notes issued will increase, while the proportion of Series B Notes issued will decrease, to the extent necessary to limit the total amount of Series B Notes issued to $16.0 million. The following table illustrates the principal amount of Series A Notes and Series B Notes to be issued in exchange for each $1,000 principal amount of Old Debentures that are accepted in the exchange assuming various levels of participation in the Exchange Offer:
Principal Amount Per $1,000 Tendered
------------------------------------
Principal Amount
% of Old of Old
Debentures Debentures Series A Series B
Tendered Tendered Notes Notes Total
---------- ----------------- -------- -------- ------------
95% $126,000,000 $902 $127 $1,029
90 119,637,000 895 134 1,029
85 112,990,500 887 142 1,029
80 106,344,000 879 150 1,029
75 99,697,500 869 160 1,029
70 93,051,000 857 172 1,029
65 86,404,500 844 185 1,029
60 79,758,000 839 190 1,029
55 73,111,500 839 190 1,029
50 or less 66,465,000 839 190 1,029
The Exchange Offer is limited to a maximum of $126.0 million of the Old Debentures and is not subject to any minimum tender. The Series A Notes mature on September 30, 2002 and accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. interest at a rate of 5 3/4% per year on the principal amount. The Series B Notes mature on April 1, 2008. The Series B Notes accrue interest at a rate of 10% per year on the principal amount, payable semi-annually on April 1 and October 1 of each year, beginning April 1, 2003. The Company has the option to pay up to 2% interest per year through the issuance of additional Series B Notes. The Series B Notes will be convertible into shares of the Company's common stock at any time prior to maturity, at the option of the holder, at a conversion price of $2.25 per share. The Series B Notes are redeemable, in whole or in part, at the Company's option, at any time, at a premium starting at 105% of the principal amount of the Series B Notes, declining to 100% at stated intervals. The Series A Notes and Series B Notes will be senior to any remaining Old Debentures, but will be subordinated to all other indebtedness of the Company. The proposed financing transactions with Health Care Property Investors, Inc. ("HCPI HCPI Harmonized Consumer Price Index ") are expected to produce net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $120 million, which will be used to repay first the Series A Notes and second any remaining Old Debentures. HCPI's commitment expires September 30, 2002 and remains subject to a number of conditions and contingencies, including the successful tender of at least 75% of the Old Debentures. As of September 11, 2002, approximately $20.4 million of aggregate principal amount of the Old Debentures, representing 15.3% of the total outstanding, were tendered in the original exchange offer. The expiration date for the exchange offer has been extended to 5:00 p.m., Eastern Time, on September 25, 2002, unless extended or earlier terminated. The Company is making the Exchange Offer in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended. The Company will not pay or give, directly or indirectly, any commission or remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. to any broker, dealer, salesperson, agent or other person for soliciting tenders in the exchange offer. "The purpose of the Exchange Offer is to enable the Company to retain liquidity sufficient to allow for the completion of the HCPI transactions. We have worked with certain of our bondholders to address their issues regarding the original offer, including enhancing the terms of the Series B Notes by making them fully convertible and shortening their maturity. The Exchange Offer remains a critical step for the Company and, therefore, we urge all of our bondholders to participate in the Exchange Offer in order to ensure a positive outcome for the Company and all of its constituencies, including the bondholders themselves," said Bill Sheriff, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . The Company also announced that it intends to issue the Series B Notes pursuant to an exception to the Shareholder Approval Policy of the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (the "NYSE"). The issuance of the Series B Notes would normally require the prior approval of shareholders under the NYSE's shareholder approval policy as a result of the potential dilution potential dilution The decrease in the proportional equity position of a share of stock that will occur eventually if additional authorized shares are actually issued. associated with the conversion of the Series B Notes. The Audit Committee of the Board of Directors of the Company determined that the delay necessary in securing shareholder approval prior to the issuance of the Series B Notes would seriously jeopardize jeop·ard·ize tr.v. jeop·ard·ized, jeop·ard·iz·ing, jeop·ard·izes To expose to loss or injury; imperil. See Synonyms at endanger. the financial viability of the Company. Because of that determination, the Audit Committee, pursuant to an exception provided in the NYSE's shareholder approval policy for such a situation, expressly approved the Company's omission omission n. 1) failure to perform an act agreed to, where there is a duty to an individual or the public to act (including omitting to take care) or is required by law. Such an omission may give rise to a lawsuit in the same way as a negligent or improper act. to seek the shareholder approval that would otherwise have been required under that policy. The Company, in reliance on the exception, is mailing to all shareholders a letter notifying them of its intention to issue the Series B Notes without seeking their approval. An amendment to the Company's Schedule TO describing the amendment to the terms of the Exchange Offer has been filed with the Securities and Exchange Commission. This press release shall not constitute an offer to exchange or a solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of an offer to exchange the Old Debentures for Series A Notes or Series B Notes. The Exchange Offer is being made solely pursuant to the amended and restated offering memorandum Offering Memorandum A legal document stating the objectives, risks, and terms of investment involved with a private placement. Notes: The private placement of hedge funds necessitates the issue of memorandums. dated as of September 12, 2002, and related revised letter of transmittal Letter of Transmittal A document used by security holder to accompany certificates surrendered in an exchange or other corporate action. attached to such Schedule TO. Investors and security holders are strongly advised to read both the amended and restated offering memorandum and the related revised letter of transmittal regarding the Exchange Offer, because they explain the Exchange Offer in greater detail and contain important information. Holders of the Old Debentures should also be aware that the proposed HCPI transactions are described in greater detail in the Company's recent filings with the Securities and Exchange Commission. Documents describing the Exchange Offer in greater detail are being mailed to holders of the Old Debentures. Holders of Old Debentures who wish to participate in the Exchange Offer should contact the Company's information agent, D.F. King & Co., at 212-269-5550 (call collect) or 800-735-3591 (toll free), or Ross Roadman, the SVP SVP S'il Vous Plaît (French: Please) SVP Senior Vice President SVP Schweizerische Volkspartei (Swiss People~s Party) SVP Society of Vertebrate Paleontology SVP Social Venture Partners SVP St Vincent de Paul , Strategic Planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. and Investor Relations Investor relations The process by which the corporation communicates with its investors. , or Todd Kaestner, the Executive Vice President, Corporate Development at 800-663-0766 (toll free). Exchanges will be effected by U.S Bank National Association, the exchange agent for the Exchange Offer. American Retirement Corporation The Company offers a broad range of care and services to seniors, including independent living, assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. , skilled nursing and Alzheimer's care. The Company currently operates 65 senior living communities in 14 states with an aggregate capacity for approximately 14,400 residents. The Company's strategy is to develop senior living networks in major metropolitan regions. These networks are comprised of large continuing care continuing care a professional convention that a veterinarian who is treating an animal is obliged to continue treating that case unless an arrangement is made with its custodian to transfer the care to another practitioner or to a specialist. retirement communities and free-standing assisted living residences located in the same markets. |
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