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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 1, 2000
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VENCOR, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14057 61-1323993
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
One Vencor Place
680 South Fourth Street
Louisville, Kentucky
(Address of principal executive offices)
40202-2412
(Zip Code)
Registrant's telephone number, including area code: (502) 596-7300
Not Applicable
(Former name or former address, if changed since last report.)
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Items 1-4. Not Applicable.
Item 5. Other Events and Regulation FD Disclosure.
Vencor, Inc., (the "Company") announced that it has filed its second
amended plan of reorganization (the "Amended Plan") with the United States
Bankruptcy Court for the District of Delaware (the "Court"). The Company intends
to seek approval of the disclosure materials describing the Amended Plan at a
hearing before the Court on December 6, 2000. If the disclosure materials are
approved by the Court, the Company intends to begin the process of soliciting
approval of the Amended Plan.
The Amended Plan and the related plan documents represent the Company's
best efforts to embody understandings that it has reached with all of its major
creditor constituencies, including the United States government and its major
landlord, Ventas, Inc. ("Ventas"). These agreements are extremely complex and
remain subject to further negotiation between the parties that the Company
expects to conclude prior to the hearing on the disclosure materials on December
6. All parties have reserved their right to determine whether or not they will
vote for the Amended Plan and execute the related plan documents pending the
outcome of these final negotiations and the completion of the final
documentation.
As noted, the Amended Plan also further revises the terms of the settlement
of civil and certain administrative claims with the United States government.
The Amended Plan does not make any other material changes to the previously
filed plan of reorganization.
The following is a summary of certain material provisions of the Amended
Plan that affect Ventas. The summary does not purport to be complete and is
qualified in its entirety by reference to all of the provisions of the Amended
Plan, including all exhibits and documents described therein, as filed with the
Court and as may otherwise be supplemented.
Ventas will receive the following treatment under the Amended Plan:
The four master leases with Ventas will be assumed and simultaneously
amended as of the effective date of the Amended Plan (the "Amended Leases").
The principal economic terms of the Amended Leases are as follows:
(a) A decrease of $52 million in the aggregate minimum rent from the
annual rent as of May 1, 1999 to a new initial aggregate minimum rent of $174.6
million as of the first day of the first month after the effective date of the
Amended Plan.
(b) Minimum rent payable in cash will escalate at the annual rate of
3.5% for the period from May 1, 2001 through April 30, 2004. Thereafter,
minimum rent payable in cash will escalate at an annual rate of 2%, plus a 1.5%
annual accrued rent escalator (with an interest accrual at LIBOR plus 450 basis
points). All accrued rent will be payable upon the repayment or refinancing of
the new senior subordinated secured notes to be issued under the Amended Plan
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and at such time, the minimum rent payable in cash will escalate at the annual
rate of 3.5% and there will be no further accrual feature.
(c) A one-time option, that can be exercised by Ventas 5 1/4 years
after the effective date of the Amended Plan, to reset the aggregate minimum
rent under one or more of the Amended Leases to the then current fair market
rental in exchange for a payment of $5 million (or a pro rata portion thereof if
fewer than all of the Amended Leases are reset) to the Company.
(d) Under the Amended Leases, the "Event of Default" provisions also
will be substantially modified.
In addition to the Amended Leases, Ventas will receive a distribution of
9.99% of the new common stock of the reorganized Company (subject to dilution
from stock issuances occurring after the effective date of the Amended Plan).
Ventas also will enter into a new tax escrow agreement with the Company as
of the effective date that will provide for the escrow of a federal income tax
refund received in 2000 and other federal, state and local refunds until the
expiration of the applicable statutes of limitation for the auditing of the
refund applications. The escrowed funds will be available for the payment of
tax deficiencies during the escrow period except that all interest paid by the
government in connection with any refund or earned on the escrowed funds will be
distributed equally to the parties. At the end of the escrow period, the
Company and Ventas will each be entitled to 50% of the proceeds in the escrow
account.
All agreements and indemnification obligations between the Company and
Ventas, except those modified by the Amended Plan, will be assumed by the
Company as of the effective date of the Amended Plan.
In addition to the factors noted below, the confirmation and consummation
of the Amended Plan are subject to a number of material conditions including,
without limitation, the receipt of the requisite acceptances from various
creditor classes to confirm the Amended Plan and the Court's determination that
the Amended Plan satisfies the statutory requirements for confirmation under the
bankruptcy code. There can be no assurance that the Amended Plan as submitted
will be confirmed or consummated.
A copy of the press release is included as an exhibit to this filing.
Certain statements contained herein, including, but not limited to, statements
containing words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend," "may" and similar expressions are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are inherently uncertain, and stockholders must
recognize that actual results may differ materially from the Company's
expectations as a result of a variety of factors, including, without limitation,
those discussed below. Such forward-looking statements are based on
management's current expectations and
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include known and unknown risks, uncertainties and other factors, many of which
the Company is unable to predict or control, that may cause the Company's actual
results or performance to differ materially from any future results or
performance expressed or implied by such forward-looking statements. These
statements involve risks, uncertainties and other factors detailed from time to
time in the Company's filings with the Securities and Exchange Commission.
Factors that may affect the plans or results of the Company include, without
limitation, the ability of the Company to continue as a going concern; the
delays or the inability to complete and/or consummate the Company's proposed
plan of reorganization; the ability of the Company to operate pursuant to the
terms of its debtor-in-possession financing; the Company's ability to satisfy
the conditions to effectuate a restated debtor-in-possession financing; the
ability of the Company to operate successfully under the Chapter 11 cases; risks
associated with operating a business in Chapter 11; adverse actions which may be
taken by creditors and the outcome of various bankruptcy proceedings; adverse
developments with respect to the Company's liquidity or results of operations;
the Company's ability to attract patients given its current financial position;
the ability of the Company to attract and retain key executives and other
personnel; the effects of healthcare reform and legislation on the Company's
business strategy and operations; the Company's ability to control costs,
including labor costs in response to the prospective payment system,
implementation of its Corporate Integrity Agreement and other regulatory
actions; adverse developments with respect to the Company's settlement
discussions with the United States government concerning ongoing investigations;
and the dramatic increase in the costs of defending and insuring against alleged
patient care liability claims. Many of these factors are beyond the control of
the Company and its management. The Company cautions investors that any forward-
looking statements made by the Company are not guarantees of future performance.
The Company disclaims any obligation to update any such factors or to announce
publicly the results of any revisions to any of the forward-looking statements
to reflect future events or developments.
Item 6. Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Exhibit 99.1 Press Release dated December 1, 2000.
Items 8-9. Not Applicable.
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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 hereunto duly authorized.
VENCOR, INC.
Dated: December 4, 2000 By: /s/ Richard A. Lechleiter
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Richard A. Lechleiter
Vice President, Finance,
Corporate Controller and
Treasurer
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