SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 3)
Under the Securities Exchange Act of 1934
THE HILLHAVEN CORPORATION
(Name of Issuer)
Common Stock, par value $.75 per share
(Title of Class of Securities)
431576 10 7
(CUSIP Number of Class of Securities)
Scott M. Brown, Esq.
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
(310) 998-8000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
with a copy to:
Brian J. McCarthy, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 S. Grand Avenue
Los Angeles, California 90071
(213) 687-5070
January 25, 1995
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Statement because of Rule 13d-1(b)(3) or (4), check the
following: ( )
Check the following box if a fee is being paid with this
Statement: ( )
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NATIONAL MEDICAL ENTERPRISES, INC. 95-2557091
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)( )
(b)(X)
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) (X)
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
: (7) SOLE VOTING POWER
:
: 8,878,147
:
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 0
PERSON WITH :
: (9) SOLE DISPOSITIVE
: 8,878,147
:
:(10) SHARED DISPOSITIVE
: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,878,147
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* ( )
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
27% -- See Item 5
(14) TYPE OF REPORTING PERSON*
CO
______________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NME PROPERTIES CORP. 62-0725891
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)( )
(b)(X)
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Tennessee
: (7) SOLE VOTING POWER
:
: 8,878,147
:
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 0
PERSON WITH :
: (9) SOLE DISPOSITIVE
: 8,878,147
:
:(10) SHARED DISPOSITIVE
: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,878,147
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* ( )
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
27% -- See Item 5
(14) TYPE OF REPORTING PERSON*
CO
______________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NME PROPERTY HOLDING CO., INC. 91-1172506
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)( )
(b)(X)
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
: (7) SOLE VOTING POWER
:
: 2,877,947
:
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 0
PERSON WITH :
: (9) SOLE DISPOSITIVE
: 2,877,947
:
:(10) SHARED DISPOSITIVE
: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,877,947
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* ( )
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.8% -- See Item 5
(14) TYPE OF REPORTING PERSON*
CO
______________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NME PROPERTIES, INC. 91-0628039
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)( )
(b)(X)
(3) SEC USE ONLY
(4) SOURCE OF FUNDS*
00
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
: (7) SOLE VOTING POWER
:
: 2,877,947
:
NUMBER OF SHARES BENEFICIALLY : (8) SHARED VOTING
OWNED BY EACH REPORTING : 0
PERSON WITH :
: (9) SOLE DISPOSITIVE
: 2,877,947
:
:(10) SHARED DISPOSITIVE
: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,877,947
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* ( )
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.8% -- See Item 5
(14) TYPE OF REPORTING PERSON*
CO
______________________________________________________________________
This Amendment No. 3 (the "Amendment No. 3")
amends and supplements the Statement on Schedule 13D (the
"Schedule 13D"), dated January 31, 1990, Amendment No. 1
of Schedule 13D, dated February 28, 1994, and Amendment
No. 2 of Schedule 13D, dated December 19, 1994, relating
to the common stock, par value $.75 per share (the
"Common Stock"), issued by The Hillhaven Corporation, a
Nevada corporation (the "Company"), and is being filed
pursuant to Rule 13d-2 under the Securities Exchange Act
of 1934, as amended (the "Act").
Unless otherwise indicated, each capitalized
term used but not otherwise defined herein shall have the
meaning assigned to such term in the Schedule 13D. The
information set forth in the Exhibits attached hereto is
hereby expressly incorporated herein by reference and the
response to each item of this statement is qualified in
its entirety by the provisions of such Exhibits.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is amended and supplemented as follows:
In the course of reviewing its alternatives
with respect to its investment in the Company, NME has
had discussions with the Company and third parties
concerning possible courses of action. During these
discussions, Horizon Healthcare Corporation ("Horizon")
indicated that it had orally made a business combination
proposal to the Company. Representatives of the Company
had indicated to Horizon, and so informed NME, that only
a written proposal would be considered by the Board of
Directors of the Company.
On January 25, 1995, after entering into the
letter agreement with NME described below, Horizon
submitted a written business combination proposal to the
Company, a copy of which is attached hereto as Exhibit 28
(the "Transaction"). In the Transaction, shareholders of
the Company would receive $28 in value of shares of
common stock of a newly formed holding company ("Newco")
for each outstanding share of Common Stock and
shareholders of Horizon would receive one share of Newco
common stock for each outstanding share of Horizon common
stock. In addition, as part of the Transaction, each
outstanding share of the Company's Series C and Series D
preferred stock would be redeemed at $1,000 per share in
cash, plus any accrued and unpaid dividends, whether or
not declared, to the date of redemption.
In consideration of the mutual covenants
contained therein and in order to provide the opportunity
contained in the Transaction to the Company and all of
its shareholders, NME has entered into a letter agreement
with Horizon, a copy of which is attached hereto as
Exhibit 29 (the "Letter Agreement"). If prior to
consummating a Transaction but within 12 months of the
date of the Letter Agreement there is a merger,
consolidation or other transaction with any party other
than Horizon (an "Other Transaction") in which NME
receives consideration for any of its shares of Common
Stock equal to or greater than $27.50 per share, then
Horizion shall be entitled to receive (and NME shall
cause Horizon to receive) upon consummation of an Other
Transaction an amount equal to the greater of (i)
$5,000,000 or (ii) 50% of the consideration received by
NME in excess of $29 per share of Common Stock. Horizon
agreed in the Letter Agreement to actively pursue the
Transaction in good faith. The Letter Agreement also
provides that nothing therein shall be construed to
impose any requirement or restriction on NME with respect
to its right to acquire or dispose of any shares of
Common Stock from or to any party, or to vote any shares
of Common Stock, and all decisions with respect thereto
shall be made by NME in its sole discretion.
NME believes that a business combination
transaction will provide all of the Company's
shareholders with the best alternative to achieve maximum
values. NME believes that the Transaction provides an
attractive opportunity for the Company and its
shareholders and believes that the Transaction requires
the serious review and consideration of the Company's
Board of Directors. NME understands that the Board of
Directors of the Company has established a committee to
review, among other things, business combination
proposals involving the Company.
Except as otherwise described in this Item 4,
none of NME, PropCorp, Holding or PropInc has any present
specific plans or proposals that relate to or would
result in any of the following: (i) the acquisition by
any person of additional securities of the Company or the
disposition of securities of the Company, (ii) an
extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or
any of its subsidiaries, (iii) a sale or transfer of a
material amount of assets of the Company or any of its
subsidiaries, (iv) any change in the present Board of
Directors or management of the Company, including any
plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Board
of Directors, (v) any material change in the present
capitalization or dividend policy of the Company, (vi)
any other material change in the Company's business or
corporate structure, (vii) changes in the Company's
Amended and Restated Articles of Incorporation, Bylaws or
other instruments corresponding thereto or other actions
that may impede the acquisition of control of the Company
by any person, (viii) causing a class of securities of
the Company to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national
securities association, (ix) a class of equity securities
of the Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended, or (x) any
action similar to those enumerated above. NME, PropCorp,
Holding or PropInc may at any time, however, propose any
of the foregoing that it considers desirable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
PropInc may be deemed to be the beneficial
owner of the 2,877,947 shares of Common Stock owned by it
(the "PropInc Shares"), or approximately 8.8% of the
shares of Common Stock outstanding. PropInc has the sole
power to vote and the sole power to dispose of the
PropInc Shares.
PropCorp and Holding, as the sole stockholders
of PropInc, may be deemed, for the purposes of Rule 13d-3
under the Act, to beneficially own indirectly the PropInc
Shares.
PropCorp may be deemed to be the beneficial
owner of the 6,000,200 shares of Common Stock owned by it
(the "PropCorp Shares"), or approximately 18.3% of the
shares of Common Stock outstanding. PropCorp has the
sole power to vote and the sole power to dispose of the
PropCorp Shares. As noted above, PropCorp also may be
deemed, for purposes of Rule 13d-3 under the Act, to
beneficially own indirectly the PropInc Shares, for an
aggregate of 8,878,147 shares of Common Stock, or
approximately 27% of the shares of Common Stock
outstanding.
NME, as the sole stockholder of PropCorp and
Holding, may be deemed, for purposes of Rule 13d-3 under
the Act, to beneficially own indirectly the PropCorp
Shares and the PropInc Shares, for an aggregate of
8,878,147 shares of Common Stock, or approximately 27% of
the shares of Common Stock outstanding.
The Reporting Persons, in the aggregate, may be
deemed to beneficially own 8,878,147 shares of Common
Stock, or approximately 27% of the shares of Common Stock
outstanding. The percentage of shares of Common Stock
outstanding reported as beneficially owned herein on the
date hereof is based upon 32,824,463 shares of Common
Stock outstanding, based upon the 28,624,463 shares of
Common Stock outstanding as of January 1, 1995 and the
4,200,000 newly issued shares of Common Stock that the
Company announced on January 16, 1995 that it had
committed to issue to a newly established grantor trust.
NME reserves all rights in connection with the
establishment of the grantor trust and the issuance of
the shares of Common Stock thereto.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
ISSUER.
Item 6 is amended and supplemented as follows:
The information set forth in Item 4 above is
incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 27 Joint Filing Agreement
Exhibit 28 Letter from Horizon to the Company, dated
January 25, 1995
Exhibit 29 Letter agreement between NME and Horizon,
dated January 25, 1995
SIGNATURE
After reasonable 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.
Date: January 25, 1995
NATIONAL MEDICAL ENTERPRISES, INC.
By: /s/ Scott M. Brown
________________________________
Scott M. Brown
Senior Vice President and Secretary
SIGNATURE
After reasonable 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.
Date: January 25, 1995
NME PROPERTIES CORP.
By: /s/ Scott M. Brown
________________________________
Scott M. Brown
Vice President
SIGNATURE
After reasonable 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.
Date: January 25, 1995
NME PROPERTY HOLDING CO., INC.
By: /s/ Scott M. Brown
________________________________
Scott M. Brown
Vice President
SIGNATURE
After reasonable 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.
Date: January 25, 1995
NME PROPERTIES, INC.
By: /s/ Scott M. Brown
________________________________
Scott M. Brown
Vice President
EXHIBIT INDEX
Exhibit No. Description Page No.
Exhibit 27 Joint Filing Agreement
Exhibit 28 Letter from Horizon to the
Company, dated January 25,
1995
Exhibit 29 Letter agreement between NME
and Horizon, dated January 25,
1995
______________________________________________________________________
Exhibit 27
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities
Exchange Act of 1934, as amended, each of the persons named
below agrees to the joint filing on behalf of each of them
of a Statement on Schedule 13D (including amendments
thereto) with respect to the common stock, par value $.75
per share, of The Hillhaven Corporation, a Nevada
corporation, and further agrees that this Joint Filing
Agreement be included as an exhibit to such filings provided
that, as contemplated by Section 13d-1(f)(l)(ii), no person
shall be responsible for the completeness or accuracy of the
information concerning the other persons making the filing,
unless such person knows or has reason to believe that such
information is inaccurate. This Joint Filing Agreement may
be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument.
Date: January 25, 1995
NATIONAL MEDICAL NME PROPERTIES CORP.
ENTERPRISES, INC.
By:/s/ Scott M. Brown
By:/s/ Scott M. Brown _________________________
______________________ Scott M. Brown
Scott M. Brown Vice President
Senior Vice President
and Secretary
NME PROPERTY HOLDING NME PROPERTIES, INC.
CO., INC.
By: /s/ Scott M. Brown
By:/s/ Scott M. Brown ________________________
____________________ Scott M. Brown
Scott M. Brown Vice President
Vice President
______________________________________________________________________
EXHIBIT 28
HORIZON HEALTHCARE CORPORATION
6001 Indian School Road, N.E.
Albuquerque, New Mexico 87190
(505) 881-4961
January 25, 1995
The Hillhaven Corporation
1148 Broadway Plaza
Tacoma, Washington 98402
Attention: Mr. Bruce Busby
Chairman and CEO
Dear Bruce:
On behalf of Horizon Healthcare Corporation
("Horizon"), I am pleased to confirm in writing the
following proposal for a business combination between
Horizon and The Hillhaven Corporation ("Hillhaven"). As you
know, we have followed the development of Hillhaven's
business for some time. Based on our review of publicly
available information about Hillhaven and our analysis of
the strategic fit between our companies, we firmly believe
that a combination is in the long-term best interests of our
companies and our respective stockholders. During our
meeting on January 17, 1995, I presented you with a summary
analysis of the benefits of a combination from our point of
view (the "January 17 Presentation"), prepared in
conjunction with our financial advisor, Donaldson, Lufkin &
Jenrette Securities Corporation. Our proposed merger also
has the support of National Medical Enterprises, Inc.
("NME").
Consistent with the January 17 Presentation and
our subsequent conversations, we are proposing a merger (the
"Merger") pursuant to which the stockholders of Hillhaven
would receive, for each share of common stock of Hillhaven
held by them, $28 in value of common stock of a newly formed
holding company ("Newco"), subject to normal collar
provisions, and our stockholders would receive 1.0 shares of
Newco stock for each Horizon share held by them. This $28
per share value represents a 35% premium to the NYSE closing
price of the Hillhaven shares on December 20, 1994, the day
before the public announcement that Hillhaven and NME were
in discussions with respect to the Hillhaven shares held by
NME. As part of the Merger, each outstanding share of
Hillhaven Series C and Series D Preferred Stock would be
redeemed at $1,000 per share in cash, plus any accrued and
unpaid dividends, whether or not declared, to the date of
redemption.
The Merger would be treated as a pooling of
interests for accounting purposes and would be a non-taxable
transaction for federal income tax purposes. Under our
proposal, Newco would cause one of its newly-formed
subsidiaries to merge into Hillhaven. Simultaneously, Newco
would cause another of its newly-formed subsidiaries to
merge into Horizon. As a result of these mergers, Newco
would become a new publicly-held company with two wholly-
owned subsidiaries.
OPERATIONS AND STRATEGIC FIT
We are prepared to meet with you to discuss the
many strategic, operational and other benefits that the
combined entity can realize through its proposed
transaction. The January 17 Presentation contains a summary
analysis of the financial implications of the proposed
combination, background on our company, the combined company
business plan and the rationale for the merger. For your
convenience, we are supplying, under separate cover, copies
of our Annual Report to Stockholders; our Annual Report on
Form 10-K for the year ended May 31, 1994; our Quarterly
Report on Form 10-Q for the quarter ended November 30, 1994
and the prospectus dated November 17, 1994 relating to our
common stock offering completed on November 25, 1994.
We estimate the merger will be non-dilutive based
on publicly available information, implementation of our
business plan and pooling treatment with no goodwill
implications. NME would own approximately 13% of the
combined company stock on a fully-diluted basis, and would
not be bound by any on-going standstill requirements other
than compliance with pooling requirements.
OTHER TERMS AND CONDITIONS
We are prepared to provide you with a form of
Merger Agreement containing representations, warranties,
covenants and conditions customary for a transaction of this
nature and magnitude. These conditions will include, among
other things, (i) the amendment of Hillhaven's Rights
Agreement (or, at our request, the redemption of the Rights
issued thereunder) to exempt Horizon and the Merger from the
operation of the Rights Agreement and (ii) action by
Hillhaven's Board of Directors to ensure that Sections
78.411 through 78.444 and 78.378 through 78.3793 of the
Nevada Private Corporations Law will not apply to the
proposed transaction. In addition, we would expect NME to
enter into a voting agreement supporting the proposed
transaction.
CONCLUSION
I hope that you will be as enthusiastic as we are
about the exciting prospect of combining our two companies.
Of course, we are ready to discuss our proposal with you and
your advisors at any time or to make a presentation to your
Board of Directors. Please feel free to call me at (505)
881-4961 extension 3018. This matter has the highest
priority for all of us at Horizon, and we look forward to
hearing from you soon.
Sincerely,
HORIZON HEALTHCARE CORPORATION
/s/ Neal Elliott
_______________________________
Neal Elliott
Chairman of the Board
______________________________________________________________________
EXHIBIT 29
HORIZON HEALTHCARE CORPORATION
6001 Indian School Road, N.E.
Albuquerque, New Mexico 87190
(505) 881-4961
January 25, 1995
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Attention: Mr. Jeff Barbakow
Chairman of the Board of Directors
Re: The Hillhaven Corporation
Gentlemen:
As you are aware, Horizon Healthcare Corporation
("Horizon") has made a business combination proposal to The
Hillhaven Corporation ("Hillhaven"), as outlined in the
letter previously delivered to National Medical Enterprises,
Inc. ("NME") (the "Transaction"). In the Transaction,
shareholders of Hillhaven would receive $28 in value of
shares of common stock of a newly formed holding company
("Newco") for each outstanding share of Hillhaven common
stock (the "Shares") and shareholders of Horizon would
receive one share of Newco common stock for each outstanding
share of Horizon common stock. In addition, as part of the
Transaction, each outstanding share of Hillhaven's Series C
and Series D Preferred Stock would be redeemed at $1,000 per
share in cash, plus any accrued and unpaid dividends,
whether or not declared, to the date of redemption. In
consideration of the mutual covenants contained herein, NME
and Horizon have agreed as follows:
1. If prior to consummating a Transaction but within
12 months of the date hereof there is a merger,
consolidation or other transaction with any party other than
Horizon (an "Other Transaction") in which NME receives
consideration for any of its Shares equal to or greater than
$27.50 per Share, then Horizon shall be entitled to receive
(and NME shall cause Horizon to receive) upon consummation
of an Other Transaction an amount equal to the greater of
(i) $5,000,000 or (ii) 50% of the consideration received by
NME in excess of $29 per Share. If the consideration
received for NME's Shares in an Other Transaction includes
securities or other assets or property other than cash, such
consideration shall be valued at fair market value at the
time of receipt, and NME, at its option, may distribute to
Horizon the payments required to be made under the foregoing
sentence in cash or in kind. It is intended that each of
NME and Horizon will be responsible for the income tax
liability attributable to the portion of the consideration
received by each party, respectively, in an Other
Transaction.
2. Horizon agrees to actively pursue the Transaction
in good faith.
3. This letter agreement shall terminate upon the
termination or abandonment of Horizon's efforts to
consummate the Transaction. Notwithstanding the foregoing
sentence, the provisions of Section 1 hereof shall survive
such termination, provided that Horizon shall have complied
with the terms of Section 2 hereof.
4. Nothing in this letter agreement shall be
construed to impose any requirement or restriction on NME
with respect to its right to acquire or dispose of any
Shares from or to any party, or to vote any Shares, and all
decisions with respect thereto shall be made by NME in its
sole discretion.
5. This letter agreement shall be governed by and
construed in accordance with the laws of the State of
New York.
If NME agrees to the terms set forth in this letter, please
execute and return the enclosed copy of this letter
agreement, at which time this letter agreement shall
constitute a binding agreement between the parties hereto.
Very truly yours,
HORIZON HEALTHCARE CORPORATION
/s/ Neal Elliott
______________________________
Neal Elliott
Chairman of the Board
AGREED AND ACCEPTED:
NATIONAL MEDICAL ENTERPRISES, INC.
By: /s/ Scott M. Brown
______________________________
