SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 3)*
Sylvan Learning Systems, Inc.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
871399101
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(CUSIP Number)
Michael D. Weiner
Apollo Management IV, L.P.
1999 Avenue of the Stars, Suite 1900
(310) 201-4100
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 30, 2003
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box: / /
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.ss.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 9 Pages)
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CUSIP No. 871399101 SCHEDULE 13D/A Page 2 of 9
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Investment Fund IV, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
1,771,973 shares of Common Stock
NUMBER OF SHARES (see Item 5 below)
BENEFICIALLY OWNED -----------------------------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 1,870,416 shares of Common Stock
WITH (see Item 5 below)
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9 SOLE DISPOSITIVE POWER
1,771,973 shares of Common Stock
(see Item 5 below)
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,870,416 shares of Common Stock
(see Item 5 below)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,771,973 shares of Common Stock (see Item 5 below)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.14% (see Item 5 below)
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14 TYPE OF REPORTING PERSON
PN
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CUSIP No. 871399101 SCHEDULE 13D/A Page 3 of 9
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Overseas Partners IV, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
98,443 shares of Common Stock
NUMBER OF SHARES (see Item 5 below)
BENEFICIALLY OWNED -----------------------------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 1,870,416 shares of Common Stock
WITH (see Item 5 below)
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
98,443 shares of Common Stock
(see Item 5 below)
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,870,416 shares of Common Stock
(see Item 5 below)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
98,443 shares of Common Stock (see Item 5 below)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.23% (see Item 5 below)
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14 TYPE OF REPORTING PERSON
PN
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CUSIP No. 871399101 SCHEDULE 13D/A Page 4 of 9
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Advisors IV, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0 shares of Common Stock
NUMBER OF SHARES (see Item 5 below)
BENEFICIALLY OWNED -----------------------------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 1,870,416 shares of Common Stock
WITH (see Item 5 below)
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
0 shares of Common Stock
(see Item 5 below)
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,870,416 shares of Common Stock
(see Item 5 below)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,870,416 shares of Common Stock (see Item 5 below)
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.37% (see Item 5 below)
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14 TYPE OF REPORTING PERSON
PN
--------------------------------------------------------------------------------
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CUSIP No. 871399101 SCHEDULE 13D/A Page 5 of 9
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Management IV, L.P.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0 shares of Common Stock
NUMBER OF SHARES (see Item 5 below)
BENEFICIALLY OWNED -----------------------------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 1,870,416 shares of Common Stock
WITH (see Item 5 below)
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
0 shares of Common Stock
(see Item 5 below)
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,870,416 shares of Common Stock
(see Item 5 below)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,870,416 shares of Common Stock (see Item 5 below)
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.37% (see Item 5 below)
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14 TYPE OF REPORTING PERSON
PN
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CUSIP No. 871399101 SCHEDULE 13D/A Page 6 of 9
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This Amendment No. 2 (this "Report") amends the Statement on Schedule
13D, filed with the Securities and Exchange Commission ("SEC") on March 6,
2000 (the "Initial Schedule 13D"), as amended by Amendment No. 1 on Schedule
13D/A, filed with the SEC on February 20, 2003 and Amendment No. 2 on Schedule
13D/A, filed with the SEC on March 12, 2003, relating to shares of common
stock, $.01 par value per share (the "Common Stock"), of Sylvan Learning
Systems, Inc., a Maryland corporation (the "Issuer"). Pursuant to Rule 13d-2
of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, the undersigned hereby file this Report on behalf of Apollo
Investment Fund IV, L.P., a Delaware limited partnership ("Fund IV"), Apollo
Overseas Partners IV, L.P., an exempted limited partnership registered in the
Cayman Islands ("Overseas IV"), Apollo Advisors IV, L.P. a Delaware limited
partnership ("Advisors IV") and Apollo Management IV, L.P., a Delaware limited
partnership ("Management IV"). Fund IV, Overseas IV, Advisors IV and
Management IV are referred to collectively as the "Reporting Persons."
Unless otherwise indicated, each capitalized term used but not
otherwise defined herein shall have the meaning assigned to such term in the
Initial Schedule 13D.
Item 4. Purpose of Transaction.
Item 4 of the Initial Schedule 13D is hereby amended and restated as
follows:
Pursuant to a Purchase Agreement, dated as of February 23, 2000, by
and among Fund IV, Overseas IV and the Issuer, Fund IV and Overseas IV
purchased an aggregate of $80 million principal amount of the Convertible
Debentures. Concurrently therewith, the Issuer and Management IV, on behalf of
Fund IV and Overseas IV (the "Apollo Entities"), entered into an Investors
Agreement (the "Investors Agreement"), generally providing for transfer
restrictions on the Convertible Debentures, nomination rights for two board
designees, restrictions on purchases of voting securities of the Issuer and
certain corporate governance rights, and the Issuer entered into a
Registration Rights Agreement granting certain registration rights to the
Apollo Entities. In connection with the closing of the transactions
contemplated by the Asset Purchase Agreement described below, the Apollo
Entities and the Issuer amended certain provisions of the Investors Agreement
(the "Investors Amendment"). With the exceptions of an amended right of the
Apollo Entities to nominate one person to the board of directors of Issuer as
long as the Apollo Entities own, directly or upon conversion of the
Convertible Debentures, at least 1,000,000 shares of Common Stock, and
amendments regarding the restrictions on the purchase of voting securities of
the Issuer, the Investors Amendment eliminated all of the remaining covenants
contained in the Investors Agreement.
On March 10, 2003, Educate Operating Company, LLC, a Delaware
limited liability company ("Operating Company"), Educate, Inc., a Delaware
corporation, Apollo Sylvan, a Delaware limited liability company, Apollo
Sylvan II, a Delaware limited liability company (collectively, the
"Purchasers"), the Issuer, Sylvan Ventures, LLC, a Delaware limited
liability company ("Ventures"), and Management IV entered into an Asset
Purchase Agreement, which was subsequently amended on June 30, 2003 (the
"Asset Purchase Agreement") pursuant to which the Issuer and Ventures agreed
to sell the Issuer's K-12 educational business and Ventures'
CUSIP No. 871399101 SCHEDULE 13D/A Page 7 of 9
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interests in its subsidiaries, Connections Academy, Inc. and eSylvan, Inc.
(collectively, the "Targeted Businesses"). The Purchasers were formed in
connection with this transaction.
On June 30, 2003, in connection with the closing of the transactions
under the Asset Purchase Agreement (the "Closing"), the Purchasers delivered
to the Issuer and Ventures the purchase price for the Targeted Businesses,
which included an amount of the Issuer's 5% Convertible Subordinated
Debentures due 2010 (the "Convertible Debentures"), otherwise held by the
Purchasers, with a Debenture Value (as defined in the Asset Purchase
Agreement) of $72,450,000. The Debenture Value was calculated in accordance
with the Asset Purchase Agreement, and was based upon the average closing
price for the 15 trading days preceding the Closing. Using the formulas set
forth in the Asset Purchase Agreement and the conversion price of $15.735 of
principal amount of Convertible Debentures per share of the Issuer's Common
Stock, the Purchasers, on behalf of the Reporting Persons, delivered
$50,569,000 face amount of Debentures to the Issuer, which represents
3,213,791 shares of Common Stock and a Debenture Value of $72,450,000.
The Reporting Persons have the right to change their investment
intent, to propose one or more possible transactions to the Board of Directors
of the Issuer, to acquire additional Convertible Debentures or shares of
Common Stock from time to time or to sell or otherwise dispose of all or part
of the Convertible Debentures or shares of Common Stock beneficially owned by
them in any manner permitted by law.
Item 5. Interest in Securities of the Issuer.
Parts (a) and (b) of Item 5 of the Initial Schedule 13D are hereby
amended and restated as follows:
(a) The calculations included herein are based on a total of
42,846,531 shares of Common Stock outstanding as of the date of this Report
(40,976,115 shares of Common Stock outstanding as of May 12, 2003, as last
reported by the Issuer in its Form 10-Q filed with the SEC on May 15, 2003,
which shares do not include convertible securities, plus 1,870,416 shares of
Common Stock issuable to the Reporting Persons upon conversion of the
Convertible Debentures). As set forth in Item 4, in connection with the
Closing, the Purchasers, on behalf of the Reporting Persons, delivered to the
Issuer $50,569,000 face amount of Convertible Debentures as part of the
purchase price for the Targeted Businesses. The Reporting Persons, after
giving effect to the transactions contemplated by the Asset Purchase
Agreement, have, by reason of their ownership, beneficial ownership of an
aggregate of $29,431,000 principal amount of Debentures, which at the
conversion price of $15.735 of principal amount of Convertible Debentures per
share of the Issuer's Common Stock, represents 1,870,416 shares of Common
Stock and approximately 4.37% of the outstanding shares of Common Stock.
(b) Fund IV has sole voting and sole dispositive power with respect
to an aggregate of 1,771,973 shares of Common Stock. Overseas IV has sole
voting and sole dispositive power with respect to an aggregate of 98,443
shares of Common Stock. Advisors IV, as the general partner of Fund IV and the
managing general partner of Overseas IV, and Apollo Management IV, as the
manager of Fund IV and Overseas IV, may be deemed to have voting and
dispositive power over
CUSIP No. 871399101 SCHEDULE 13D/A Page 8 of 9
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the shares of Common Stock over which Fund IV and Overseas IV, respectively,
have voting and dispositive power.
Item 7. Materials to Be Filed as Exhibits.
Exhibit 1* Asset Purchase Agreement, dated as of March 10, 2003, by
and among Educate Operating Company, LLC, Apollo Sylvan,
LLC, Apollo Sylvan II, LLC, Educate, Inc., Sylvan
Learning Systems, Inc., Sylvan Ventures, LLC and Apollo
Management IV, L.P.
Exhibit 2 First Amendment to the Asset Purchase Agreement dated as
of June 30, 2003, by and among Educate Operating
Company, LLC, Apollo Sylvan, LLC, Apollo Sylvan II, LLC,
Educate, Inc., Sylvan Learning Systems, Inc., Sylvan
Ventures, LLC and Apollo Management IV, L.P.
Exhibit 3 First Amendment to the Investors Agreement dated as of
June 30, 2003, by and between Sylvan Learning Systems,
Inc. and Apollo Management IV, L.P.
* Previously filed with Amendment No. 2 to Schedule 13D/A, which was
filed on March 12, 2003.
CUSIP No. 871399101 SCHEDULE 13D/A Page 9 of 9
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 3, 2003
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors IV, L.P., its General Partner
By: Apollo Capital Management IV, Inc., its General Partner
By: /s/ Michael D. Weiner
-----------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital Management IV, Inc.
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors IV, L.P., its Managing General Partner
By: Apollo Capital Management IV, Inc., its General Partner
By: /s/ Michael D. Weiner
-----------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital Management IV, Inc.
APOLLO ADVISORS IV, L.P.
By: Apollo Capital Management IV, Inc., its General Partner
By: /s/ Michael D. Weiner
-----------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital Management IV, Inc.
APOLLO MANAGEMENT IV, L.P.
By: AIM Management IV, Inc.
By: /s/ Michael D. Weiner
-----------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital Management IV, Inc.