<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 1999
REGISTRATION NO. 333-___
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RAMSAY YOUTH SERVICES, INC.
(formerly known as Ramsay Health Care, Inc.)
(Exact name of Registrant as specified in its charter)
DELAWARE 63-0857352
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)) Identification Number)
COLUMBUS CENTER
ONE ALHAMBRA PLAZA
SUITE 750
CORAL GABLES, FLORIDA 33134
(305) 569-6993
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
LUIS E. LAMELA
CHIEF EXECUTIVE OFFICER
RAMSAY YOUTH SERVICES, INC.
COLUMBUS CENTER
ONE ALHAMBRA PLAZA
SUITE 750
CORAL GABLES, FLORIDA 33134
(305) 569-6993
(Name,address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
COPIES OF ALL COMMUNICATIONS, INCLUDING COMMUNICATIONS
SENT TO AGENT FOR SERVICE, SHOULD BE SENT TO:
Bradley P. Cost, Esq.
Haythe & Curley
237 Park Avenue
New York, New York 10017
(212) 880-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plan, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]
<PAGE> 2
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act , please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [X]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered(1) offering price aggregate offering registration fee
per share(1) price(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.01 par value).......... 3,211,113 $2.03125 $6,552,574 $1,813.28
==============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act, based upon the
average of the high and low sale price of the registrant's Common
Stock on the Nasdaq Stock Market on January 14, 1999.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 3
===============================================================================
TABLE OF CONTENTS
PAGE
----
Risk Factors.................................................... 2
The Company..................................................... 7
Recent Transactions in Common Stock............................. 8
Use of Proceeds................................................. 9
Selling Securityholders......................................... 9
Plan of Distribution............................................ 11
Description of Common Stock..................................... 12
Incorporation of Certain Information by
Reference.................................................... 13
Legal Matters................................................... 14
Experts......................................................... 14
Available Information........................................... 14
===============================================================================
<PAGE> 4
SUBJECT TO COMPLETION, DATED JANUARY 19, 1999
3,211,113 SHARES OF COMMON STOCK
RAMSAY YOUTH SERVICES, INC.
Ramsay Youth Services, Inc. (formerly known as Ramsay Health Care,
Inc.) provides and manages treatment and educational programs for troubled
children and adolescents. Several of our stockholders are offering and selling
a total of 3,211,113 shares of our common stock (the "Common Stock") under this
prospectus. Certain of the selling stockholders purchased 3,111,113 shares of
the common stock in a private placement through individual subscription
agreements in October 1998 and another selling stockholder received 100,000
shares of common stock in connection with his employment arrangement with a
subsidiary we acquired in November 1998.
The common stock is listed on The Nasdaq Stock Market under the symbol
"RYOU." On January 14, 1999, the closing sale price of the common stock as
reported on The Nasdaq Stock Market was $2 1/8 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN
FACTORS THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN THE COMMON STOCK BEING
SOLD WITH THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is January 19, 1999
<PAGE> 5
RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all of the other information
included in this prospectus before you decide to purchase shares of our common
stock.
Some of the information in this prospectus may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. These statements discuss future
expectations, contain projections of results of operations or of financial
condition or state other "forward-looking" information. When considering such
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this prospectus. The risk factors noted in this
section and other factors noted throughout this prospectus, including certain
risks and uncertainties, could cause our actual results to differ materially
from those contained in any forward-looking statement. See "The Company."
CHANGE IN STRATEGIC DIRECTION
In February 1998, we announced a change in our strategic direction in
order to focus on becoming a leader in providing and managing the treatment and
educational programs for troubled youths and adolescents. Since that time, we
have sold businesses and assets, including our behavioral managed care business
and a number of inpatient psychiatric hospital facilities, which we decided
were not essential to our objectives in the youth services field. As a result
of our changes in strategic direction, and the related sales of assets, at
present, we are a significantly smaller company.
FAILURE TO BE SUCCESSFUL IN THE AT-RISK YOUTH INDUSTRY
Our business strategy is to expand into the at-risk youth industry by
establishing or acquiring additional residential treatment centers and group
homes, or companies which own these type of facilities, and establishing or
acquiring companies which provide educational services. We may not be
successful in expanding in this industry, and our business may not be
profitable once we have expanded within it. Also, the at-risk youth industry
will subject us to new management demands and expose us to differing areas of
liability.
RISKS RELATING TO ACQUISITIONS
One way we may expand in the at-risk youth industry is to acquire
companies already engaged in the provision of treatment and educational
services for troubled youth. This will subject us to a number of risks,
including the possible increase in indebtedness of the Company, the possible
inability to integrate the operations of the acquired business with ours, the
diversion of our management's attention from their other business activities
and the potential inability to retain key managers and employees of any
acquired business. In addition, we cannot predict whether we will actually make
acquisitions of complimentary businesses or how many businesses we may actually
acquire. Finally, our credit facility restricts our ability to make
2
<PAGE> 6
acquisitions and we cannot predict whether the necessary consents from our
lenders will be obtained in order to make any acquisitions.
EXTENSIVE GOVERNMENT REGULATION
Various Federal, state and local laws regulate our businesses and
frequently change. These laws apply to regulation of many aspects, including
licensure, billing, financial and payment relationships, referrals, direct
employment of licensed healthcare professionals, conduct of operations, the
non-profit status of certain entities with whom we do business, and
certification under Medicare and Medicaid. We expect to comply with applicable
regulatory requirements, although there can be no assurance that we will. If we
cannot comply with these, or other regulations, the government could fine us,
temporarily suspend our operations, exclude us from participation in government
reimbursement or payment programs or revoke our licenses. We cannot predict how
such legislation or regulations will change or how such a change might effect
our operations.
Existing Federal laws governing Medicare, as well as some state laws,
regulate certain aspects of the relationship between providers such as us, and
their referral sources, including physicians, hospitals and other health care
providers. The Social Security Act and several of its healthcare laws, prohibit
providers and others from receiving compensation for either making a referral
for or ordering a Medicare-covered service or item. These laws also prohibit
physicians, subject to certain exceptions, from making referrals to certain
entities (including hospitals) in which they will benefit financially.
Violation of these laws is punishable by civil and criminal penalties and
exclusion from the Medicare program. In addition, certain states have passed
similar legislation which prohibits the referral of patients who pay directly
for their own care. We believe that we are currently in compliance with these
laws, although it is possible that we are not as these laws are often
complicated and vague.
PROBLEMS AFFECTING REIMBURSEMENT FOR OUR SERVICES
We receive our operating revenues mostly from third-party
reimbursement and payment programs, including commercial insurance programs,
government insurance programs such as Medicare and Medicaid and other
governmental payment and aid programs. It is possible that payments under these
provisions may not cover all of the costs of the services provided. Also,
changes in the reimbursement and payment policies of these programs may
adversely affect our financial condition and results of operations.
Our business has been and will continue to be affected by the actions
and policies of payors for these services. Payors are continually trying to
revise payment procedures in their favor. For example, payors try to monitor
spending in order to keep costs down through several methods, including
prescreening patients before they receive care and continually monitoring the
patients while they are receiving care. It is possible that these actions could
adversely affect our financial condition and results of operations.
3
<PAGE> 7
DEPENDENCE ON MANAGEMENT AND OTHER QUALIFIED PERSONNEL
The successful operation of our business is dependent upon the
services of our key members of management. If we were to lose the full-time
services of these key managers, it could have a material adverse effect on our
business and results of operations, and we cannot predict whether we would be
able to find replacements with the necessary skills or experience.
PROFESSIONAL LIABILITY RISKS
We, along with other physicians, hospitals and healthcare providers,
have been subject to an increasing number of legal claims in recent years. We
maintain professional liability insurance coverage with maximum coverage of
$25,000,000 subject to a self-insured retention of $250,000 per claim. Although
we believe that our insurance is sufficient for our needs, a significant award
of claims or damages could adversely affect our financial condition and results
of operations.
POSSIBLE REQUIREMENT TO REPAY LOUISIANA MEDICAID DISPROPORTIONATE SHARE
PAYMENTS AND OTHER AMOUNTS IN CONNECTION WITH ASSET SALES
During fiscal years 1994 and 1995, our Three Rivers facility received
Medicaid payments which the State of Louisiana believes to be more than we
earned. We believe that we were correctly reimbursed and that the State of
Louisiana should reassess their determination.
Also, during fiscal years 1994 and 1995, certain private psychiatric
facilities in Louisiana, including our Three Rivers and Bayou Oaks facilities,
received additional payments from the State due to their classification in
Louisiana as teaching hospitals. The State of Louisiana again believes that
payments were improperly paid by the State to certain facilities, including
ours. We believe, based on our understanding of the rules and regulations in
place at the time these payments were made, that the payments received as a
result of the teaching classification were appropriate.
The State of Louisiana has asked us to pay them approximately
$5,000,000 in connection with the above. We expect this matter to be settled
for a much smaller amount. It is possible that we cannot agree to a settlement
or terms or conditions which we think are fair with the State of Louisiana. We
cannot predict the outcome of these matters at this time.
As a result of our change in strategic direction, we sold businesses
and assets which we decided were not essential to our objectives. The
documentation effecting these sales contains various adjustments in the
purchase prices for the business and assets sold by us and various agreements
on our part to indemnify the buyers against certain risks and contingencies.
These purchase price adjustments and indemnifications could require us to pay
these buyers significant amounts in the future. We cannot predict the extent,
if any, of these payments.
DEMAND FOR INDEMNIFICATION
Prior to our merger with Ramsay Managed Care, Inc. ("RMCI") RMCI sold
its HMO subsidiary which, as a licensed HMO in Louisiana, Alabama and
Mississippi, managed and provided prepaid healthcare services to its members. On
September 29, 1997, RMCI received a demand for indemnification by the purchaser
in an amount totaling approximately $5,800,000. In addition, on September 30,
1997, RMCI demanded indemnification from the purchaser for various matters in an
amount exceeding $2,000,000. Although we intend to contest vigorously any
position which we consider adverse, we cannot predict the outcome of these
matters at this time.
FAILURE TO BE YEAR 2000 COMPLIANT
Many existing computer programs were designed and developed without
considering the upcoming change in the century, which could lead to the failure
of computer applications or create erroneous results by or at the year 2000.
This issue is referred to as the "Year 2000 Issue." The Year 2000 Issue is a
broad business issue, whose impact extends beyond traditional computer hardware
and software to possible failure of automated plant systems and
instrumentation, as well as to business third parties. Also, there can be no
guarantee that third parties of business important to us will successfully
reprogram or replace, and test, all of their own computer hardware, software
and process control systems to ensure such systems are Year 2000 compliant.
Failure by us, third parties businesses important to us and/or other
constituents such as governments to become Year 2000 compliant on a timely
basis could have a material adverse effect on our financial position and
results of operations.
DILUTION
The issuance of additional shares of common stock in acquisition
transactions could decrease the value of the shares of common stock
outstanding.
4
<PAGE> 8
FAILURE TO PAY DIVIDENDS
We have never declared any cash dividends on our common stock. In
addition, under the terms of our credit facility, we are not allowed to do so
in the future. We expect to use our future earnings to support the continued
growth of our business, not to return it to our stockholders in the form of a
dividend. A decision to declare a cash dividend on our common stock is
exclusively that of our Board of Directors and only if our credit facility
allows it.
DELISTING OF COMMON STOCK FROM NASDAQ STOCK MARKET
We are required to satisfy continued listing requirements of the
Nasdaq Stock Market in order for our common stock to remain listed on this
market. We believe, as of the date of this prospectus, that we meet those
requirements. However, the price of our common stock is nearing Nasdaq's
minimum listing requirement. We may not be able to satisfy Nasdaq's continued
listing requirements in the future.
If we cannot meet all of Nasdaq's continued listing requirements, our
common stock may be delisted from The Nasdaq Stock Market. If so, there may no
longer exist a public market for our common stock. As a result, an owner of
shares of the common stock may have difficulty selling them or ascertaining
their true value. Also, any delisting may cause the common stock to be subject
to "penny stock" regulations under the Securities and Exchange Commission.
Under such regulations, broker-dealers are required to, among other things,
comply with complicated disclosure and other determinations prior to the sale
of the common stock. If our common stock becomes subject to these regulations,
the market price of our common stock and the ability to transfer it could be
adversely affected.
POSSIBLE INSTABILITY OF STOCK PRICE
We believe that several factors may affect the market price of our
common stock. For example, announcements regarding healthcare and educational
reform measures and other providers, reductions in projected government
healthcare and educational spending, and variations in our financial results
could cause the market price of our common stock to increase or decrease. Any
negative announcements regarding reform measures or program spending or about
our earnings could decrease the market price of our common stock. As a result,
the market for our common stock may have price and volume fluctuations
unrelated to our operating performance.
MINIMAL TRADING VOLUME OF COMMON STOCK
The trading volume for our common stock, as reported on The Nasdaq
Stock Market, averaged 88,150 shares per week during the three month period
ended December 31, 1998, and purchasers of our common stock may be unable to
readily sell the common stock at the time or at the price desired.
5
<PAGE> 9
DEPENDENCE ON PAYMENTS FROM SUBSIDIARIES
We are a holding company which earns money only through the operations
of our subsidiaries. Therefore, we have to rely upon payments from our
subsidiaries to meet our obligations. Our subsidiaries' ability to pay us will
be subject to, among other things, applicable state laws. Also, creditors of
our subsidiaries have first priority over our subsidiaries' funds.
STATE REGISTRATION REQUIRED FOR SALES OF SHARES
Under some state securities laws, shares of common stock may not be
sold unless they are qualified for sale or are exempt from the registration
requirements of the state in which the prospective purchaser lives. We will use
our best efforts to register and qualify our common stock under the state
securities laws in which we believe we need to do so.
6
<PAGE> 10
THE COMPANY
GENERAL
The Company is a leading provider and manager of diversified treatment
and educational programs for at-risk and troubled youth in residential and
non-residential settings nationwide.
On February 19, 1998, the Company announced a change in strategic
direction in order to focus on becoming a leader in the at-risk youth industry.
To that end, in February 1998, management identified for divestiture those
businesses and facilities which were not essential to its strategic objectives
in the youth services field. In June 1998, the Company sold its behavioral
managed care business and in September 1998, the Company completed the sales of
non-strategic inpatient psychiatric hospitals. The net proceeds from these
divestitures were applied to reduce indebtedness and to redeem preferred stock,
all held by an unaffiliated financial institution. The remaining business
represents the Company's youth service operations and is comprised of seven
youth facilities with 713 beds and six group homes with 66 beds. The Company
also provides a range of outpatient services and day treatment programs
tailored for the at-risk and troubled youth population.
Throughout its youth facilities and group homes, the Company offers
specialized services to those adolescents affected with behavioral disorders,
psychoses, emotional disorders, as well as sexual and juvenile offenders.
Within these environments, clinical and program teams incorporate therapeutic,
educational and vocational services with cognitive, behavioral and social
rehabilitation programs. These highly structured programs assist troubled youth
in learning how to change ineffective or violent behavior and cope with the
difficulties and stresses of life. The Company's specialized services and
programs are geared toward the following populations: (i) juvenile offenders,
(ii) adolescent females, (iii) children and adolescents with emotional and
behavioral disorders, (iv) sexual offenders, (v) substance abusers and (vi)
youth with developmental disabilities. In response to state, community and
agencies' needs to secure appropriate placements for special needs youth, the
Company offers residential treatment facilities, group homes, special education
programs and community-based services. The primary objective of the Company's
programs is to provide the optimal opportunity for habitation and integration
of at-risk and troubled youth into their communities as responsible individuals
and productive citizens.
FORWARD-LOOKING STATEMENTS
In connection with the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company notes that this
prospectus (including the documents incorporated by reference) contains
forward-looking statements about the Company. The Company is hereby setting
forth cautionary statements identifying important factors that may cause the
Company's actual results to differ materially from those set forth in any
forward-looking statements or information made by or on behalf of or concerning
the Company. Some of the most significant factors include (i) accelerating
changes occurring in the at-risk youth industry, including competition from
consolidating and integrated provider systems and limitations on reimbursement
rates, (ii) federal and state governmental budgetary constraints which could
have the effect of limiting the amount of funds available to support
governmental
7
<PAGE> 11
programs, (iii) statutory, regulatory and administrative changes or
interpretations of existing statutory and regulatory provisions affecting the
conduct of the Company's business and affecting current and prior reimbursement
for the Company's services, (iv) the Company's inability to successfully
implement its new strategic direction of providing treatment and education
programs for at-risk and troubled youth and (v) the other matters set forth
under the caption "Risk Factors" above.
RECENT TRANSACTIONS IN COMMON STOCK
On October 30, 1998, the Company completed the private placement (the
"Private Placement") of an aggregate of 3,111,113 shares of Common Stock to its
Chief Executive Officer, Paul Ramsay Holdings Pty Limited ("Ramsay Holdings"),
a corporate affiliate of Paul J. Ramsay, the Chairman of the Board of the
Company and the principal stockholder of the Company, and other unrelated
persons, all at a price per share of $1 1/8, the closing bid price of the
Common Stock on The Nasdaq Stock Market on October 26, 1998 (the date of the
various subscription agreements). These shares are included in the shares of
Common Stock covered by this Prospectus.
In addition, on October 30, 1998, the Company issued 533,334 shares of
Common Stock to Ramsay Holdings, in exchange for $600,000 of principal amount
of junior subordinated indebtedness owed by the Company to Ramsay Holdings. As
part of the Exchange Agreement (the "Exchange Agreement") entered into between
the Company and Ramsay Holdings to affect the foregoing exchange, the Company
agreed to issue additional shares of Common Stock to Ramsay Holdings in
exchange for $4 million of the Company's Class B Preferred Stock, Series 1997-A
(together with all accrued and unpaid dividends thereon) and an additional
$400,000 of principal amount of junior subordinated indebtedness owed by the
Company to Ramsay Holdings. This latter exchange was effected on December 1,
1998 at a price per share of $1 1/8 (the closing bid price of the Common Stock
on The Nasdaq Stock Market on October 26, 1998, the date of the Exchange
Agreement) after the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. This latter exchange
resulted in the issuance by the Company of 4,286,222 additional shares of
Common Stock to Ramsay Holdings.
On December 8, 1998, the Company completed the acquisition of The
Rader Group, Inc. for $1 million in cash and earn-out payments payable in the
future if certain earning targets are achieved. In addition, one of the
Company's subsidiaries entered into an employment agreement with Bill T. Rader.
As part of the employment arrangement, Mr. Rader received 100,000 shares of
Common Stock, which shares are included in the shares of Common Stock covered
by this Prospectus.
On December 16, 1998, the Company entered into an agreement (the
"Agreement") with Ramsay Holdings, Ramsay Holdings HSA Limited and Paul Ramsay
Hospitals Pty Limited (collectively, the "Ramsay Affiliates") pursuant to which
the Ramsay Affiliates (i) converted the Company's Class B Preferred Stock,
Series C and Class B Preferred Stock, Series 1996 (together with accrued and
unpaid dividends thereon of $618,908) into an aggregate of 3,596,263 shares of
Common Stock and (ii) exchanged $6,883,553 of principal amount of junior
subordinated indebtedness owed by the Company (together with accrued and unpaid
interest thereon of
8
<PAGE> 12
$123,219) for 4,152,162 shares of Common Stock. This latter exchange was
effected at a price per share of $1 11/16 (the closing bid price of the Common
Stock on The Nasdaq Stock Market on December 16, 1998, the date of the
Agreement).
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares offered in this prospectus. However, the $3,500,000 in proceeds received
by the Company from the Private Placement in which 3,111,113 of the shares of
Common Stock covered by this Prospectus were purchased were used to reduce
indebtedness and will be used for other general corporate purposes.
SELLING SECURITYHOLDERS
The following selling securityholders beneficially own as of January
1, 1999 and may offer hereby the number of shares of Common Stock set forth
opposite their respective names. The shares offered pursuant to this Prospectus
may be offered from time to time by the selling securityholders named below,
their nominees, transferees or their donees. The selling securityholders are
under no obligation to sell all or any portion of the shares pursuant to this
prospectus. In addition, because the selling securityholders are not obligated
to sell all or a portion of their shares pursuant to this Prospectus, the
Company is unable to ascertain the number of shares of Common Stock that will
be beneficially owned by each selling securityholder following the termination
of the offering.
The Company will incur expenses in respect of this offering in an
amount estimated to be $50,000 in the aggregate. Except as otherwise provided
in this Prospectus (including the footnotes to the table below), no selling
securityholder has held any position or office or had any other material
relationship with the Company within the past three years. The selling
securityholders will receive all of the proceeds from the sale of the shares
offered hereby. The Company will not receive any proceeds from the sale of such
shares. See "Use of Proceeds" and "Plan of Distribution."
9
<PAGE> 13
The information in the table below concerning the selling
securityholders is based on information provided to, or known by, the Company.
Information concerning the selling securityholders may change from time to time
after the date of this prospectus. See "Risk Factors," "Plan of Distribution"
and "Description of Capital Stock."
<TABLE>
<CAPTION>
Shares Of Common Shares Of Common Stock
Stock Owned Prior Offered Pursuant To
Name of Selling Securityholder To Offering Offering
- ------------------------------ ----------- --------
<S> <C> <C>
Dauphin Capital Partners I, LP(1)...................... 1,333,334 1,333,334
Luis E. Lamela (2)..................................... 1,744,957(3) 888,889
Paul Ramsay Holdings Pty. Limited (4).................. 14,163,073 (5) 480,000
Moises Hernandez, M.D. ................................ 177,778 177,778
Bill T. Rader.......................................... 100,000 100,000
Thomas Hodapp.......................................... 88,889 88,889
Haythe & Curley (6).................................... 88,889 88,889
Sanford R. Robertson................................... 44,445 44,445
Aaron Beam............................................. 52,505(7) 8,889
TOTAL............................................. 3,211,113
</TABLE>
- -----------------
(1) The address for Dauphin Capital Partners I, LP is 1921 West Joppa
Road, Reston, Maryland 21204-1848.
(2) Luis E. Lamela has been Chief Executive Officer of the Company since
January 1998 and a director of the Company since 1996.
(3) Includes 115,000 shares of Common Stock issuable upon the exercise of
exercisable options to purchase shares of Common Stock held by Mr.
Lamela and 450,045 shares of Common Stock issuable upon the exercise
of exercisable warrants to purchase shares of Common Stock held by Mr.
Lamela.
(4) Paul Ramsay Holdings Pty. Limited, an Australian corporation (Ramsay
Holdings), is a corporate affiliate of Paul J. Ramsay, the Chairman of
the Board of the Company.
(5) Includes all shares beneficially owned by Ramsay Holdings HSA Limited,
a Barbados corporation, a wholly owned subsidiary of Ramsay Holdings
and a corporate affiliate of Mr. Ramsay. Includes 250,000 shares of
Common Stock issuable upon the exercise of exercisable options to
purchase shares of Common Stock held by Ramsay Holdings. Does not
include 2,394,739 shares of Common Stock beneficially owned by Ramsay
Hospital Pty Limited, an Australian corporation and the parent
corporation of Ramsay Holdings.
(6) Haythe & Curley has served as counsel to the Company since 1987, and
Thomas M. Haythe, a member of that firm, has been a director of the
Company since 1987. See "Legal Matters."
(7) Includes 23,333 shares of Common Stock issuable upon the exercisable
options to purchase shares of Common Stock held by Mr. Beam.
10
<PAGE> 14
PLAN OF DISTRIBUTION
All of the shares offered hereby are being offered on behalf of the
selling securityholders. The shares are comprised of 3,111,113 shares of Common
Stock issued by the Company in a private placement in October 1998 and 100,000
shares of Common Stock issued by the Company in connection with employment
arrangements entered into in connection with an acquisition by the Company in
December 1998. See "Recent Transactions in Common Stock."
The sale of the shares may be effected directly to purchasers by the
selling securityholders as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions (which
may involve block transactions). Any sales of the shares may be effected
through the Nasdaq Stock Market, in private transactions or otherwise. The
shares may be sold at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. If the
selling securityholders effect sales through underwriters, brokers, dealers or
agents, such firms may receive compensation in the form of discounts,
concessions or commissions from the selling securityholders or the purchasers
of the shares for whom they may act as agent, principal or both. Those persons
who act as broker-dealers or underwriters in connection with the sale of the
shares will be selected by the selling securityholders and may have other
business relationships with, and perform services for, the Company. Any selling
securityholder, underwriter or broker-dealer who participates in the sale of
the shares may be deemed to be an "underwriter" within the meaning of Section
2(11) of the Securities Act. Any commissions received by any underwriter or
broker-dealer and any profit on any sale of the shares as principal may be
deemed to be underwriting discounts and commissions under the Securities Act.
The anti-manipulation provisions of Rules 101 through 104 under the
Exchange Act of 1934 may apply to purchases and sales of shares of Common Stock
by the selling securityholders. In addition, there are restrictions on
market-making activities by persons engaged in the distribution of the Common
Stock.
Under the securities laws of certain states, the shares may be sold in
such states only through registered or licensed brokers or dealers. In
addition, in certain states the shares may not be able to be sold unless the
Common Stock has been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
The Company is required to pay expenses incident to the registration,
offering and sale of the shares pursuant to this offering. The Company has also
agreed to indemnify the selling securityholders, their partners, officers,
directors and each of their controlling persons, if any, against certain
liabilities, including liabilities under the Securities Act. The Company
estimates that its expenses in connection with the offering will be
approximately $25,000 in the aggregate.
The Company has advised the selling securityholders that if a
particular offer of shares is to be made on terms constituting a material
change from the information set forth above, then to the extent required, a
prospectus supplement must be distributed setting forth such terms and related
information must be used.
11
<PAGE> 15
DESCRIPTION OF COMMON STOCK
The Company's authorized capital stock consists of 30,000,000 shares
of Common Stock, $.01 par value, 800,000 shares of Class A preferred stock,
$1.00 par value, and 2,000,000 shares of Class B preferred stock, $1.00 par
value, issuable in series.
At January 1, 1999, the Company had issued and outstanding 26,657,076
shares of Common Stock. Each outstanding share of Common Stock is entitled to
one vote on all matters submitted to a vote of stockholders. The Common Stock
does not have cumulative voting rights. Presently outstanding shares of Common
Stock are fully paid and non-assessable. In the event of any liquidation,
dissolution or winding-up of the affairs of the Company, the holders of Common
Stock will be entitled to share ratably in its assets remaining after provision
for payment of creditors and after the liquidation preference of any Class B
Preferred Stock outstanding at the time.
Subject to the rights of the holders of the Class B Preferred Stock,
no shares of which are issued or outstanding on the date hereof, the holders of
the Common Stock are entitled to receive dividends when and if declared by the
Board of Directors out of funds legally available for that purpose. The
Company's ability to pay dividends is restricted under the terms of certain
loan agreements to which the Company is a party.
The transfer agent for the Common Stock is First Union National Bank
of North Carolina.
On January 13, 1999, the Company announced a 1-for-3 reverse stock
split. The Company expects the reverse stock split to become effective in late
February 1999.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation, as amended, includes
provisions to eliminate the personal liability of the Company's directors to
the fullest extent permitted by Delaware law. Under current law, such
exculpation generally extends to breaches of fiduciary duty, except for (i)
breaches of such person's duty of loyalty, (ii) acts or omissions not in good
faith or which involve intentional misconduct, (iii) those instances where an
improper personal benefit was received and (iv) the declaration of dividends in
violation of applicable law.
The Company's By-Laws provide that the Company shall indemnify any
person who is or is threatened to be made a party to any action or proceeding
by reason of his or her being or having been a director or officer of the
Company to the fullest extent permitted by Delaware law.
It is the position of the Securities and Exchange Commission that
insofar as indemnification for liabilities arising under the Securities Act may
be permitted for any director or officer of the Company pursuant to the
foregoing provisions as a means of indemnifying any of them against such
liabilities, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
12
<PAGE> 16
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission pursuant to the Exchange Act are incorporated by reference
into this Prospectus and made a part hereof as of their respective dates:
1. The Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1998, filed with the Securities and Exchange
Commission on October 13, 1998.
2. The Company's Annual Report on Form 10-K/A for the year
ended June 30, 1998, filed with the Securities and Exchange Commission
on October 26, 1998.
3. The Company's Proxy Statement on Form 14-A, filed with the
Securities and Exchange Commission on October 28, 1998.
4. The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, filed with the Securities and
Exchange Commission on November 6, 1998.
5. The Company's Report on Form 8-K/A, filed with the
Securities and Exchange Commission on December 14, 1998.
6. The Company's Quarterly Report on Form 10-Q/A for the
quarter ended September 30, 1998, filed with the Securities and
Exchange Commission on January 13, 1999.
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective filing dates of such documents. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document,
which also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide, without charge, to each person to whom a
copy of this Prospectus is delivered, upon the request of any such person, a
copy of any or all of the documents incorporated by reference herein (excluding
the exhibits to such documents). Requests for copies should be directed to
Ramsay Youth Services, Inc., Columbus Center, One Alhambra Plaza, Suite 750,
Coral Gables, Florida 33134, Attention: Secretary.
13
<PAGE> 17
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Haythe & Curley, New York, New York. Haythe &
Curley is also one of the selling securityholders and Thomas M. Haythe, a
member of that firm, is a director of the Company. See "Selling
Securityholders."
EXPERTS
The consolidated financial statements as of June 30, 1998, 1997 and
1996 and for the years then ended incorporated in this Prospectus by reference
to the Annual Report on Form 10-K of Ramsay Youth Services, Inc. for the fiscal
year ended June 30, 1998 have been so incorporated in reliance on the report of
Ernst & Young LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
under the Securities Act a registration statement on Form S-3, of which this
Prospectus is a part, with respect to the shares offered hereby. This
Prospectus, which constitutes a part of the registration statement, does not
contain all of the information set forth in the registration statement, certain
items of which are contained in exhibits and schedules as permitted by the
rules and regulations of the Securities and Exchange Commission. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to herein are not necessarily complete. With respect to each
contract, agreement or other document filed as an exhibit to the registration
statement or in a filing incorporated by reference herein, reference is made to
the exhibit for a more complete description of the matters involved, and each
statement shall be deemed qualified in its entirety by this reference.
The Company is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files certain periodic reports,
proxy statements and other information with the Securities and Exchange
Commission. Reports and other information filed by the Company may be inspected
and copied at the public reference facilities maintained by the Securities and
Exchange Commission at its principal offices located at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices of the Securities and Exchange Commission: Seven World Trade
Center, 13th Floor, New York, New York 10048, and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60601. Copies of such material may be obtained by
mail from the Public Reference Section of the Securities and Exchange
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Securities and Exchange Commission maintains a Web site
at http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company. Material filed by the Company can also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
14
<PAGE> 18
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SECURITIES EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION OR
REPRESENTATIONS PROVIDED IN THIS PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO
PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE
SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME
THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THE DOCUMENT.
15
<PAGE> 19
===============================================================================
3,211,113 SHARES
COMMON STOCK
RAMSAY YOUTH SERVICES, INC.
--------------------------------------
PROSPECTUS
--------------------------------------
January 19, 1999
===============================================================================
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be incurred and borne
by the Company in connection with the sale of the shares offered hereby. All
amounts shown are estimates, except for the Securities and Exchange Commission
and Nasdaq Stock Market filing fees.
Securities and Exchange Commission filing fee...................... $ 1,813
Nasdaq Stock Market additional share listing fee................... $ 906
Legal fees and expenses............................................ $ 25,000
Accounting fees and expenses....................................... $ 10,000
Miscellaneous...................................................... $ 3,221
----------
Total fees and expenses....................................... $ 50,000
----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, among other
things, and subject to certain conditions, authorizes the Company to indemnify
its officers and directors against certain liabilities and expenses incurred by
such persons in connection with the claims made against them as a result of
their being an officer or director. The Company's By-Laws provide that the
Company shall indemnify any person who is or was a director or officer of the
Company and is a party or is threatened to be made a party to any action or
proceeding to the fullest extent permitted by Delaware law.
Article IV, Section 4.1 of the Company's By-laws provides, in part, as
follows:
Each person who was or is a party or is threatened to be made a party
or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director, officer or fiduciary
of another corporation, partnership, joint venture, trust of other enterprise,
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said Law permitted the corporation to provide prior
to such amendment), against all expenses, liability and loss, (including
attorneys' fees, judgments, fines and amounts paid in settlement) actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonable believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
II-1
<PAGE> 21
ITEM 16. EXHIBITS.
The following is a list of exhibits filed as a part of this
registration statement:
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- -----------------------
5.1 Opinion of Haythe & Curley (regarding the validity of the
shares of Common Stock).
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney (included on page II-3).
ITEM 17. UNDERTAKINGS.
(a) The Company hereby undertakes the following:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of
the Company in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against the public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-2
<PAGE> 22
POWER OF ATTORNEY
The Company and each person whose signature appears below hereby
appoints the agent for service named in the registration statement, Luis E.
Lamela and Thomas M. Haythe as attorneys-in-fact with full power of
substitution, severally, to execute in their respective names and on behalf of
the Company and each such person individually and in each capacity stated
below, one or more amendments (including post-effective amendments) to this
registration statement as the attorney-in-fact acting in the premises deems
appropriate and to file any such amendment to this registration statement with
the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Coral Gables, State of Florida, on January 18, 1999.
RAMSAY YOUTH SERVICES, INC.
By:
------------------------------
(Luis E. Lamela
Chief Executive Officer and
Principal Executive Officer)
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
DATE SIGNATURE/TITLE
---- ---------------
Dated: January 19, 1999 ----------------------------------
Luis E. Lamela
Chief Executive Officer,
Principal Executive Officer and
Director
Dated: January 19, 1999 ----------------------------------
Marcio Cabrera
Principal Financial Officer
and Principal Accounting Officer
Dated: January 19, 1999 ----------------------------------
Paul J. Ramsay
Chairman of the Board and Director
II-3
<PAGE> 23
Dated: January 19, 1999 ----------------------------------
Aaron Beam, Jr.
Director
Dated: January 19, 1999 ----------------------------------
Peter J. Evans
Director
Dated: January 19, 1999 ----------------------------------
Thomas M. Haythe
Director
Dated: January 19, 1999 ----------------------------------
Steven J. Shulman
Director
Dated: January 19, 1999 ----------------------------------
Michael S. Siddle
Director
II-4
<PAGE> 24
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- -----------------------
5.1 Opinion of Haythe & Curley (regarding the validity of the
shares of Common Stock).
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney (included on page II-3).
<PAGE> 1
EXHIBIT 5.1
January 19, 1999
Ramsay Youth Services, Inc.
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Re: REGISTRATION STATEMENT ON FORM S-3
----------------------------------
Gentlemen:
We have acted as your special counsel in connection with the offering
by certain selling shareholders of a number of shares of Common Stock, par
value $.01 per share (the "shares"), of Ramsay Youth Services, Inc., a Delaware
corporation (the "Company"). The shares are being offered pursuant to the
Company's registration statement on Form S-3 filed with the Securities and
Exchange Commission (the "Commission") on January 18, 1999.
In connection with the foregoing, we have examined originals or
copies, satisfactory to us, of all such corporate records and of all such
agreements, certificates and other documents as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed, including the
following documents: (a) the Company's Certificate of Incorporation, as
amended; (b) the Company's Bylaws, as amended; and (c) the resolutions adopted
by the Board of Directors of the Company.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with the original documents of all documents submitted to us as
copies. As to any facts material to such opinion, we have relied on
certificates of public officials and certificates of officers or other
representatives of the Company.
Based upon the foregoing, and subject to the qualifications and
limitations contained herein, we are of the opinion that the shares have been
duly and validly authorized and issued, and are fully paid and non-assessable.
We are members of the Bar of the State of New York and are not
licensed or admitted to practice law in any other jurisdiction. Accordingly, we
express no opinion with respect to the laws of any jurisdiction other than the
Federal laws of the United States and the State of New York.
Our opinion and the matters expressed herein are as of the date hereof
and we assume no obligation to advise you of any change in any matter set forth
herein after the date hereof. This opinion may not be relied upon by any other
person for any purpose without our prior written consent.
<PAGE> 2
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming part of the Registration Statement. In
giving such consent, we do not thereby concede that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended (the "Act"), or the rules and regulations thereunder, or that
we are "experts" within the meaning of the Act or such rules and regulations.
Very truly yours,
HAYTHE & CURLEY
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (on Form S-3 No. 333- ) and related Prospectus of
Ramsay Youth Services, Inc. for the registration of 3,211,113 shares of its
Common Stock and to the incorporation by reference therein of our report dated
October 1, 1998 with respect to the consolidated financial statements of Ramsay
Youth Services, Inc. included in its Annual Report on Form 10-K for the year
ended June 30, 1998, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
January 19, 1999
