UNITED STATES 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: June 6, 2011
Date of earliest event reported: May 31, 2011
AdCare Health Systems, Inc.
(Exact Name of Registrant as specified in its Charter)
|
Ohio (State or Other Jurisdiction of Incorporation) |
333-131542 (Commission file Number) |
31-1332119
(IRS Employer Identification No.)
5057 Troy Road, Springfield, Ohio 45502-9032
(Address of principal executive offices) (Zip code)
Registrant’s Telephone Number, Including Area Code
(937) 964-8974
Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)).
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Item 2.01. Completion of Acquisition or Disposition of Assets.
On December 3, 2010, AdCare Health Systems, Inc. (the “Company”) filed Form 8-K reporting under Item 1.01 its entry into a purchase agreement to acquire three skilled nursing facilities located in Georgia. On May 5, 2011, the Company filed Form 8-K reporting under Item 2.01 reporting the completion of the acquisition of two of the three skilled nursing facilities known as Southland Care Center and Autumn Breeze Healthcare Center. The December 3, 2010 and May 5, 2011, Forms 8-K are incorporated by reference in this filing.
On May 31, 2011, CP Property Holdings, LLC, a wholly owned subsidiary of the Company completed the acquisition of the operations of and selected assets of a skilled nursing facility from SPTIHS Properties Trust and Five Star Quality Care-GA, LLC. The property acquired is known as College Park Healthcare Center (“CPHC”), a 100 bed skilled nursing facility located in College Park, Georgia. The purchase price was $5,250,000.
Through separate Operations Transfer Agreements, the Company obtained control of the CPHC facility effective June 1, 2011. The Company had paid $500,000 in earnest money upon entering the purchase agreement and an additional $400,000 to extend the closing dates to April 29, 2011, for the Southland Care Center and Autumn Breeze Healthcare Center facilities and to extend the closing date to May 31, 2011 for CPHC.
To complete the acquisition of CPHC, the Company entered a business loan agreement for $2,840,000 (the “Loan 1”). The Loan 1 matures on May 1, 2031, accrues interest at a rate of 6.25% per annum and may be repaid without penalty. Loan 1 is secured by the CPHC facility and guaranteed by AdCare Health Systems, Inc., and by Christopher Brogdon and his spouse. Additionally, the Company entered a short term loan agreement for $2,034,000 (the “Loan 2”). Loan 2 is secured by the CPHC facility as well as the facility known as Autumn Breeze Healthcare Center. Additionally, the Company has assigned certificates of deposit as additional collateral in the initial amount of $500,000. The Company will be required to pledge additional certificates of deposit over the next eight months in the event the loan is not refinanced. Loan 2 is also guaranteed by Christopher Brogdon and his spouse. The Company plans to replace this short term financing with permanent long term financing prior to Loan 2’s maturity date.
Item 8.01 Other Matters
On June 1, 2011, the Company issued a press release announcing the completion of the acquisitions described under Item 2.01 above. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.
The information in this Item 8.01 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth in such filing.
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Item 9.01. Financial Statements and Exhibits.
a.
Financial Statements of Business Acquired. The financial statements required by Item 9.01(a) are not included with this report. The Company intends to file these financial statements by amendment not later than 71 calendar days after the date this Form 8-K is required to be filed with the Securities and Exchange Commission.
b.
Pro Forma Financial Information. The pro forma financial information required under 9.01(b) is not included with this report. The Company intends to file this pro forma financial information by amendment no later than 71 calendar days after the date this Form 8-K is required to be filed with the Securities and Exchange Commission.
|
Exhibit Number |
Description of Exhibit |
|
10.1 |
CP Property Holdings, LLC Business Loan Agreement dated May 25, 2011 |
|
10.2 |
CP Property Holdings, LLC Loan Agreement dated May 27, 2011 |
|
99.1 |
Press Release dated June 1, 2011 |
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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 hereto duly authorized.
Date: June 6, 2011
ADCARE HEALTH SYSTEMS, INC.
By: /s/Martin D. Brew
Name: Martin D. Brew
Title: Chief Financial Officer
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Exhibit 10.1
Exhibit 10.2
Exhibit 99.1
AdCare Health Systems Closes Acquisition of Skilled Nursing Center in Georgia
SPRINGFIELD, Ohio, June 1, 2011 - AdCare Health Systems, Inc. (NYSE AMEX: ADK ), a leading skilled nursing and assisted living provider, has closed the previously announced acquisition of a skilled nursing facility in College Park, Georgia. The addition of this facility completes the three acquisitions in Georgia previously announced, following the recent acquisitions in Dublin and Marietta, Georgia. The three facilities were purchased for an aggregate price of $18 million.
The facilities have on aggregate 335 beds that generate an estimated $16.4 million in annualized revenues, and their addition is anticipated to be immediately accretive to AdCare's earnings.
AdCare has initially financed the acquisitions through bank loans. These loans are expected to be refinanced with a loan guaranteed by the United States Department of Agriculture (USDA) on the Dublin facility and Small Business Administration loans for the Marietta and College Park facilities.
Combined with other transactions announced and in the process of closing, AdCare's estimated annualized revenue run-rate is expected to exceed $175 million. This would represent an increase of more than 229% over the company's revenues in 2010, and an increase of more than 555% over revenues in 2009 when it initiated its current M&A campaign.
"The acquisition of College Park nursing facility is among the some 20 facilities we've purchased or leased since we began our M&A program in the fall of 2009," said Chris Brogdon, AdCare's vice chairman and chief acquisitions officer. "This latest facility expands our presence in Georgia, joining the 12 facilities we already operate in the state. The addition of this Georgia facility is in line with our expansion into the Southeast."
"We're also considering a number of attractive new opportunities around our home base in the Midwest," added Brogdon, "with our M&A program continuing to be a major focus for us in 2011."
About
AdCare Health Systems
AdCare Health Systems, Inc. (NYSE Amex: ADK
) is a recognized innovator in
senior living and health care facility management. AdCare develops, owns and
manages assisted living facilities, nursing homes and retirement communities, as
well as provides home health care services. Since its inception in 1988,
AdCare's mission has been to provide the highest quality of healthcare services
to the elderly. For more information about AdCare, visit
www.adcarehealth.com
.
Important
Cautions Regarding Forward-Looking Statements
Statements contained in
this press release that are not historical facts may be forward-looking
statements within the meaning of federal law. Such statements can be identified
by the use of forward-looking terminology, such as "believes," "expects, "
"plans," "intends," "anticipates" and variations of such words or similar
expressions, but their absence does not mean that the statement is not
forward-looking. Statements in this announcement that are forward-looking
include, but are not limited to, that including the transactions announced and
are in the process of closing, the company's annualized revenue run-rate will
exceed $175 million. Such forward-looking statements reflect management's
beliefs and assumptions and are based on information currently available to
management, and involve known and unknown risks, results, performance
or achievements of AdCare which may differ materially from those expressed or implied in such statements. Such factors are identified in the public filings made by AdCare with the SEC and include, among others, AdCare's ability to secure lines of credit and/or an acquisition credit facility, find suitable acquisition properties at favorable terms, changes in the health care industry because of political and economic influences, changes in regulations governing the industry, changes in reimbursement levels including those under the Medicare and Medicaid programs and changes in the competitive marketplace. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements. Except where required by law, AdCare undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.
Company Contacts
Boyd P. Gentry, Co-CEO
Chris Brogdon, Vice Chairman & CAO
AdCare Health Systems, Inc.
Tel (937) 964-8974
info@adcarehealth.com
Investor Relations
Ron Both or Geoffrey Plank
Liolios Group, Inc.
Tel (949) 574-3860
info@liolios.com