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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
October 1, 2001
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Date of report (Date of earliest event reported)
ASSISTED LIVING CONCEPTS, INC.
(exact name of registrant as specified in its charter)
NEVADA 1-13498 93-1148702
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(State or other jurisdiction of Commission File Number (I.R.S. Employer
incorporation or organization) Identification Number)
11835 NE Glenn Widing Drive, Bldg E, Portland, OR 97220-9057
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(Address of Principal Executive Offices) (Zip Code)
(503) 252-6233
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On October 1, 2001, Assisted Living Concepts, Inc. (the "Company")
announced that it had reached an agreement ("Plan Support Agreement") for a
financial reorganization with the holders (the "Debenture Holders") of
$75,857,000 million aggregate principal amount (out of a total of $161,250,000
aggregate principal amount outstanding, or approximately 47%) of its two series
of convertible subordinated debentures (collectively, the "Debentures") that
will be implemented through a prenegotiated plan of reorganization (the
"Prenegotiated Plan").
Pursuant to the Plan Support Agreement, on October 1, 2001, the Company,
and its wholly owned subsidiary, Carriage House Assisted Living, Inc. ("Carriage
House") have filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court for the District of Delaware in
Wilmington (the "Court") (cases no. 01-10674 and 01-10670, respectively). The
Company and Carriage House will operate under the protection of the Bankruptcy
Code as a debtor-in-possession, which will allow the Company and Carriage House
to continue operations during the reorganization proceeding. Each of the Company
and Carriage House will remain in possession of its assets and properties, and
its business and affairs will continue to be managed by its directors and
officers, subject in each case to the supervision of the Bankruptcy Court.
Implementation of the Prenegotiated Plan is dependent upon the Debenture
Holders' approval of final documentation and Court approval of the Prenegotiated
Plan and related solicitation materials.
Pursuant to the Plan Support Agreement, the Debentures and certain other
unsecured debt of the Company will be exchanged for seven-year secured notes,
ten-year secured notes, and common stock of the reorganized Company. Also, as
part of the Prenegotiated Plan, existing holders of the Company's common stock
will exchange their stock for 4% of the common stock of the reorganized Company
upon effectiveness of the Prenegotiated Plan. The Company expects the
Prenegotiated Plan to be effective in early 2002. Copies of the Company's press
release and the Plan Support Agreement have been filed as exhibits to this
Report on Form 8-K and are incorporated herein by reference.
ITEM 5. OTHER EVENTS
In accordance with its policies, the American Stock Exchange may halt
and/or suspend trading in the Company's common stock and Debentures as a result
of the Company's filing under Chapter 11 of the U.S. Bankruptcy Code.
Subject to Bankruptcy Court approval, the Company and Carriage House
anticipate entering into a debtor-in-possession facility with Heller Healthcare
Finance, Inc. ("Heller") in an anticipated approximate principal amount of up to
$4.4 million (the "DIP Facility"). The DIP Facility will supplement the Company
and Carriage House's cash position in order to ensure that all on-going working
capital needs are met and will be secured by certain properties of the Company
and Carriage House and a pledge of certain intercompany notes and the stock of
certain subsidiaries of the Company (collectively, the "DIP Collateral"). The
DIP Facility will mature upon the earlier of the Company's emergence from
bankruptcy or twelve months following the effective date of the DIP Facility.
Principal will be payable at maturity and interest will be calculated at 5.0%
over three month LIBOR, floating monthly, and payable monthly in arrears.
Concurrent with the closing of the DIP Facility and subject to Court approval,
it is anticipated that certain wholly-owned subsidiaries of the Company will
enter into an amendment
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of their existing facility with Heller, which is guaranteed by the Company, (the
"Existing Facility" and the subsidiary borrowers thereunder, the "Non-Debtor
Heller Borrowers") in which the Company is a guarantor, to, among other things,
extend the maturity of the Existing Facility to be coterminous with the DIP
Facility, to amend the interest to be calculated at 5.0% over three month LIBOR,
floating monthly, payable monthly in arrears, and to finance the acquisition by
Texas ALC Partners, L.P. ("Texas ALC") of sixteen properties currently leased by
Texas ALC from the current lessor thereunder, T and F Properties, L.P. (the
"Meditrust Properties" and the acquisition by Texas ALC, the "Meditrust
Acquisition"). Texas ALC's rights to proceed with the Meditrust Acquisition are
subject to and pursuant to an option granted by T and F Properties, L.P. to
Texas ALC Partners, L.P. or its assignee on September 25, 2001 (the "Option").
The Option expires on October 31, 2001. It is anticipated that the DIP
Collateral and the collateral for the Existing Facility (including the Meditrust
Properties when acquired) will cross-collateralize both the DIP Facility and the
Existing Facility, as amended. The extension of the Company guarantee is subject
to the approval of the Court.
Subject to Court approval, it is anticipated that the DIP Facility may
be refinanced through an amendment of the Existing Facility in connection with,
the exit from bankruptcy (the "Exit Facility"). The principal amount of the Exit
Facility will not exceed $44.0 million and will mature 36 months from the date
on which the Company exits from bankruptcy. Principal will be payable monthly in
a monthly amount of $50,000 for the first year, $65,000 for the second year and
$80,000 for the last year of the Exit Facility term. Interest will be calculated
at 4.5% over three month LIBOR, floating monthly (not to be less than 8%), and
payable monthly in arrears. The Company will remain liable for the entire amount
of the Exit Facility directly or as a guarantor.
In September 2000, the Company reached an agreement to settle the class
action litigation relating to the restatement of the Company's financial
statements for the years ended December 31, 1996 and 1997 and the first three
fiscal quarters of 1998. This agreement received final court approval on
November 30, 2000 and the Company was subsequently dismissed from the litigation
with prejudice. The total cost of the settlement was approximately $10,020,000
(less $1.0 million of legal fees and expenses reimbursed by the Company's
corporate liability insurance carriers and other reimbursements of approximately
$193,000). On September 28, 2001, the Company made the final settlement payment
of $1.0 million.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) and (b) None.
(c) The following documents are furnished as Exhibits to this
Current Report on Form 8-K pursuant to Item 601 of Regulation
S-K:
99.1 Press Release of Assisted Living Concepts, Inc., dated
October 1, 2001.
99.2 Plan Support Agreement, dated as of September 28, 2001,
among Assisted Living Concepts, Inc., certain of its
subsidiaries and affiliates and certain of the holders
of the Debentures.
99.3 Form of Loan Agreement among Heller Healthcare Finance,
Inc., as lender, and Assisted Living Concepts, Inc. and
Carriage House Assisted Living, Inc., collectively as
Borrower
99.4 Form of Second Amendment to Loan Documents among ALC
Ohio, Inc., ALC Pennsylvania, Inc., ALC Iowa, Inc., ALC
Nebraska, Inc., ALC New Jersey, Inc. and ALC Indiana,
Inc., collectively as Borrower, Assisted Living
Concepts, Inc., as guarantor, the financial institutions
from time to time parties to the Loan Agreement as
lenders and Heller Healthcare Finance, Inc., as agent
and lender.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSISTED LIVING CONCEPTS, INC.
By: /s/ SANDRA CAMPBELL
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Name: Sandra Campbell
Title: Secretary
Date: October 1, 2001
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EXHIBIT INDEX
EXHIBIT NO. DOCUMENT DESCRIPTION
99.1 Press Release of Assisted Living Concepts, Inc.,
dated October 1, 2001.
99.2 Plan Support Agreement, dated as of September 28,
2001, among Assisted Living Concepts, Inc.,
certain of its subsidiaries and affiliates and
certain of the holders of the Debentures.
99.3 Form of Loan Agreement among Heller Healthcare
Finance, Inc., as lender, and Assisted Living
Concepts, Inc. and Carriage House Assisted Living,
Inc., collectively as Borrower
99.4 Form of Second Amendment to Loan Documents among
ALC Ohio, Inc., ALC Pennsylvania, Inc., ALC Iowa,
Inc., ALC Nebraska, Inc., ALC New Jersey, Inc. and
ALC Indiana, Inc., collectively as Borrower,
Assisted Living Concepts, Inc., as guarantor, the
financial institutions from time to time parties
to the Loan Agreement as lenders and Heller
Healthcare Finance, Inc., as agent and lender.