SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 27, 1997
Commission file number 1-12055
PARACELSUS HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
California 95-3565943
<S> <C>
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>
515 W. Greens Road, Suite 800, Houston, Texas
(Address of principal executive offices)
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<CAPTION>
<S> <C>
77067 (281) 774-5100
(Zip Code) (Registrant's telephone number, including
area code)
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ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTOR
On June 27, 1997, Mr. James A. Conroy submitted his resignation as a director
of Paracelsus Healthcare Corporation (the "Company"). In his resignation
letter, which is hereby filed as Exhibit 17, Mr. Conroy stated " My
resignation is due to my unhappiness with the unwillingness of the Special
Committee to address the issue of the old Paracelsus board members'
responsibility for the reporting and accounting failures found by the Special
Committee, as well as my strong disagreement with the decision made by the
other board members not to make full disclosure of the results of the Special
Committee's investigation to the Securities and Exchange Commission."
The Company's management, while accepting Mr. Conroy's resignation,
does not agree with Mr. Conroy's positions on the matters addressed above
because of the following:
(i) The Special Committee's investigation sought to uncover all facts relevant
to the responsibility of the directors of premerger Paracelsus for the
reporting and accounting failures reflected in the Company's restatement
of its financial statements. Based on these facts, a majority of the
Special Committee members, including a completely disinterested
nonmanagement director, concluded that it was not in the Company's best
interests for the Special Committee to make recommendations concerning the
old Paracelsus' board members at that time. The Company's position was
fully supported by Wilmer, Cutler & Pickering, its outside legal counsel
which firm had been retained by the Special Committee to conduct such
inquiry.
(ii) During the last Board Meeting, Mr. Conroy motioned that the Company should
waive its attorney-client and work product privileges so as to permit
disclosure of the detailed facts uncovered in the Special Committee's
investigation to the Securities and Exchange Commission. During the
discussion of that motion, Wilmer, Cutler & Pickering advised the Company
that, given the pendency of the shareholder and derivative litigation and
other factors, waiver of the privileges was not in the best interests of
the Company. The Company was further reassured by Wilmer, Cutler &
Pickering, that based on the available facts, all legally
required public disclosures concerning the results of the Special
Committee's investigation had already been made. Based on this advice,
there was no second to Mr. Conroy's motion.
(iii)The Board is concerned that Mr. Conroy's positions may reflect his
interests as a member of a large group of former Champion shareholders,
rather that the interests of the Company, its shareholders and all of its
other constituent groups.
ITEM 7. EXHIBIT
17 Letter re director resignation of Mr. James Conroy.
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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.
Paracelsus Healthcare Corporation
(Registrant)
/s/ James G. VanDevender
Dated: July 7, 1997 By: ___________________________
James G. VanDevender
Executive Vice President,
Chief Financial Officer
& Director
OLYMPUS PARTNERS
Metro Center, One Station Place
Stanford, Connecticut 06902
(203)353-5900
James A. Conroy
Partner
June 27, 1997
Via Facsimile: 281-774-5110
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The Board of Directors
Paracelsus Healthcare Corporation
515 West Greens Road
Houston, Texas 77067
Attention: Mr. Charles R. Miller
Gentlemen:
I hereby resign as a director of Paracelsus effective immediately. My
resignation is due to my unhappiness with the unwillingness of the Special
Committee to address the issue of the old Paracelsus board members'
responsibility for the reporting and accounting failures found by the Special
Committee, as well as my strong disagreement with the decision made by the
other board members not to make full disclosure of the results of the Special
Committee's investigation to the Securities and Exchange Commission.
I request that this letter be filed in a Form 8-K within the required time
period.
Sincerely,
/s/ James A. Conroy
JAC/jbp
cc: Arthur F. Mathews, Esq.
