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 (Date of earliest event reported) August 15, 1997.
HEALTH MANAGEMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-18472 75-2096632
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
1371-A Abbott Court, Buffalo Grove, Illinois 60089
(Address of principal executive offices) (Zip Code)
(847) 913-2700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Item 1. Change of Control of Registrant.
See Item 5 "Other Events" for information regarding a potential change of
control of Health Management, Inc. (the "Company").
Item 5. Other Events.
On August 15, 1997, Transworld HealthCare, Inc., a New York corporation and
the Company's 49% stockholder and senior creditor ("Transworld"), entered into
an agreement (the "Asset Purchase Agreement") with Counsel Corporation, a
Canadian corporation ("Counsel") relating to the sale of all of the business and
operations of the Company. Pursuant to the agreement, Counsel will purchase the
assets of the Company for $40 million, subject to certain conditions, including
satisfactory due diligence.
While the Company is not a party to the Asset Purchase Agreement, the
Company has agreed to allow Counsel to conduct due diligence and has agreed to
refrain from pursuing other transactions until September 30, 1997 or such
earlier date after September 3, 1997 as instructed by Transworld.
Transworld and the Company are parties to a merger agreement pursuant to
which a subsidiary of Transworld will be merged with and into the Company and
the stockholders of the Company (other than affiliates of Transworld) will
receive $0.30 per share of common stock of the Company (the "Merger"). As the
Company previously announced, it is still not clear whether Transworld intends
to consummate the Merger. If the Merger is not consummated and the transaction
with Counsel proceeds as a purchase of assets, it is not clear what
consideration, if any, would be paid to the Company's stockholders.
Also on August 15, 1997, the Company announced that W. James Nicol entered
into an agreement with the Company to step down as President and Chief Executive
Officer of the Company, although he will continue to have an active role in the
Company as a member of its Board of Director. James R. Mieszala, formerly the
Company's Chief Operating Officer, has been named President and Chief Executive
Officer.
A copy of the press release issued by the Company in connection with the
above-described matters is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description
10.1 Letter Agreement, dated August 13, 1997, between the Company and
Counsel Corporation.
99.1 Press release, dated August 15, 1997, issued by the Company.
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 thereunto duly authorized.
HEALTH MANAGEMENT, INC.
(Registrant)
/s/ James R. Mieszala
Name: James R. Mieszala
Date: August 25, 1997 Its: Chief Executive Officer and
President
Index to Exhibits
Exhibit Sequential
Number Description Page No.
10.1 Letter Agreement, dated August 13, 1997, between the Company and
Counsel Corporation.
99.1 Press release, dated August 15, 1997, issued by the Company.
issued by the Registrant.
Exhibit 10.1
Counsel Corporation
The Exchange tower
Suite 1300
2 First Canadian Place
Toronto, Ontario M5X IE3
Canada
August 13, 1997
Health Management, Inc.
1371-A Abbott Court
Buffalo Grove, IL 60089
Gentlemen:
In order to induce Counsel Corporation ("Counsel") to expend the effort and
expense to conduct a due diligence examination of Health Management, Inc.
("HMI"), please confirm your agreement with the following by signing below:
1. HMI shall give Counsel and its accountants, counsel and other
representatives full and free access to HMI's assets, properties, customers,
suppliers, books, accounting, financial and statistical records, corporate
records, tax returns and other business files of HMI and such other documents
and information relating to the business and operations of HMI as may be deemed
necessary for the consummation of the proposed transaction and shall permit
Counsel to conduct an appropriate investigation into HMI's financial position
and operations. HMI shall cooperate fully in making its offices and personnel
available to Counsel, and its accountants, counsel and other representatives.
Counsel agrees that (except as may be required by law), Counsel will not
disclose or use, and Counsel will cause its representatives not to disclose or
use, any confidential information with respect to HMI, furnished, or to be
furnished by HMI in connection herewith at any time or in any manner other than
in connection with its evaluation of the transaction contemplated herein without
the prior written consent of HMI, unless the same is or shall become available
to it through non-confidential means or is or shall become generally available
to the public other than by breach of this letter by Counsel or its
representatives. The letter agreement dated October 28, 1996 between Counsel
and HMI shall apply to any information disclosed to Counsel or its
representatives pursuant to this letter. In addition, the provisions of Section
6 of such letter ("No Solicitation") shall apply as if the date of such letter
agreement was the date hereof.
2. HMI shall not, nor will HMI permit any of its officers, directors,
agents or affiliates to, provide information to, or have contact with, other
parties (other than Transworld Healthcare, Inc. ("Transworld")) with regard to
any merger, sale of all or substantially all of the assets or other business
combination through September 30, 1997 (or such earlier date after September 3,
1997 as Transworld notifies HMI in writing).
3. Prior to the closing date of the transactions contemplated in the
letter agreement dated August 13, 1997 between Counsel and Transworld, HMI shall
carry on its business diligently and in substantially the same manner as such
business has been operated prior to the date hereof.
Very truly yours,
COUNSEL CORPORATION
By: /s/ Samuel Shimer
ACCEPTED AND AGREED TO:
HEALTH MANAGEMENT, INC.
By: /s/ James R. Mieszala
Exhibit 99.1
FOR IMMEDIATE RELEASE
HEALTH MANAGEMENT, INC. COMMENTS ON
TRANSWORLD/COUNSEL AGREEMENT
BUFFALO GROVE, IL -- AUGUST 15, 1997 ... Health Management, Inc. (the "Company")
(NASDAQ SmallCap: HMIS) announced today that its 49% stockholder and major
creditor Transworld HealthCare, Inc. ("Transworld") issued a press release on
August 14, 1997 stating that Transworld and Counsel Corporation ("Counsel") have
entered into an agreement relating to the sale of all of the business and
operations of the Company. The agreement calls for the purchase of the assets
of the Company by Counsel for approximately $40 million.
The Company is not a party to the Transworld/Counsel agreement. The Company,
however, has agreed to allow Counsel to conduct due diligence and has agreed to
refrain from pursuing alternative transactions until September 30, 1997. The
Company has agreed to merge with a subsidiary of Transworld. The merger
agreement provides that the Company's stockholders will receive $0.30 per share
upon the consummation of the merger. As previously announced, Transworld had
advised the Company that it will not be in a position to conclude the merger in
the near future. Either party can now terminate the merger agreement at any
time.
As described in the Transworld announcement, the closing of its transaction with
Counsel is subject to various conditions and the purchase of the Company by
Transworld in the merger, or alternatively, Counsel entering into an agreement
with the Company. Accordingly, it is not clear whether Transworld intends to
consummate the merger. If the merger is not consummated the HMI stockholders
will not receive the $0.30 per share consideration provided for in the merger
agreement. Furthermore, if the merger is not consummated and the transaction
with Counsel proceeds as a purchase of assets, it is not clear what
consideration, if any, would be paid to HMI stockholders.
The Company continues to experience severe financial difficulties and if not
stabilized through the above-described transactions or an alternative
transaction, it may have to seek protection under the Federal Bankruptcy Laws.
Separately, HMI announced that Jim Nicol has entered into an agreement with the
Company to step down as President and Chief Executive Officer of the Company,
although he will continue to have an active role advising the Company as a
member of the Board of Directors. Jim Mieszala, 46, formerly the Chief
Operating Officer of HMI, has been named President and CEO.
Health Management, Inc. is a national provider of integrated pharmacy management
services to patients with chronic medical conditions and to health care
professionals, drug manufacturers and third-party payers involved in their care.
Except for historical information contained herein, the statements made in this
release constitute forward looking statements that involve certain risks and
uncertainties. Certain factors may cause actual results to differ materially
from those contained in the forward looking statements, including those risks
detailed from time to time in the Company's reports on file at the Securities
and Exchange Commission.
# # #
For Additional Information:
At HMI:
Jim Mieszala, President & CEO
847-913-2419
At Edelman Financial:
Joe Kist or Julia Kohn (Investors)
212-704-8239 or 212-704-8101
