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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
CENTENNIAL HEALTHCARE CORPORATION
(Name of Subject Company)
CENTENNIAL HEALTHCARE CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
150937100
(CUSIP Number of Class of Securities)
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DARYL R. GRISWOLD
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
CENTENNIAL HEALTHCARE CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 650
ATLANTA, GEORGIA 30346
(770) 698-9040
(Name, address, and telephone number of person authorized
to receive notices and communications on behalf of the person(s) filing
statement)
WITH COPIES TO:
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PAUL A. QUIROS
LYNN S. SCOTT DAVID A. STOCKTON
KING & SPALDING KILPATRICK STOCKTON, LLP
191 PEACHTREE STREET 1100 PEACHTREE STREET
ATLANTA, GEORGIA 30303-1763 ATLANTA, GEORGIA 30309
(404) 572-4600 (404) 815-6000
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[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. SUBJECT COMPANY INFORMATION.
NAME AND ADDRESS. The name of the subject company is Centennial HealthCare
Corporation, a Georgia corporation (the "Company"). The address of the principal
executive offices of the Company is 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia 30346 and its telephone number is (770) 698-9040.
SECURITIES. The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Statement")
relates is the common stock, par value $.01 per share of the Company (the
"Shares"). As of February 25, 2000, there were 11,923,618 Shares issued and
outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
NAME AND ADDRESS. The name, business address and business telephone number
of the Company, which is the person filing this Statement, are set forth in Item
1 above.
TENDER OFFER. This Statement relates to the tender offer by Hilltopper
Acquisition Corp., a Georgia corporation ("Purchaser") and a wholly owned
subsidiary of Hilltopper Holding Corp., a Delaware corporation ("Parent"), as
set forth in the Tender Offer Statement on Schedule TO, dated March 17, 2000
(the "Schedule TO"), to purchase all of the outstanding Shares of the Company at
a price of $5.50 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated March 17, 2000 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as they may be amended or supplemented from time to time,
together constitute the "Offer"), copies of which are filed as Exhibits (a)(1)
and (a)(2) hereto, respectively, and are incorporated herein by reference.
Parent is a wholly owned subsidiary of Warburg, Pincus Equity Partners, L.P., a
Delaware limited partnership ("Warburg, Pincus Equity").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 25, 2000 (the "Merger Agreement"), among Parent, Purchaser and
the Company. Pursuant to the Merger Agreement, as promptly as practicable
following the consummation of the Offer and upon the satisfaction of the other
conditions contained in the Merger Agreement, Purchaser will be merged with and
into the Company (the "Merger"), with the Company continuing as the surviving
corporation. A copy of the Merger Agreement is filed as Exhibit (e)(1) to this
Statement and is incorporated herein by reference.
The Schedule TO states that the principal executive offices of Parent and
Purchaser is c/o E.M. Warburg, Pincus & Co., LLC, 466 Lexington Avenue, New
York, New York 10017.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS, AND AGREEMENTS.
The information set forth in the "INTRODUCTION," "SPECIAL
FACTORS--Background of the Transaction; Past Contacts, Negotiations and
Agreements," "--Interests of Certain Persons in the Offer and the Merger," and
"TENDER OFFER--The Subscription Agreement; The Voting Agreement; The Merger
Agreement; The Executive Employment Agreements" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
RECOMMENDATION. The Board of Directors of the Company (the "Board"), by
unanimous vote of all of the directors and based on, among other things, the
unanimous recommendation of a special committee of the Board comprised of
independent directors (the "Special Committee"), (i) determined that the Offer
and the Merger are advisable and that the terms of the Offer and Merger are fair
to and in the best interests of the Company and its shareholders, (ii) approved
the Offer and the Merger and adopted and approved the Merger Agreement and the
transactions contemplated thereby, and (iii) recommended the acceptance of the
Offer, the approval of the Merger, and the approval and adoption of the Merger
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Agreement by the Company's shareholders, other than Parent, Purchaser and the
shareholders who are contributing their Shares to Parent in exchange for shares
of Parent's preferred stock (if such approval is required by applicable law).
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
A letter to the Company's shareholders, a letter to brokers, dealers,
commercial banks, trust companies, and other nominees, a letter to clients for
use by brokers, dealers, commercial banks, trust companies, and other nominees
communicating the Board's recommendation and a press release announcing the
Offer and the Merger are filed herewith as Exhibits (a)(3), (a)(4), (a)(5) and
(a)(7), respectively, and are incorporated herein by reference.
REASONS. The Information set forth in the "INTRODUCTION," "SPECIAL
FACTORS--Background of the Transaction; Past Contacts Negotiations and
Agreements," "--Purposes, Alternatives, Reasons, Effects and Plans;"
"--Recommendation of the Special Committee and the Board of Directors of the
Company; Fairness of the Transaction," and "--Reports, Opinions, Appraisals and
Negotiations" of the Offer to Purchase is incorporated herein by reference.
Pursuant to the Merger, Purchaser will acquire from WCAS Capital
Partners II, L.P. ("WCAS CP"), 246,895 Shares for $5.50 per Share. Welsh,
Carson, Anderson & Stowe VI, L.P. ("WCAS VI") and Welsh, Carson, Anderson &
Stowe Healthcare Partners, L.P. (WCAS HP"), affiliates of the Company, will
contribute their Shares to Parent for shares of Series B Non-Voting Convertible
Preferred Stock of Parent ("Series B Preferred Stock") pursuant to the
Subscription and Contribution Agreement, dated February 24, 2000 (the
"Subscription Agreement").
Mr. J. Stephen Eaton, Chairman, President and Chief Executive Officer of the
Company will contribute 569,917 Shares to Parent for shares of Series A
Convertible Preferred Stock of Parent ("Series A Preferred Stock") pursuant to
the Subscription Agreement. Pursuant to the Merger, Purchaser will acquire from
Mr. Eaton 545,454 Shares for $5.50 per Share.
Mr. Andrew Paul, a director of the Company and a general partner of the
general partner of WCAS VI, an affiliate of the Company, will contribute 9,686
Shares to Parent for shares of Series B Preferred Stock pursuant to the
Subscription Agreement. Pursuant to the Merger, Purchaser will acquire from
Mr. Paul 3,021 Shares for $5.50 per Share.
Mr. Alan Dahl, Executive Vice President and Chief Financial Officer and a
director of the Company, will not tender any of his Shares. Mr. Dahl will
contribute his Shares to Parent for shares of Series A Preferred Stock pursuant
to the Subscription Agreement.
Mr. Kent C. Fosha, Sr., Executive Vice President--Operations, will not
tender any of his Shares. Mr. Fosha will contribute his Shares to Parent for
shares of Series A Preferred Stock pursuant to the Subscription Agreement.
Mr. Lawrence W. Lepley, Jr., President of Paragon Rehabilitation, Inc., an
indirect wholly-owned subsidiary of the Company, will not tender any of his
Shares. Mr. Lepley will contribute his Shares to Parent for shares of Series A
Preferred Stock pursuant to the Subscription Agreement. Mr. Lepley's wife owns
26,500 shares that she is expected to tender in the Offer.
South Atlantic Venture Fund II, Limited Partnership, South Atlantic Venture
Fund III, Limited Partnership and The Burton Partnership, Limited Partnership
(collectively, "South Atlantic"), affiliates of the Company, will contribute
their Shares to Parent for shares of Series B Preferred Stock pursuant to the
Subscription Agreement. In addition, two affiliates of South Atlantic will
purchase 909,091 shares of Series B Preferred Stock at $5.50 per share for an
aggregate of $5 million.
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To the best of the Company's knowledge, except as noted above, each of the
Company's executive officers, directors, affiliates, and subsidiaries currently
intends to tender pursuant to the Offer all Shares held of record or
beneficially owned by them.
ITEM 5. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED, OR USED.
J.P. Morgan Securities, Inc. ("J.P. Morgan") is acting as the financial
advisor to the Special Committee in connection with the Offer and the Merger.
Pursuant to its agreement with the Special Committee, the Company has agreed to
pay J.P. Morgan an aggregate of $2.3 million, of which $500,000 was paid upon
its engagement, $300,000 is being paid upon delivery of its fairness opinion
concerning the Offer and the Merger and $1.5 million will be paid upon the
earlier of termination of its engagement or July 1, 2000. The Company has also
agreed to pay J.P. Morgan for its out-of-pocket expenses, including the fees and
expenses of its legal counsel, and to indemnify J.P. Morgan and related parties
against liabilities, including liabilities under the federal securities laws,
arising out of J.P. Morgan's engagement. J.P. Morgan and its affiliates have in
the past provided financial services to the Company in connection with a
proposed transaction with WCAS VI in 1998, which was terminated prior to its
consummation. The Company had agreed to pay J.P. Morgan the sum of $2.0 million
for services provided to a special committee of the board of Directors of the
Company in connection with that proposed transaction. The fees for the services
with respect to the Offer and the Merger will satisfy the Company's obligations
to J.P. Morgan for the previous proposed transaction. J.P. Morgan and its
affiliates maintain banking and other business relationships with Warburg,
Pincus Equity and its affiliates, and have advised, financed and undertaken
capital market transactions with such entities, for which it received customary
fees. In the ordinary course of business, J.P. Morgan and its affiliates may
actively trade the debt and equity securities of the Company for their own
accounts and for the accounts of customers and, accordingly, may at any time
hold long or short positions in such securities. A copy of J.P. Morgan's opinion
is filed as Exhibit (a)(8) hereto and is incorporated herein by reference.
SunTrust Equitable Securities ("SunTrust Equitable") acted as advisor to the
Company in exploring strategic alternatives for the Company. SunTrust Equitable
made the initial contacts with Warburg, Pincus Equity concerning a proposed
transaction with the Company. The Company will pay SunTrust Equitable
$2.1 million in fees and expenses upon consummation of the Merger for services
provided in connection with its assistance.
Except as set forth above, neither Parent nor the Company nor any person
acting on either entity's behalf has employed, retained or compensated, or
currently intends to employ, retain or compensate, any person to make
solicitations or recommendations to the shareholders of the Company on either
entity's behalf with respect to the Offer.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
No transactions in the Shares have been effected by the Company or, to the
Company's knowledge, by any executive officer, director, affiliate, or
subsidiary of the Company during the past 60 days.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Except as set forth in this Statement with respect to the Offer and the
Merger, the Company is not undertaking or engaged in any negotiation in response
to the Offer that relates to (i) a tender offer or other acquisition of the
Company's Shares by the Company, any of its subsidiaries, or any other person,
(ii) an extraordinary transaction, such as a merger,reorganization, or
liquidation, involving the Company or any of its subsidiaries, (iii) a purchase,
sale, or transfer of a material amount of assets by the Company or any of its
subsidiaries, or (iv) any material change in the present dividend rate or
policy, or indebtedness or capitalization of the Company. Additionally, the
information set forth in "SPECIAL FACTORS--
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Purposes, Alternatives, Reasons, Effects and Plans" and "TENDER OFFER--The
Subscription Agreement; The Voting Agreement; The Merger Agreement, The
Executive Employment Agreements" of the Offer to Purchase is incorporated herein
by reference.
Except as set forth in this Statement with respect to the Offer and the
Merger, there are no transactions, Board resolutions, agreements in principle,
or signed contracts in response to the Offer that would relate to one or more of
the matters referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The information contained in the Offer to Purchase filed as Exhibit (a)(1)
hereto is incorporated herein by reference.
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ITEM 9. EXHIBITS.
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EXHIBIT NO. DESCRIPTION
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(a)(1) Offer to Purchase dated March 17, 2000.*+
(a)(2) Letter of Transmittal.*+
(a)(3) Letter to Company's Shareholders.+
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies, and Other Nominees.*+
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust
Companies, and Other Nominees to Clients.*+
(a)(6) Summary Announcement dated March 17, 2000.*
(a)(7) Press Release dated February 25, 2000.**
(a)(8) Opinion of J.P. Morgan Securities, Inc.+
(e)(1) Agreement and Plan of Merger dated, as of February 25, 2000,
among Parent, Purchaser and the Company.*
(e)(2) Contribution and Subscription Agreement, dated as of
February 24, 2000, among Parent, Purchaser, Warburg Pincus
Equity Partners, L.P. and certain of its affiliates and the
Contributing Shareholders.*
(e)(3) Voting Agreement, dated February 25, 2000, among the
Contributing Shareholders, WCAS Capital Partners II, L.P.,
Parent and Purchaser.*
(e)(4) Employment Agreement, dated February 24, 2000, between the
Company and J. Stephen Eaton.*
(e)(5) Employment Agreement dated February 24, 2000, between the
Company and Alan C. Dahl.*
(e)(6) Employment Agreement, dated February 24, 2000, between the
Company and Kent C. Fosha, Sr.*
(e)(7) Employment Agreement, dated February 24, 2000, between the
Company and Lawrence W. Lepley, Jr.*
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* INCORPORATED BY REFERENCE TO SCHEDULE TO FILED BY PARENT, PURCHASER,
WARBURG, PINCUS EQUITY, THE COMPANY, STEPHEN EATON, ALAN DAHL, KENT FOSHA
AND LAWRENCE LEPLEY.
** INCORPORATED BY REFERENCE TO FORM 8-K FILED BY THE COMPANY ON MARCH 10,
2000.
+ INCLUDED IN COPIES MAILED TO THE COMPANY'S SHAREHOLDERS.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Statement is true, complete, and correct.
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CENTENNIAL HEALTHCARE CORPORATION
By: /s/ J. STEPHEN EATON
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J. Stephen Eaton
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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Dated: March 17, 2000
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[LOGO]
March 17, 2000
Dear Shareholder:
On February 25, 2000, Centennial HealthCare Corporation (the "Company"),
Hilltopper Acquisition Corp., ("Purchaser") a Georgia corporation and a wholly
owned subsidiary of Hilltopper Holding Corp., a Delaware corporation (the
"Parent"), and Parent entered into a merger agreement providing for the
acquisition of any and all of the Common Stock, par value $0.01 per share, of
the Company at $5.50 cash per share.
The Purchaser has today commenced a cash tender offer for any and all of the
issued and outstanding shares of Common Stock of the Company at a price of $5.50
net per share. If Parent beneficially owns at least 68.5% of the Common Stock
(on a fully diluted basis) and other conditions are satisfied or waived and the
tender offer is consummated, the merger agreement provides that, following the
tender offer, Purchaser will merge with and into the Company and any remaining
shares of Common Stock of the Company will be converted into the right to
receive $5.50 per share in cash, without interest.
At a meeting on February 25, 2000, your Board of Directors (the "Board") by
unanimous vote of all directors, based on, among other things, the unanimous
recommendation of a Special Committee comprised of independent directors,
(i) determined that the merger is advisable and that the terms of the offer and
the merger, the merger agreement and the consummation of the transactions
contemplated thereby are fair to, and in the best interests of, the Company and
its shareholders, (ii) approved the offer and the merger and approved and
adopted the merger agreement, and (iii) recommended the offer to, and the
approval and adoption of the merger agreement and the transactions contemplated
thereby by, the shareholders of the Company.
In arriving at its recommendation, the Board gave careful consideration to
the factors described in the enclosed tender offer materials and
Schedule 14D-9. Included as Annex A to the offer to purchase is the written
opinion, dated February 25, 2000, of J.P. Morgan Securities, Inc., the Special
Committee's financial advisor, to the effect that, as of that date and based on
and subject to the matters described in the opinion, the price per share of
$5.50 to be received in the offer and the merger, taken together, by the holders
of shares of Common Stock was fair, from a financial point of view, to such
holders, other than Parent and its affiliates.
Enclosed for your consideration are copies of the tender offer materials and
the Company's Schedule 14D-9, which are being filed today with the Securities
and Exchange Commission. These documents should be read carefully.
Sincerely,
[LOGO]
J. Stephen Eaton
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Annex A
February 25, 2000
Special Committee of the Board of Directors
Centennial HealthCare Corporation
400 Perimeter Center Terrace, Suite 650
Atlanta, Georgia 30346
Attention: Mr. Bob L. Wood
Chairman of the Special Committee
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of Centennial HealthCare Corporation (the
"Company") of the consideration to be paid to them in connection with the
proposed tender offer (the "Tender Offer") for all shares of the Company
Common Stock, par value $0.01 per share (the "Common Stock"), by, and the
proposed merger (the "Merger") of the Company with, Hilltopper Acquisition
Corp. ("Acquisition Sub"), a wholly owned subsidiary of Hilltopper Holdings
Corporation ("Parent"), a company formed at the direction of E.M. Warburg
Pincus & Co., LLC (the "Buyer"). Pursuant to the Agreement and Plan of
Merger, dated as of February 25, 2000 (the "Agreement"), among the Company,
Parent and Acquisition Sub, Acquisition Sub will offer to purchase all shares
of Common Stock in the Tender Offer for $5.50 per share and then will merge
with and into the Company, and each share of Common Stock, issued and
outstanding immediately prior to the effective time of the Merger (other than
shares contributed to Parent by certain institutional shareholders of the
Company and certain members of senior management of the Company (the
"Contributing Shareholders"), dissenting shares and shares canceled pursuant
to the Agreement) shall be converted into the right to receive an amount in
cash, without interest, equal to $5.50.
In arriving at our opinion, we have reviewed (i) the Agreement; (ii) certain
publicly available information concerning the business of the Company and of
certain other companies engaged in businesses comparable to those of the
Company, and the reported market prices for certain other companies'
securities deemed comparable; (iii) publicly available terms of certain
transactions involving companies comparable to the Company and the
consideration received for such companies; (iv) current and historical market
prices of the common stock of the Company; (v) the audited financial
statements of the Company for the fiscal year ended December 31, 1998 and the
unaudited financial statements of the Company for the periods ended March 31,
June 30, September 30, and December 31, 1999; (vi) certain agreements with
respect to outstanding indebtedness or obligations of the Company; (vii)
certain internal financial analyses, forecasts and other information prepared
by the Company and its management (collectively, the "Financial
Information"); and (viii) the terms of certain other business combinations
that we deemed relevant.
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In addition, we have held discussions with certain members of the management
of the Company and with outside auditors with respect to certain aspects of
the Tender Offer and the Merger, the past and current business operations of
the Company, the financial condition and future prospects and operations of
the Company, the effects of the Tender Offer and the Merger on the financial
condition and future prospects of the Company, and certain other matters we
considered necessary or appropriate to our inquiry. We have reviewed such
other financial studies and analyses and considered such other information as
we deemed appropriate for the purposes of this opinion. We have also held
discussions with the Company's internal and external counsel regarding the
status and potential impact of the pending OIG investigation.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was
publicly available or was furnished to us by the Company or otherwise
reviewed by us, and we have not assumed any responsibility or liability
therefor. We have not conducted any valuation or appraisal of any assets or
liabilities, nor have any such valuations or appraisals been provided to us.
In relying on the Financial Information provided to us, we have assumed that
they have been reasonably prepared based on assumptions reflecting the best
currently available estimates and judgments by management as to the expected
future results of operations and financial condition of the Company to which
such Financial Information relates. We have also assumed that the Merger
will have the tax consequences described in discussions with, and materials
furnished to us by, representatives of the Company, and that the other
transactions contemplated by the Agreement will be consummated as described
in the Agreement. We have relied as to all legal matters relevant to
rendering our opinion upon the advice of counsel.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date
hereof. It should be understood that subsequent developments may affect this
opinion and that we do not have any obligation to update, revise, or reaffirm
this opinion.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company with respect to the proposed Tender Offer and the
proposed Merger and will receive a fee from the Company for our services.
Please be advised that we have no other current financial advisory or other
relationships with the Company. We acted as financial advisor to a Special
Committee of the Board of Directors of the Company with respect to a proposed
merger transaction between the Company and affiliates of Welsh, Carson
Anderson & Stowe, VI, L.P. in October 1998, which was terminated prior to
consummation. J.P. Morgan Securities Inc. and its affiliates maintain an
ongoing relationship with the Buyer and have advised, financed and undertaken
capital markets transactions with the Buyer. In the ordinary course of their
businesses, J.P. Morgan Securities Inc. and its affiliates may actively trade
the debt and equity securities of the Company for their own account or for
the accounts of customers and, accordingly, they may at any time hold long or
short positions in such securities.
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On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that the consideration to be paid to the Company's stockholders
in the proposed Tender Offer and the proposed Merger is fair, from a
financial point of view, to such stockholders.
This letter is provided to the Special Committee of the Board of Directors of
the Company in connection with and for the purposes of its evaluation of the
Merger. This opinion does not constitute a recommendation to any stockholder
of the Company as to how such stockholder should vote with respect to the
Merger. This opinion may not be disclosed, referred to, or communicated (in
whole or in part) to any third party for any purpose whatsoever except with
our prior written consent in each instance. This opinion may be reproduced
in full in any offer to purchase, proxy or information statement mailed to
stockholders of the Company but may not otherwise be disclosed publicly in
any manner without our prior written approval and must be treated as
confidential.
Very truly yours,
J.P. MORGAN SECURITIES INC.
By: /s/ John D. Fowler
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Name: John D. Fowler
Title: Managing Director
