SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date earliest event reported) December 21, 2001
CORAM HEALTHCARE CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 1-11343 33-0615337
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1675 Broadway, Suite 900, Denver, Colorado 80202
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(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code (303) 292-4973
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(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ]
ITEM 5. OTHER EVENTS
On August 8, 2000, Coram Healthcare Corporation ("CHC") and its
wholly-owned first tier subsidiary, Coram, Inc. ("CI") (collectively, the
"Debtors"), filed voluntary petitions under Chapter 11 of the United States
Bankruptcy Code. As of such date, the Debtors are operating as
debtors-in-possession subject to the jurisdiction of the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
On December 21, 2001, the Bankruptcy Court issued an order denying
confirmation of the Debtors' Second Joint Plan of Reorganization (the "Second
Joint Plan"). A copy of the related December 24, 2001 press release is attached
hereto as Exhibit 99.1.
On December 28, 2001, the Debtors announced that they filed a Notice of
Appeal in the Bankruptcy Court related to the December 21, 2001 Bankruptcy Court
decision denying confirmation of the Debtors' Second Joint Plan. An appeal will
be filed in the United States District Court for the District of Delaware. A
copy of the related December 28, 2001 press release is attached hereto as
Exhibit 99.2.
Effective December 31, 2001, the Debtors converted approximately $23
million in principal and unpaid accrued interest of their Series A Senior
Subordinated Unsecured Notes to equity in the form of CI Series A Preferred
Stock, $0.001 par value per share (the "Preferred Stock"), in order for CHC and
its subsidiaries to maintain compliance with the public-company exception to the
physician ownership and referral prohibitions of the Omnibus Budget
Reconciliation Act of 1993 (commonly referred to as "Stark II"). Documents
related to such transaction are attached hereto as follows:
(a) A copy of the January 2, 2002 press release (Exhibit 99.3);
(b) Exchange Agreement dated as of December 31, 2001, by and among
Coram, Inc. and the Noteholders (as defined below) (Exhibit
99.4);
(c) Amendment No. 1 to Stockholder Agreement dated as of December
31, 2001 (Exhibit 99.5);
(d) Amendment No. 5 to Securities Exchange Agreement dated as of
December 31, 2001 (Exhibit 99.6);
(e) Certificate of Amendment of Certificate of Designation of
Coram, Inc. filed on December 31, 2001 (Exhibit 99.7); and
(f) Bylaws of Coram, Inc., as amended and restated on December 31,
2001 (Exhibit 99.8).
Exchange Agreements
On December 29, 2000, CI executed the Exchange Agreement with Goldman Sachs
Credit Partners, L.P., Cerberus Partners, L.P. ("Cerberus") and Foothill Capital
Corporation ("Foothill") (collectively, the "Noteholders") to exchange
approximately $97.7 million of Series A Senior Subordinated Unsecured Notes (the
"Series A Notes") and approximately $11.6 million of accrued but unpaid interest
on the Series A Notes and Series B Senior Subordinated Convertible Unsecured
Notes (the "Series B Notes") for 905 shares of Preferred Stock (issued on a pro
rata basis), having a liquidation preference of approximately $109.3 million.
On December 31, 2001, CI executed a second Exchange Agreement with the
Noteholders to exchange $21 million of the Series A Notes and approximately $1.9
million of accrued but unpaid interest on the Series A Notes for 189.5705 shares
of Preferred Stock (issued on a pro rata basis), having a liquidation preference
of approximately $22.9 million. The Preferred Stock has an aggregate liquidation
preference of approximately $149.9 million as of December 31, 2001.
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Preferred Stock
The authorized Preferred Stock consists of 10,000 shares, and the only
shares issued and outstanding at December 31, 2001 are those issued pursuant to
the aforementioned Exchange Agreements and the corresponding dividend
requirements for the year ended December 31, 2001. So long as any shares of the
Preferred Stock are outstanding, the Noteholders are entitled to receive
preferential dividends at a rate of 15% per annum on the liquidation preference
amount. Dividends are payable on a quarterly basis on the last business day of
each calendar quarter. Prior to the effective date of the Debtors' plan of
reorganization, dividends are to be paid in the form of additional shares of
Preferred Stock having a liquidation preference amount equal to such dividend
amount. Subsequent to the effective date of a plan of reorganization, at CI's
election, dividends will be payable in cash or shares of common stock of CI
having a fair value equal to such cash dividend payment, as determined by a
consensus of investment banking firms acceptable to the Noteholders. In the
event of default, the dividend rate shall increase to 16% per annum until such
time that the event of default is cured. All dividends are to include tax
indemnities and gross-up provisions (computed subsequent to CI's tax fiscal year
end in connection with the preparation of the income tax returns) as are
appropriate for transactions of this nature.
The agreements, organizational documents and bylaws underlying the
Preferred Stock include usual and customary affirmative and negative covenants
for a security of this nature, including, but not limited to (i) providing
timely access to certain financial and business information; (ii) authorization
to communicate with independent certified public accountants with respect to the
financial conditions and other affairs of the company; (iii) maintaining tax
compliance; (iv) maintaining adequate insurance coverage; (v) adherence to
limitations on transactions with affiliates; (vi) adherence to limitations on
acquisitions or investments; (vii) adherence to limitations on the liquidation
of assets or businesses; and (viii) adherence to limitations on entering into
additional indebtedness.
The agreements, organizational documents and bylaws underlying the
Preferred Stock also include special provisions regarding the Preferred Stock
voting rights. These provisions generally include terms and conditions
pertaining to certain "triggering events" whereby the Preferred Stock voting
rights would become effective. Generally speaking, such "triggering events"
include notice of a meeting, distribution of a written consent in lieu of a
meeting, or entry of an order of court compelling a meeting, of the stockholders
or the Board of Directors, of CI or CHC: (i) to approve appointment, removal or
termination of any member of the Board of Directors of CI or CHC; or (ii) to
approve any change in the rights of any person to do so. "Triggering Events"
related to a notice of a meeting or the distribution of a written consent of the
stockholders or Board of Directors of CI cannot occur without a majority of the
independent directors of CHC previously approving such meeting or written
consent. Substantial consummation of a plan of reorganization will also
constitute a "triggering event." The specific "triggering event" provisions are
fully set forth in Amendment No. 1 to Stockholder Agreement (Exhibit 99.5).
Subsequent to the occurrence of a "triggering event," each share of the
Preferred Stock will be entitled to one vote and shall entitle the holder
thereof to vote on all matters voted on by the holders of the common stock of
CI, voting together as a single class with other shares entitled to vote at all
meetings of the stockholders of CI. As of December 31, 2001, the Preferred Stock
would have approximately 55.4% of CI's total voting power upon the occurrence of
a "triggering event." Subsequent to the occurrence of a "triggering event," the
holders of Preferred Stock will also have the right to appoint four directors
out of a total of seven directors to CI's Board of Directors, and a quorum in
meetings of the Board of Directors shall be constituted by the presence of a
majority of the directors, at least two of whom must be directors appointed by
the holders of Preferred Stock. Prior to the occurrence of a "triggering event,"
the holders of Preferred Stock have the right to appoint two directors to CI's
Board of Directors. Alternatively, if the holders of the Preferred Stock elect
no Board of Directors representation, they retain the right to appoint three
observers.
The Preferred Stock is redeemable at the option of CI, in whole or in part,
at any time, on not less than thirty days prior written notice, at the
liquidation preference amount plus any accrued but unpaid dividends. Redemption
may be made in the form of cash payments only.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit
Number Description of Document
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99.1 Press release, issued December 24, 2001, announcing the United
States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") order denying confirmation of the Second Joint
Plan of Reorganization of Coram Healthcare Corporation ("CHC") and
Coram, Inc. ("CI").
99.2 Press release, issued December 28, 2001, announcing the Notice of
Appeal filed by CHC and CI in the Bankruptcy Court related to the
denial of confirmation of the Second Joint Plan of Reorganization
of CHC and CI.
99.3 Press release, issued January 2, 2002, announcing the December 31,
2001, conversion of debt to equity in the form of CI Series A
Preferred Stock, $0.001 par value per share (the "Preferred
Stock").
99.4 Exchange Agreement dated as of December 31, 2001, by and among CI
and Goldman Sachs Credit Partners, L.P., Cerberus Partners, L.P.
("Cerberus") and Foothill Capital Corporation ("Foothill")
(collectively, the "Noteholders") whereby the Noteholders exchanged
$21 million of Series A Senior Subordinated Unsecured Notes (the
"Series A Notes") and approximately $1.9 million of accrued but
unpaid interest thereon for the period from December 29, 2000 to
December 31, 2001 for 189.5705 shares of Preferred Stock.(a)
99.5 Amendment No. 1 to Stockholder Agreement dated as of December 31,
2001, by and among CI, Goldman Sachs & Co., Cerberus and Foothill
providing for certain "triggering events" for the Preferred Stock
voting rights to become effective.(a)
99.6 Amendment No. 5 to Securities Exchange Agreement dated as of
December 31, 2001, by and among CI and the Noteholders as further
consideration for the December 31, 2001 Exchange Agreement whereby
CI, CHC and the Noteholders have agreed to amend the maturity of
the Series A Notes and Series B Senior Subordinated Convertible
Unsecured Notes to June 30, 2002.(a)
99.7 Certificate of Amendment of the Certificate of Designation of CI,
as filed with the Secretary of State of the State of Delaware on
December 31, 2001, related to changes in the Preferred Stock voting
rights.(a)
99.8 Bylaws of CI, as amended and restated on December 31, 2001, related
to providing for certain "triggering events" for the Preferred
Stock voting rights to become effective.
(a) Certain exhibits and schedules of this Exhibit have been
omitted. The registrant agrees to furnish supplementally any
omitted schedule or exhibit to the Securities and Exchange
Commission.
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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.
CORAM HEALTHCARE CORPORATION
Date: January 10, 2002 By: /s/ SCOTT R. DANITZ
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Name: Scott R. Danitz
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
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EXHIBIT INDEX
Exhibit
Number Description of Document
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99.1 Press release, issued December 24, 2001, announcing the United
States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") order denying confirmation of the Second Joint
Plan of Reorganization of Coram Healthcare Corporation ("CHC") and
Coram, Inc. ("CI").
99.2 Press release, issued December 28, 2001, announcing the Notice of
Appeal filed by CHC and CI in the Bankruptcy Court related to the
denial of confirmation of the Second Joint Plan of Reorganization
of CHC and CI.
99.3 Press release, issued January 2, 2002, announcing the December 31,
2001, conversion of debt to equity in the form of CI Series A
Preferred Stock, $0.001 par value per share (the "Preferred
Stock").
99.4 Exchange Agreement dated as of December 31, 2001, by and among CI
and Goldman Sachs Credit Partners, L.P., Cerberus Partners, L.P.
("Cerberus") and Foothill Capital Corporation ("Foothill")
(collectively, the "Noteholders") whereby the Noteholders exchanged
$21 million of Series A Senior Subordinated Unsecured Notes (the
"Series A Notes") and approximately $1.9 million of accrued but
unpaid interest thereon for the period from December 29, 2000 to
December 31, 2001 for 189.5705 shares of Preferred Stock.
99.5 Amendment No. 1 to Stockholder Agreement dated as of December 31,
2001, by and among CI, Goldman Sachs & Co., Cerberus and Foothill
providing for certain "triggering events" for the Preferred Stock
voting rights to become effective.
99.6 Amendment No. 5 to Securities Exchange Agreement dated as of
December 31, 2001, by and among CI and the Noteholders as further
consideration for the December 31, 2001 Exchange Agreement whereby
CI, CHC and the Noteholders have agreed to amend the maturity of
the Series A Notes and Series B Senior Subordinated Convertible
Unsecured Notes to June 30, 2002.
99.7 Certificate of Amendment of the Certificate of Designation of CI,
as filed with the Secretary of State of the State of Delaware on
December 31, 2001, related to changes in the Preferred Stock voting
rights.
99.8 Bylaws of CI, as amended and restated on December 31, 2001, related
to providing for certain "triggering events" for the Preferred
Stock voting rights to become effective.