SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: March 20, 1998
HEALTHSOUTH Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-10315 63-0860407
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of Incorporation File Number) Identification No.)
or Organization)
One HEALTHSOUTH Parkway
Birmingham, Alabama 35243
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number, (205) 967-7116
Including Area Code:
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
(4)-2 Subordinated Indenture, dated March 20, 1998, between
HEALTHSOUTH Corporation and The Bank of Nova Scotia Trust Company of
New York, as Trustee, filed as Exhibit (4)-2 to the Company's Annual
Report on Form 10-K for the Fiscal Year ended December 31, 1997, is
hereby incorporated by reference.
(4)-3 Officer's Certificate pursuant to Sections 2.3 and 11.5
of the Subordinated Indenture, dated March 20, 1998, between
HEALTHSOUTH Corporation and The Bank of Nova Scotia Trust Company of
New York, as Trustee, relating to the Company's 3.25% Convertible
Subordinated Debentures due 2003, filed as Exhibit (4)-3 to the
Company's Annual Report on Form 10-K for the Fiscal Year ended December
31, 1997, is hereby incorporated by reference.
(4)-4 Registration Rights Agreement, dated March 17, 1998,
among HEALTHSOUTH Corporation and Smith Barney Inc., Bear, Stearns &
Co. Inc., Cowen & Company, Credit Suisse First Boston Corporation, J.P.
Morgan Securities Inc., Morgan Stanley & Co. Incorporated, NationsBanc
Montgomery Securities LLC and PaineWebber Inc., relating to the
Company's 3.25% Convertible Subordinated Debentures due 2003, filed as
Exhibit (4)-4 to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 31, 1997, is hereby incorporated by
reference.
Item 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATIONS
On March 20, 1998, HEALTHSOUTH Corporation, a Delaware corporation (the
"Company"), consummated the sale in a private placement of $500,000,000
aggregate principal amount of 3.25% Convertible Subordinated Debentures due 2003
(the "Debentures").
The Debentures are convertible into Common Stock, par value $.01 per
share, of the Company ("Common Stock") at an initial conversion price of $36.625
per share. The Debentures are redeemable, in whole or in part, at the option of
the Company on or after April 5, 2001 at the following redemption prices
(expressed as percentages of principal amount) plus accrued interest if redeemed
during the 12-month period beginning on April 1 of the year (April 5, in the
case of 2001) set forth below:
Year Percentage
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2001 101.30%
2002 100.65%
No sinking fund is provided for the Debentures.
If a "Change in Control" (as defined in the Indenture covering the
Debentures) of the Company were to occur, each holder of Debentures would be
entitled to require the Company to purchase its Debentures, in whole or in part,
at a purchase price equal to 100% of the principal amount thereof, together with
accrued but unpaid interest thereon to the date of purchase.
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The payment of the principal of and premium, if any, and interest on
the Debentures will, to the extent set forth in the Indenture, be subordinated
in right of payment to the prior payment in full of all "Senior Indebtedness"
(as defined in the Indenture covering the Debentures) of the Company and
effectively subordinated in right of payment to the prior payment in full of all
indebtedness and other liabilities of the Company's subsidiaries. The Indenture
does not restrict the Company's ability to incur Senior Indebtedness.
The Debentures were sold by the Company to Smith Barney Inc.; Bear,
Stearns & Co. Inc.; Cowen & Company; Credit Suisse First Boston Corporation;
J.P. Morgan Securities Inc.; Morgan Stanley & Co. Incorporated; NationsBanc
Montgomery Securities LLC; and Paine Webber Incorporated, as initial purchasers
(together, the "Initial Purchasers"), in reliance on the exemption set forth in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Purchase Agreement between the Company and the Initial Purchasers
dated March 17, 1998. The Company granted to the Initial Purchasers a 30-day
option to purchase an additional $75,000,000 aggregate principal amount of
Debentures to cover over-allotments, if any. On March 31, 1998, the Company
consummated the sale of $67,750,000 aggregate principal amount of the Debentures
pursuant to the exercise of the Initial Purchasers' over-allotment option. The
consideration received by the Initial Purchasers was 1.75% of the aggregate
offering price, or $9,935,625.
The Company has been advised that the Initial Purchasers subsequently
resold the Debentures in the United States to "qualified institutional buyers"
in reliance on Rule 144A under the Securities Act and outside the United States
in offshore transactions to investors in reliance on Regulation S under the
Securities Act. Of the total amount of Debentures sold, $559,550,000 were sold
under Rule 144A, $6,200,000 were sold in reliance on the exemption from
registration provided by Regulation S, and $2,000,000 were sold in reliance on
the exemption from registration provided by Regulation D under the Securities
Act.
The Company has agreed pursuant to a Registration Rights Agreement to
(i) file a Shelf Registration Statement with respect to the Debentures and the
Common Stock issuable upon the conversion thereof within 60 days following the
first date of initial issuance of the Debentures, (ii) use its best efforts to
cause the Shelf Registration Statement to be declared effective within 150 days
after the first date of initial issuance of the Debentures, and (iii) keep the
Shelf Registration Statement effective after its effective date for as long as
shall be required under Rule 144(k) under the Securities Act or any successor
rule or regulation thereto. Upon the failure by the Company to comply with these
obligations, interest payable on the Debentures will be increased by 25 basis
points per annum for the first 90 days in which a registration default has
occurred and is continuing and 50 basis points per annum for any additional days
during which a registration default has occurred and is continuing.
The net proceeds of the private placement were used to repay
indebtedness under the Company's existing bank credit facilities.
The Debentures and the Common Stock issuable upon conversion thereof
have not been registered under the United States Securities Act of 1933 and may
not be offered or sold in the United States absent registration or an applicable
exemption from registration requirements. The issuance of the Debentures has
been structured to allow secondary market trading under Rule 144A under the
Securities Act of 1933.
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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.
Date: April 3, 1998
HEALTHSOUTH CORPORATION
By /s/ WILLIAM W. HORTON
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William W. Horton
Senior Vice President
and Corporate Counsel
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