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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) December 21, 1998
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MATRIA HEALTHCARE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20619 58-2205984
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1850 Parkway Place, Marietta, Georgia 30067
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 423-4500
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 21, 1998, Matria Healthcare, Inc., a Delaware
corporation ("Matria"), and Gainor Medical Management, L.L.C., a Georgia
limited liability company ("Gainor Medical"), executed a Purchase and Sale
Agreement (the "Purchase and Sale Agreement") pursuant to which Matria will
purchase all of the business and assets of Gainor Medical (other than those
assets excluded by the terms of the Purchase and Sale Agreement). The assets to
be acquired include the outstanding capital stock, membership interests, and
other equity interests of the subsidiaries of Gainor Medical; the rights of
Gainor Medical under contracts and agreements; and cash, cash equivalents,
deposits and investments. The consummation of the transactions contemplated by
the Purchase and Sale Agreement is subject to several conditions, including
financing and expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.
Gainor Medical is engaged in the business of diabetes disease
management and microsampling in the United States and Europe. The purchase price
of the transaction will be approximately $130 million, which consists of
approximately $85 million in cash at closing; and the issuance of $45 million in
redeemable preferred stock and warrants of Matria, consisting of: $35 million of
preferred stock with dividends payable quarterly at the rate of eight percent
per annum in cash; $10 million of convertible preferred stock with dividends
payable quarterly at the rate of four percent per annum, in cash or in kind at
Matria's option, convertible into Matria Common Stock at the rate of $4.50 per
share; and ten year warrants exercisable at $3.00 per share to purchase four
million shares of Matria Common Stock. Both series of the preferred stock are
required to be redeemed at par in equal increments on their eighth, ninth, and
tenth anniversaries, and the convertible preferred stock may be redeemed at a
twenty two percent premium at Matria's option at any time after its second
anniversary if the then current market price of Matria Common Stock equals or
exceeds $5.40 per share. The Purchase and Sale Agreement also provides for the
issuance in the year 2000 of up to $35 million of contingent subordinated notes
payable up to five years after issuance and bearing interest at twelve percent
per annum, eight percent to be paid quarterly and four percent accruing to
maturity, if certain financial performance thresholds are achieved for the year
ending 1999.
In connection with the proposed acquisition, Matria has obtained a
financing commitment, subject to customary conditions, providing for a $125
million five year credit facility consisting of an $80 million term loan
facility and a $45 million revolving credit facility.
After the acquisition, Mark J. Gainor and J. Michael Highland, the
principal officers of Gainor Medical, will continue to be involved on a full
time basis in the management of the diabetes disease management and
microsampling businesses. In addition, Matria's Board of Directors will be
expanded at the closing of the transaction to include Mr. Gainor and Rod F.
Dammeyer, Managing Director of Equity Group Corporate Investments, a privately
held investment firm controlled by Sam Zell. Matria will also enter a five year
agreement on the date of closing with Mr. Gainor and Sam Zell affiliate SZ
Investments, L.L.C. ("SZI"), the two
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principal equity holders in Gainor Medical, which allows Mr. Gainor and SZI to
increase their stock ownership in Matria to an aggregate of up to thirty five
percent of Matria Common Stock, on a fully diluted basis (the "Standstill
Agreement"), subject to a requirement that they refrain from any attempt to gain
control of Matria during the term of the Standstill Agreement. Pursuant to this
transaction, Matria has amended its shareholder rights plan to permit the
acquisition of shares by Mr. Gainor and SZI up to the limit of the Standstill
Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Matria has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Matria Healthcare, Inc.
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Registrant
By: /s/ Donald R. Millard
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Donald R. Millard
President and Chief Executive Officer
Date: December 23, 1998
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