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 (Date of earliest event reported) August 5, 2014
(July 30, 2014)
BROOKDALE SENIOR LIVING INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-32641
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20-3068069
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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111 Westwood Place, Suite 400, Brentwood, Tennessee
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37027
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code (615) 221-2250
(Former name or former address, if changed since last report.)
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 A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Introduction.
On July 31, 2014, Brookdale Senior Living Inc., a Delaware corporation (“Brookdale”), completed the previously announced merger contemplated by
that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of February 20, 2014, by and among Emeritus Corporation, a Washington corporation (“Emeritus”), Brookdale and Broadway Merger Sub Corporation, a
Delaware corporation (“Merger Sub”) and wholly owned subsidiary of Brookdale. Pursuant to the Merger Agreement, Merger Sub merged with and into Emeritus (the “Merger”), with Emeritus continuing as the surviving corporation
in the Merger and a wholly owned subsidiary of Brookdale.
Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement):
(i) each share of common stock, par value $0.0001 per share (“Emeritus Common Stock”), of Emeritus outstanding immediately prior to the Effective Time (other than shares (x) held by Brookdale or Emeritus or any of their wholly
owned subsidiaries or (y) with respect to which appraisal rights were properly demanded and not withdrawn under Washington law) was automatically cancelled and converted into the right to receive consideration equal to 0.95 (the “Exchange
Ratio”) of a share of common stock, par value of $0.01, of Brookdale (“Brookdale Common Stock”), with cash paid in lieu of fractional shares; (ii) each share of Emeritus restricted stock outstanding immediately prior to the
Effective Time, whether or not then vested, became fully vested and was treated as a share of Emeritus Common Stock, and was cancelled and converted in the same way as all other outstanding shares of Emeritus Common Stock, as described above; and
(iii) each Emeritus stock option outstanding immediately prior to the Effective Time was automatically cancelled and converted into the right of the holder to receive a number of whole shares of Brookdale Common Stock, determined by
(A) multiplying (x) the total number of shares subject to Emeritus stock option by (y) an amount equal to the “Applicable Closing Price,” less the exercise price per share for such option, and (B) dividing such amount
by the ten-day volume weighted average closing price of Brookdale Common Stock (the “VWAP”). The number of shares of Brookdale Common Stock issued to holders of Emeritus stock options and to certain electing holders of Emeritus restricted
stock was reduced to cover the minimum amount of any applicable tax withholdings. Emeritus stock options with an exercise price that was equal to or greater than the “Applicable Closing Price” were terminated and ceased to be outstanding,
without any payment of consideration. The “Applicable Closing Price” for purposes of the Merger Agreement is calculated by multiplying the VWAP by the Exchange Ratio.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to and qualified in
its entirety by reference to the Merger Agreement, a copy of which was attached as Exhibit 2.1 to Brookdale’s Current Report on Form 8-K filed with the SEC on February 21, 2014, and the terms of which are incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The information provided in the Introduction to this Report is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
As a result of the Merger, as of the Effective Time, Brookdale directly or indirectly acquired entities that are lessees under operating and capital leases
covering 311 communities, as well as certain other leases such as office leases and leases associated with Emeritus’ Nurse on Call business. Brookdale also directly or indirectly acquired entities which own 185 communities. The community leases
contain customary terms, including assignment and change of control restrictions, maintenance and capital expenditure obligations, termination provisions and financial covenants. In connection with the closing of the Merger, Brookdale has entered
into guarantees of certain of these leases.
In addition, as a result of the Merger, as of the Effective Time, Brookdale directly or indirectly assumed
approximately $1.4 billion aggregate principal amount of existing mortgage indebtedness of Emeritus. The mortgage loans are collateralized by a total of 182 underlying communities, bear interest either at fixed rates at a weighted average of 6.07%
per annum or at variable rates at a weighted average of 5.19% per annum (in each case, as of June 30, 2014), and have remaining maturities ranging from approximately three months to 33 years. The mortgage loans contain customary terms including
assignment and change of control restrictions, acceleration provisions and financial covenants. In connection with the closing of the Merger, Brookdale has entered into guarantees of certain of these debt arrangements.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Pursuant to the Merger Agreement and the letter agreement, by and between Brookdale and Granger Cobb, the former President and Chief
Executive Officer of Emeritus, as amended and restated as of May 22, 2014 (the “Letter Agreement”), Mr. Cobb’s employment with Emeritus terminated as of the Effective Time and he was appointed to Brookdale’s board of
directors as a Class I director (with a term to expire at Brookdale’s 2017 Annual Meeting of Stockholders). Mr. Cobb has not been appointed to serve on any committee of Brookdale’s board of directors.
In addition, the Letter Agreement provides that Mr. Cobb will provide consulting services to Brookdale beginning at the Effective Time and ending on the
later of the third anniversary thereof or such later date as is mutually agreed between Mr. Cobb and Brookdale. In his role as a consultant, Mr. Cobb will provide services and advice regarding integration and transition matters, serve as
an advisor to members of Brookdale’s senior management team, serve as an advisory member to Brookdale’s Senior Management Executive Committee, and assist with other special projects as requested.
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In consideration of the consulting services, Mr. Cobb will receive an annual cash consulting fee of
$265,000, along with reimbursement of up to $35,000 per year for premiums paid by Mr. Cobb in respect of certain life and disability insurance arrangements. In addition, Mr. Cobb will receive a grant of Brookdale restricted stock with a
grant date value of $1.0 million, which will vest in equal annual installments over the three year period following the grant date, subject to his continued service as a consultant on the applicable vesting date. Mr. Cobb will not receive any
cash or equity compensation for his service on Brookdale’s board of directors while he is also serving as a consultant to Brookdale, but he will be entitled to receive compensation as an outside director if he continues serving on
Brookdale’s board of directors following the end of the consulting period.
On July 31, 2014, Kristin A. Ferge, previously Brookdale’s
Executive Vice President and Treasurer, was named Brookdale’s Executive Vice President, Chief Accounting Officer and Treasurer and assumed the responsibilities of principal accounting officer from Mark W. Ohlendorf, who will continue serving as
Brookdale’s President and Chief Financial Officer and will retain the responsibilities of principal financial officer. The biographical information with respect to Ms. Ferge contained in the Definitive Proxy Statement on Schedule 14A for
the 2014 Annual Meeting of Stockholders of Brookdale filed with the SEC on June 6, 2014 is incorporated by reference herein.
Item 5.03.
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On July 30, 2014, pursuant to the terms of the Merger Agreement and as
approved by the stockholders of Brookdale at a special meeting held on July 10, 2014, Brookdale filed an amendment to its Amended and Restated Certificate of Incorporation (the “Charter Amendment”) with the Secretary of State of the
State of Delaware. The Charter Amendment reflects an increase in the number of authorized shares of Brookdale Common Stock from 200 million to 400 million.
Item 8.01. Other Events.
On July 31, 2014,
Brookdale issued a press release announcing the Merger. A copy of the press release is attached as Exhibit 99.1 hereto, and is incorporated by reference therein.
Item 9.01. Financial Statements and Exhibits.
(a)
Financial statements of businesses acquired
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The
audited consolidated financial statements of Emeritus Corporation as of December 31, 2013 and 2012 and for each of the years in the three-year period ended December 31, 2013 and the unaudited condensed consolidated financial statements of
Emeritus Corporation as of March 31, 2014 and December 31, 2013 and for the three months ended March 31, 2014 and 2013 were filed on Brookdale’s Current Report on Form 8-K on May 27, 2014 as Exhibits 99.2 and 99.3,
respectively, and are incorporated in this Item 9.01(a) by reference.
(b)
Pro forma financial information
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The unaudited pro forma condensed consolidated financial statements of Brookdale as of and for the three months ended March 31, 2014 and for the year
ended December 31, 2013, giving effect to the Merger and certain transactions entered into with HCP, Inc., were filed on Brookdale’s Current Report on Form 8-K filed on May 27, 2014, as Exhibit 99.1 and are incorporated in this
Item 9.01(b) by reference.
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(d)
Exhibits
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Exhibit
No.
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Description
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3.1
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Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Brookdale Senior Living Inc., dated July 30, 2014.
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99.1
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Press release, dated July 31, 2014.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
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August 5, 2014
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BROOKDALE SENIOR LIVING INC.
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By:
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/s/ Chad C. White
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Name: Chad C. White
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Title: Senior Vice President, Co-General Counsel and Secretary
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INDEX TO EXHIBITS
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Exhibit
No.
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Description
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3.1
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Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Brookdale Senior Living Inc., dated July 30, 2014.
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99.1
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Press release, dated July 31, 2014.
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Exhibit 3.1
CERTIFICATE OF AMENDMENT
TO
THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
BROOKDALE SENIOR LIVING INC.
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Pursuant to Section 242
of the General Corporation Law
of
the State of Delaware
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Brookdale Senior Living Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does
hereby certify as follows:
FIRST
: The first sentence of Article Four, Part A, Section 1 of the Corporation’s Amended
and Restated Certificate of Incorporation, as amended to date, is hereby amended to read in its entirety as set forth below:
“The
total number of shares of Capital Stock (as defined below) which the Corporation has authority to issue is 450,000,000 shares, consisting of:
a. 400,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”); and
b. 50,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”).”
SECOND
: The foregoing amendment has been duly adopted in accordance with Section 242 of the General Corporation Law of the
State of Delaware (“DGCL”) at a special meeting of the stockholders of the Corporation that was duly called and held upon notice in accordance with Section 222 of the DGCL, at which meeting the necessary number of shares as required
by the DGCL were voted in favor of this amendment.
IN WITNESS WHEREOF
, the Corporation has caused this Certificate of Amendment to
be executed in its corporate name by the undersigned duly authorized officer as of this 30
th
day of July, 2014.
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By:
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/s/ Chad C. White
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Name: Chad C. White
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Title: Vice President, Co-General Counsel
and Secretary
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Exhibit 99.1
Brookdale Senior Living and Emeritus Senior Living Complete Merger
Granger Cobb Appointed to the Board of Directors
Nashville, Tenn. and Seattle, Wash., July 31, 2014 — Brookdale Senior Living Inc. (NYSE: BKD) and Emeritus Corporation today announced the
completion of their merger to create the first national senior living solutions company. The merger transforms Brookdale into the only national full-spectrum senior living solutions company, with over 1,100 communities in 46 states, covering 80% of
the U.S. population.
Andy Smith, Brookdale’s Chief Executive Officer, said, “We are at a transformational point in the history of the company.
With this merger, we will improve our ability to deliver the best, high quality solutions for the growing demographic of aging seniors and their families. Our newly combined company will have incredible size and scale in our industry. We will begin
to leverage this scale to build a national Brookdale brand, create new efficiencies in our operating platform, and drive new innovations to serve our residents. We are excited to welcome the Emeritus associates into the Brookdale family as we build
a bigger, stronger, more dynamic Brookdale for the future.”
Brookdale today also announced the appointment of Granger Cobb to its Board of
Directors. Mr. Cobb has been serving as President and Chief Executive Officer for Emeritus Corporation. He previously served as President, Chief Executive Officer and director of Summerville Senior Living from 2000 until September
2007. Mr. Cobb joined Summerville in 1998 with its acquisition of Cobbco, Inc., a California-based assisted living company founded by Mr. Cobb in 1989. Mr. Cobb is active in several industry associations and has served on the Boards
of Directors of the Assisted Living Federation of America (“ALFA”) and the National Investment Center for the Seniors Housing & Care Industry (“NIC”).
Brookdale CEO Smith said, “We are delighted to have Granger join our board of directors. Granger’s leadership experience and senior living industry
knowledge will be an asset to the board and the company. As the company continues to grow, his insight and rich background will be extremely valuable.”
Additional Information
In accordance with the
terms of the merger agreement, Emeritus shareholders will receive 0.95 of a share of Brookdale common stock in exchange for each share of Emeritus common stock. As of the close of the merger, Emeritus became a wholly owned subsidiary of Brookdale
Senior Living Inc. and will no longer be traded on the New York Stock Exchange. In total, approximately 47.6 million shares of Brookdale common stock are being issued to Emeritus shareholders, representing approximately 27.5 percent of the
173 million total shares outstanding.
About Brookdale Senior Living
Brookdale Senior Living Inc. is a leading owner and operator of senior living communities throughout the United States. The Company is committed to
providing senior living solutions within properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents. Currently Brookdale operates independent living, assisted
living, and dementia-care communities and continuing care retirement centers, with approximately 1,150 communities in 46 states and the ability to serve over 110,000 residents. Through its ancillary services program, the Company also offers a range
of outpatient therapy, home health, personalized living and hospice services. Brookdale’s stock is traded on the New York Stock Exchange under the ticker symbol BKD.
Safe Harbor
Certain items in this press release
and statements made by or on behalf of Brookdale Senior Living Inc. and Emeritus Corporation relating hereto (including statements with respect to the merger of Brookdale and Emeritus) may constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as
“may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,”
“underestimate,” “believe,” “could,” “would,” “project,” “predict,” “continue,” “plan” or other similar words or expressions. Although we believe the expectations
reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and actual results could differ materially from those projected. Factors which could have a material
adverse effect on our operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, the risk associated with the current global economic situation and its
impact upon capital markets and liquidity; changes in governmental reimbursement programs; our inability to extend (or refinance) debt (including our credit and letter of credit facilities) as it matures; the risk that we may not be able to satisfy
the conditions precedent to exercising the extension options associated with certain of our debt agreements; events which adversely affect the ability of seniors to afford our monthly resident fees or entrance fees; the conditions of housing markets
in certain geographic areas; our ability to generate sufficient cash flow to cover required interest and long-term operating lease payments; the effect of our indebtedness and long-term operating leases on our liquidity; the risk of loss of property
pursuant to our mortgage debt and long-term lease obligations; the possibilities that changes in the capital markets, including changes in interest rates and/or credit spreads, or other factors could make financing more expensive or unavailable to
us; our determination from time to time to purchase any shares under the repurchase program; our ability to fund any repurchases; our ability to effectively manage our growth; our ability to maintain consistent quality control; delays in obtaining
regulatory approvals; the risk that we may not be able to expand, redevelop and reposition our communities in accordance with our plans; our ability to complete acquisitions and integrate them into our operations; competition for the acquisition of
assets; our ability to obtain additional capital on terms acceptable to us; a decrease in the overall demand for senior housing; our vulnerability to economic downturns; acts of nature in certain geographic areas; terminations of our resident
agreements and vacancies in the living spaces we lease; early terminations or non-
renewal of management agreements; increased competition for skilled personnel; increased union activity; departure of our key officers; increases in market interest rates; environmental
contamination at any of our facilities; failure to comply with existing environmental laws; an adverse determination or resolution of complaints filed against us; the cost and difficulty of complying with increasing and evolving regulation; risks
relating to the merger of Brookdale and Emeritus, including in respect of unanticipated difficulties and/or expenditures relating to the integration of the companies; litigation relating to the merger; the impact of the transaction on each
company’s relationships with residents, employees and third parties; and the inability to obtain, or delays in obtaining cost savings and synergies from the merger; as well as other risks detailed from time to time in our filings with the
Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to
reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
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Contacts:
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Brookdale Senior Living
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Investors:
Ross Roadman (615) 564-8104
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Media:
Julie K. Davis (615) 564-8225
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rroadman@brookdaleliving.com
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jkdavis@brookdaleliving.com
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