UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No. 1
NextHealth, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
65333G105
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(CUSIP Number)
John F. Hartigan, Esq.
Morgan, Lewis & Bockius
801 South Grand Avenue
Los Angeles, California 90017
(213) 612-2500
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 11, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act.
785517.2
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CUSIP No. 65333G105 SCHEDULE 13D Page 2 of 7 Pages
(Amendment No. 1)
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Real Estate Investment Fund II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
5,206,500
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,206,500
PERSON WITH
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,206,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.83%
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14 TYPE OF REPORTING PERSON*
PN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
785517.2
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CUSIP No. 65333G105 SCHEDULE 13D Page 3 of 7 Pages
(Amendment No. 1)
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Real Estate Advisors II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
5,206,500
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,206,500
PERSON WITH
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,206,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.83%
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14 TYPE OF REPORTING PERSON*
PN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
785517.2
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CUSIP No. 65333G105 SCHEDULE 13D Page 4 of 7 Pages
(Amendment No. 1)
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AP NH LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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7 SOLE VOTING POWER
5,106,500
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 5,106,500
10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,106,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.38%
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14 TYPE OF REPORTING PERSON*
00
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
* SEE INSTRUCTIONS BEFORE FILLING OUT!
785517.2
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CUSIP No. 65333G105 SCHEDULE 13D Page 5 of 7 Pages
(Amendment No. 1)
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Item 4. Purpose of Transaction.
This Statement is being amended to disclose that the Reporting
Persons intend to purchase, from time to time in open market or privately
negotiated transactions, up to 1,000,000 shares of common stock, par value $.01
per share of the Issuer (the "Common Stock"). Purchases may be made in open
market or private transactions, subject to market conditions and with an
objective to ultimately make a profit on the investment in the Issuer. No time
limit has been set for completion of any purchases, and purchases may be
discontinued at any time, or from time to time.
The Reporting Persons note the Issuer's recently updated
financial results for the nine months ended September 30, 1998 and, in
particular, the Issuer's positive cash flow from operating activities for the
nine months ended September 30, 1998.
The Reporting Persons or the Reporting Group Related Persons may
consider various other alternatives with respect to their investment in the
Issuer in addition to the proposed purchases described above, including, but not
limited to, (i) increasing their ownership in the Issuer through the future
acquisition of additional shares of Common Stock in the open market, privately
negotiated transactions or otherwise, (ii) attempting to communicate with, and
influence, the Board of Directors of the Issuer, (iii) making a proposal to the
Issuer for a merger, business combination, liquidation or other extraordinary
transaction, (iv) communicating with other stockholders regarding their
investment in the Issuer, and in that connection requesting a list of
stockholders in accordance with applicable Delaware law, and (v) entering into
arrangements with third parties who may be interested in joining with the
Reporting Persons or the Reporting Group Related Persons to acquire control of
the Issuer, which arrangements may contemplate the sale or disposition of
portions of the Issuer's assets to such third parties after control is obtained.
The Reporting Persons may also dispose of all or a portion of the Reporting
Persons' investment in the Issuer in the open market or otherwise. Common Stock
owned by the Reporting Persons may be subject to various collateral arrangements
effected with banking and financial institutions from time to time in the
ordinary course of business.
The Reporting Persons' determination with respect to the
foregoing possibilities will depend upon various factors, including, but not
limited to, market activity in the shares of Common Stock, the Reporting
Persons' further evaluation of the Issuer and its prospects, general market and
economic conditions (including conditions affecting the Issuer's industry in
general), other opportunities available to the Reporting Persons and other
factors the Reporting Persons may deem relevant to its investment decision.
Item 5. Interest in Securities of the Issuer.
(a) The aggregate percentage of shares of Common Stock reported
beneficially owned by each Reporting Person is based upon 8,554,938 shares of
Common Stock outstanding as reported in the Issuer's Quarterly Report on Form
10-Q, for the fiscal quarter ending September 30, 1998. As of the close of
business on December 7, 1998, each Reporting Person beneficially owned 46,065
shares of Convertible Preferred Stock, Series A, par value $.01 per share (the
"Series A Preferred Stock" or the "Preferred Stock"), which may be immediately
converted into 4,606,500 shares of Common Stock, and a Warrant (the "Warrant")
to purchase up to 500,000 shares of Common Stock, which constitutes
approximately 37.38% of the outstanding Common Stock (calculated in accordance
with SEC Rule 13d-3). Of that amount, AP NH directly owns 46,065 shares of
Series A Preferred Stock and the Warrant, and AREIF II and AREA II indirectly
own the shares beneficially owned by AP NH. In addition, AREIF II beneficially
and directly owns a warrant (acquired in October 1996) to purchase up to 100,000
shares of Common Stock, and AREA II indirectly owns the shares beneficially
owned by AREIF II
(b) Each Reporting Person has the sole power to vote and dispose
of the shares of Common Stock beneficially owned by it.
(c), (d) and (e). Not Applicable.
* SEE INSTRUCTIONS BEFORE FILLING OUT!
785517.2
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CUSIP No. 65333G105 SCHEDULE 13D Page 6 of 7 Pages
(Amendment No. 1)
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Item 6. Contracts, Arrangements, Understandings or Relationships with respect
to Securities of the Issuer.
Preferred Stock. The following is a summary of the respective
designations, preferences and rights of the Series A Preferred Stock as set
forth in the Certificate of Designation, Preference and Rights filed with the
State of Delaware, Office of the Secretary of State ("Series Designation").
1. Dividends. The holders of Series A Preferred Stock are not entitled to
receive dividends. So long as any shares of Preferred Stock remain outstanding,
the Issuer may not declare or pay any cash dividends or make any other
distributions with respect to the Common Stock.
2. Liquidation Preferences. The Preferred Stock has no liquidation
preferences.
3. Voting Rights. The holders of Series A Preferred Stock are entitled to vote
on all matters presented to the Issuer's stockholders for a vote and, except
with respect to the election of Directors, each share of Series A Preferred
Stock shall entitle the holder thereof to such number of votes per share as
shall equal the number of shares of the Issuer's common stock into which such
share of Series A Preferred Stock is then convertible. Initially, each share of
Series A Preferred Stock is convertible into 100 shares of Common Stock.
In addition, the holders of Series A Preferred Stock, as a class, are entitled
to elect four directors to the Issuer's Board of Directors ("Preferred
Directors").
Upon the occurrence of an event of default as defined in the Series Designation,
the holders of Series A Preferred Stock will become entitled to elect a majority
of the Issuer's Board of Directors. Events of default include a default under
the Stock Purchase Agreement and the passage of fifteen days thereafter.
A majority vote of the holders of the outstanding Series A Preferred Stock is
required in order to approve certain transactions including: (i) the amendment
of the Issuer's Certificate of Incorporation so as to adversely affect the
rights of the holders of Series A Preferred Stock or any of the provisions of
the Certificate of Designation; (ii) authorize, create or issue any class of
capital stock that is senior to or pari passu with the Series A Preferred Stock
or (iii) enter into a transaction having a total value in excess of $250,000 per
transaction except under certain conditions.
4. Conversion of Preferred Stock into Common Stock. As of the date of this
Amendment, each share of Series A Preferred Stock was convertible into 100
shares of Common Stock or 4,606,500 shares in the aggregate. The number of
shares of Common Stock issuable upon conversion of the Series A Preferred Stock
is subject to adjustment to reflect certain transactions affecting the Common
Stock such as issuance of Common Stock at less than $0.9226 per share, stock
dividends, splits, reverse splits, etc.
5. Redemption. Commencing on January 1, 2001, the Issuer may, at its option,
redeem all (but not less than all) shares of Preferred Stock at a price per
share equal to the redemption price of $92.26 per share ("Redemption Price")
plus all accrued but unpaid dividends.
Warrants
The Warrant entitles AP NH to purchase up to 500,000 shares of Common Stock at
an exercise price of $1.50 per share. The other warrant entitles AREIF II to
purchase up to 100,000 shares of Common Stock at an exercise price of $1.50 per
share. The warrants are exercisable at any time or from time to time before
November 14, 2006. The exercise price and number of shares purchasable are
subject to adjustment to reflect certain transactions affecting the Common Stock
such as the issuance of Common Stock at less than $0.9226 per share, stock
dividends, splits, reverse splits, etc.
* SEE INSTRUCTIONS BEFORE FILLING OUT!
785517.2
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CUSIP No. 65333G105 SCHEDULE 13D Page 7 of 7 Pages
(Amendment No. 1)
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Registration and Pre-Emptive Rights
Pursuant to the terms and provisions of the Registration and Pre-Emptive Rights
Agreement, dated as of November 14, 1996, between the Issuer and AP NH, the
Issuer granted AP NH (i) with respect to certain issuances of capital stock of
the Issuer, certain pre-emptive rights to purchase such number of shares of
capital stock of the Issuer as will allow AP NH to maintain its proportionate
interest in the Issuer's outstanding capital stock and (ii) certain piggy-back
and demand registration rights with respect to the capital stock of the Issuer
held by AP NH.
Reference is made to Exhibits 1-5 to the original Schedule 13D for a complete
description of the terms of the agreements among the Reporting Group and the
Issuer.
SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct and agrees that this statement may be
filed jointly with the other undersigned party.
Dated: December 11, 1998
cAPOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P., General Partner
By: Apollo Real Estate Capital Advisors II, Inc.,
its General Partner
By:/s/ Michael D. Weiner
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Name: Michael D. Weiner
Title: Vice President
APOLLO REAL ESTATE ADVISORS II, L.P.
By: Apollo Real Estate Capital Advisors II, Inc.,
General Partner
By: /s/ Michael D. Weiner
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Name: Michael D. Weiner
Title: Vice President
AP NH LLC
By: AP GP NH LLC,
its Managing Member
By: KRONUS PROPERTY, INC., its Managing
Member
By: /s/ Michael D. Weiner
-------------------------------------
Name: Michael D. Weiner
Title: Vice President
* SEE INSTRUCTIONS BEFORE FILLING OUT!
785517.2
