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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): June 30, 2000
BALANCED CARE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-13845 25-1761898
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
1215 Manor Drive, Mechanicsburg, Pennsylvania 17055 (Address of
principal executive offices, including zip code)
Registrant's telephone number, including area code: 717-796-6100
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Item 1. Changes in Control of Registrant.
As of June 30, 2000, HR Investments Limited, a Cayman Islands corporation "HR"),
RH Investments Limited, a Cayman Islands corporation ("RH"), and VXM Investments
Limited, a Cayman Island corporation ("VXM" and together with HR and RH,
collectively, the "Holders"), each entered into a Purchase Agreement
(collectively, the "Purchase Agreements") with Balanced Care Corporation, a
Delaware corporation (the "Corporation"), under which the Holders agreed to
purchase at par from the Corporation Unsecured Convertible Grid Debentures
(collectively, the "Debentures") in an aggregate principal amount equal to
$14,000,000. The closing under the Purchase Agreements is scheduled to occur no
later than July 31, 2000 (the "Closing"). The Purchase Agreements and the form
of the Debentures are attached hereto as exhibits and are incorporated by
reference herein.
Under the Debentures, the Holders have the right, at any time up to and
including the earlier to occur of the Early Termination Date and the Maturity
Date (as such terms are defined below), to convert all or any part of the
Debentures into common stock of the Corporation at the conversion rate of $2.00
per share (subject to adjustment as provided in the Debentures, the "Conversion
Rate"). The Debentures mature on July 1, 2005 (the "Maturity Date"). Interest
under the Debentures accrues at an annual rate of 9.5% and is due and payable
quarterly. The Corporation, at its option, may pay the interest in cash or in
lieu of payment, may add the interest amount payable to the outstanding
principal amount of the Debentures. The Corporation may terminate the Holders'
conversion rights at any time after December 31, 2002 if the average closing
price per share of common stock of the Corporation on the American Stock
Exchange for the 20 consecutive trading days ending five trading days preceding
the date on which the notice of termination is given to the Holders by the
Corporation is not less than 200% of the Conversion Rate (the "Early Termination
Date"). The Holders have no rights with respect to the election of the
Corporation's board of directors unless and until all or any portion of the
Debentures are converted into common stock, at which time the Holders will have
the same rights, powers and privileges as the other holders of the Corporation's
common stock.
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Depending on when (and if) the Debentures are converted and how the Corporation
elects to pay interest, the Holders could have the right to convert the
Debentures into shares of common stock equal to approximately 17% to 24.7% of
the issued and outstanding shares of the Corporation after giving effect to the
transactions.
In December 1999, the Corporation issued 16,700,000 shares of common stock to
IPC Advisors S.a.r.l., a Luxemburg company ("IPC"), in accordance with the terms
and conditions of a Stock Subscription Agreement dated as of October 8, 1999 (as
amended and restated October 11, 1999, the "Subscription Agreement"). As
consideration, the Corporation received $1.25 per share, for an aggregate
purchase price of $20,875,000. Pursuant to the Subscription Agreement, the
Corporation agreed to nominate or appoint four of the nine members of the
Corporation's board of directors as selected by IPC on an annual basis. In
addition, IPC is entitled to designate at least 50% of the members of any
committee of the board of directors. The Corporation cannot increase the size of
its board in excess of nine members without IPC's prior consent.
IPC currently owns 49.8% of the issued and outstanding shares of common stock of
the Corporation. Upon the closing of the transactions contemplated by the
Purchase Agreements and following a restructuring of the ownership of IPC, IPC
and the Holders may be deemed to be affiliates. On the closing date, on a
combined basis, IPC and the Holders (directly or indirectly) would be deemed to
beneficially own 58.4% of the common stock of the Corporation. If the Debentures
are outstanding until the Maturity Date and the Corporation elects, in lieu of
payment, to add the interest amount payable to the outstanding principal amount
of the Debentures until the Maturity date, on a combined basis, IPC and the
Holders (directly or indirectly) would be deemed to beneficially own 62.2% of
the common stock of the Corporation.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
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Not applicable.
(c) Exhibits. The following Exhibits are filed with this Current Report on
Form 8-K
Pursuant to Item 601 of Regulation S-K:
4.1 Form of 9.5% Unsecured Convertible Grid Debenture
10.1 Purchase Agreement dated as of June 30, 2000 between Balanced
Care Corporation and HR Investments Limited.
10.2 Purchase Agreement dated as of June 30, 2000 between Balanced
Care Corporation and RH Investments Limited.
10.3 Purchase Agreement dated as of June 30, 2000 between Balanced
Care Corporation and VXM Investments Limited.
99.1 Press Release dated July 18, 2000.
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SIGNATURE
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, thereunto duly authorized.
Balanced Care Corporation
/s/ Clint T. Fegan
Date: July 18, 2000 By: Clint T. Fegan
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
Number
4.1 Form of 9.5% Unsecured Convertible Grid Debenture
10.1 Purchase Agreement dated as of June 30, 2000 between Balanced
Care Corporation and HR Investments Limited.
10.2 Purchase Agreement dated as of June 30, 2000 between Balanced
Care Corporation and RH Investments Limited.
10.3 Purchase Agreement dated as of June 30, 2000 between Balanced
Care Corporation and VXM Investments Limited.
99.1 Press Release dated July 18, 2000.
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