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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 30, 1997
PHP HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
State or other jurisdiction of incorporation: Delaware
Commission File No.: 0-16235
I.R.S. Employer Identification No.: 54-1023168
Address of principal executive offices: 11440 Commerce Park Drive
Reston, VA 20191
Registrant's telephone number, including area code: (703) 758-3600
Former name or former address, if changed since last report: Not applicable
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Exhibit Index at Page 7
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The undersigned registrant hereby files this Amendment No. 1 (the
"Amendment") for purposes of amending and restating Part II, Item 5. The
Amendment is set forth below:
ITEM 5. OTHER MATTERS.
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On December 30, 1997, PHP Healthcare Corporation ("PHP" or the "Company")
announced the completion of a private placement of shares of its Series B
Convertible Preferred Stock at a purchase price of $1,000 per share resulting in
gross proceeds to the Company of $70 million. The proceeds of the offering were
used to repay outstanding borrowings under senior credit facilities, to pay
related expenses and for working capital. The senior credit facilities were
established to finance the Company's acquisition of 18 health centers from HIP
of New Jersey, Inc.
The holders of the Series B Preferred Stock are not entitled to receive
dividends and, except as provided for by law, have no voting rights. The shares
of Series B Preferred Stock are convertible into shares of the Company's common
stock upon the earlier of April 1, 1998 or the date on which the registration
statement relating to the resale of the common stock issuable upon conversion of
the Series B Preferred Stock becomes effective. The shares of Series B Preferred
Stock will automatically convert into common stock on the fifth anniversary of
the date of original issuance to the extent any shares of Series B Preferred
Stock remain outstanding at that time. Each share of Series B Preferred Stock is
convertible into that number of shares of common stock equal to the quotient of
(i) $1,000 divided by (ii) the Conversion Price. Through May 31, 1998, the
Conversion Price will be $25. Thereafter, subject to the maximum Conversion
Price specified below, the Conversion Price will be equal to the lowest trading
price of the common stock for the 22 trading days immediately preceding the
conversion date, less a discount ranging from 5% (beginning June 1, 1998) to 9%
(on or after December 1, 1998). The maximum Conversion Price is the lesser of
(i) $30, (ii) 91% of the average of the daily low trading prices of the common
stock for all trading days in March, 1999, and (iii) 91% of the average of the
daily low trading prices for all trading days in September, 1999; provided,
however, that the maximum Conversion Price shall not be less than $25.
The number of shares that any holder of Series B Preferred Stock may
convert in any calendar month is limited according to a sliding scale percentage
of such holder's shares of Series B Preferred Stock determined by reference to
the highest of the daily low trading prices during such month.
<TABLE>
<CAPTION>
Highest of daily low trading Percentage convertible
prices during month during such month
<S> <C>
$25.00 or less 20%
$25.01 to $27.00 25%
$27.01 to $29.00 30%
$29.01 to $31.00 35%
$31.01 to $33.00 40%
</TABLE>
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<TABLE>
<S> <C>
$33.01 to $35.00 45%
$35.01 to $37.00 50%
$37.01 or more 100%
</TABLE>
The number of shares which may be converted in any calendar month also includes
the number of shares which might have been but were not converted during earlier
calendar months.
If at any time the Conversion Price falls below $25, upon conversion of any
Series B Preferred Stock, the Company may, in lieu of the issuance of common
stock, make a payment in cash in an amount equal to the value of the common
stock based upon the high trading price of the common stock on the conversion
date.
The Company has agreed to register the shares of common stock issuable upon
conversion of the Series B Preferred Stock for resale under the Securities Act
of 1933 by April 1, 1998. The Preferred Stock Investment Agreement provides that
if the registration statement covering the shares of common stock issuable upon
conversion of the Series B Preferred Stock is not effective by April 1, 1998,
the Company shall pay each investor in cash an amount equal to 3% of the
purchase price of the Series B Preferred Shares then held by the investor for
each 30-day period thereafter until the registration statement is effective
(pro-rata as to a period of less than 30 days). The Registration Statement has
not been declared effective. The Company believes that the liquidated damages
provision constitutes an unenforceable penalty and intends to challenge any
attempt to enforce the provision. The Company is seeking waivers of this
provision from the holders of the Series B Preferred Stock. There can be no
assurance that the Company will be successful in obtaining waivers from the
holders of Series B Preferred Stock or that the Company will prevail in
establishing that the provision is unenforceable. The enforcement of the
liquidated damages provision against the Company could have a material adverse
effect on the Company's financial condition and results of operations.
Each purchaser of the Series B Preferred Stock has agreed not to offer or
sell on any trading day, on a net basis, more than the following number of
shares of common stock: the greater of (i) 10% of the average daily trading
volume of the common stock for the five previous trading days, (ii) 10,000
shares, or (iii) 10% of the trading volume of the common stock on the day of
such sale. In addition, the purchasers of the Series B Preferred Stock and their
affiliates have agreed not to engage in any short sales, swaps, purchasing of
puts, or other hedging activities involving the common stock to hedge their
investment in the Series B Preferred Stock; however, any purchaser may write
call options if the call exercise price is greater than the lesser of (i) the
effective Conversion Price on the day that the call is written or (ii) the
closing price of the common stock on the day prior to the day that the call is
written. These hedging restrictions do not apply to certain short sales within
three days of conversion where the shares issuable upon conversion are used to
cover the short sale.
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At a special meeting of the Company's stockholders held on March 31, 1998,
the Company's stockholders approved the issuance of common stock issuable upon
conversion of the Series B Preferred Stock.
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FORWARD LOOKING STATEMENTS
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This Report contains forward-looking statements. The words "believe,"
"expect" and "anticipate" and similar expressions identify such forward-looking
statements. These forward-looking statements reflect the Company's views with
respect to future events and financial performance. Such statements are subject
to risks and uncertainties that could cause the Company's actual results and
financial position to differ materially from those projected in the forward-
looking statements. Risks associated with the Company's forward-looking
statements include, but are not limited to, those risk factors described in the
Company's Form 10-K under the caption "Business -- Risk Factors." Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of their dates. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
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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.
PHP HEALTHCARE CORPORATION
By: /s/ Anthony M. Picini
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Name: Anthony M. Picini
Title: Executive Vice President and
Chief Financial Officer
Dated: May 7, 1998
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