- --------------------------------------------------------------------------------
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): April 18, 2000
Commission File Number: 0-18942
ILM II SENIOR LIVING, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Virginia 06-1293758
- ---------------------------- --------------------
(State of organization) (I.R.S. Employer
Identification No.)
1750 Tysons Boulevard, Suite 1200, Tysons Corner, Virginia 22102
- ----------------------------------------------------------- ----------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (888) 357-3550
--------------------
(Page 1 of 5 pages)
Exhibit Index Appears on Page 5
<PAGE>
ITEM 5. OTHER EVENTS
On April 18, 2000, ILM II Senior Living, Inc., a Virginia finite-life
corporation (the "Company")entered into a First Amendment to the Amended and
Restated Agreement and Plan of Merger dated October 19, 1999 (as so amended)
(the "Amended Merger Agreement") with Capital Senior Living Corporation, a
Delaware corporation ("CSLC") and Capital Senior Living Acquisition, LLC, a
Delaware limited liability company and wholly owned subsidiary of CSLC ("Merger
Sub").
The Company was advised by CSLC that, due to deteriorating conditions in
the senior living industry and a decline in the loan value of the Company's
properties, CSLC was informed by its prospective lenders that they would not be
able to raise sufficient financing to fund the $74,982,000 purchase price
contemplated a the time of the original transaction.
Upon the terms and subject to the conditions of the Amended Merger
Agreement, the Company will be merged with and into Merger Sub, and Merger Sub
will be the surviving corporation in the merger (the "Merger"). Pursuant to the
Merger, among other things, each share of the Company's common stock, $.01 par
value ("Company Common Stock"), outstanding immediately prior to the effective
time of the Merger (the "Effective Time"), other than shares of Company Common
Stock owned by the Company, CSLC or Merger Sub (or any other subsidiary of the
Company or CSLC), automatically will be converted into the right to receive
approximately $13.04 in cash. The previous merger consideration announced in
October 1999 was $14.47 per share in cash. Holders of Company Common Stock will
have no dissenters' rights in the Merger. The Merger is intended to be reported
as a fully taxable acquisition by CSLC of the Company and will be recorded by
CSLC as a purchase for accounting purposes.
In connection with entering into the amended Merger Agreement, the Company
required CSLC to agree to pay the Company increased termination fees in
certain circumstances. In addition, the Company required CSLC to agree to reduce
the amount of fees and expenses it would receive upon termination of the Merger
in certain circumstances.
In connection with the merger, CSLC reported to the Company that it has
obtained the signed commitment of GMAC Commercial Mortgage Corporation to
provide CSLC with substantially all of the cash funds necessary to pay the
merger consideration. The GMAC financing commitment contains customary funding
and termination conditions and market "outs," and expires by its terms on July
31, 2000.
The Company has agreed that immediately prior to the Effective Time it
will cause its direct subsidiary and record owner of the Company's senior living
facilities, ILM II Holding, Inc. ("ILM II Holding"), to exercise its right to
terminate the Facilities Lease Agreement (the "Lease Agreement") dated September
1, 1995, between ILM II Holding and ILM II Lease Corporation, an affiliate of
the Company ("ILM II LeaseCo"). The Lease Agreement provides, among other
things, for the lease by ILM II LeaseCo of the senior housing facilities from
ILM II Holding and the payment to ILM II Holding of certain rents and fees in
respect of such lease. The Lease Agreement presently expires by its terms on
December 31, 2000, subject to earlier termination by
(Page 2 of 5 pages)
<PAGE>
ILM II Holding in connection with the sale of the senior housing facilities to
an unaffiliated purchaser.
Consummation of the Merger is subject to certain conditions, including,
without limitation, (i) approval and adoption of the Amended Merger Agreement
and the Merger by the holders of not less than 66-2/3% of the outstanding
Company Common Stock, (ii) the receipt of all requisite consents and approvals
by public and governmental authorities, (iii) the transfer to the Company of the
senior housing facilities owned by ILM II Holding (together with cancellation of
the intercompany mortgage indebtedness thereon) and the liquidation of ILM II
Holding pursuant to Section 332 of the Internal Revenue Code of 1986, as
amended, (iv) the absence or nonoccurrence of certain material conditions and
events, and (v) certain other conditions to consummation customary in
transactions such as the Merger.
Simultaneously with entering into the Amended Merger Agreement, ILM Senior
Living, Inc., a Virginia finite-life corporation and an affiliate of the Company
("ILM I"), entered into a first amendment to the amended and restated agreement
and plan of merger with CSLC and Merger Sub providing for the merger of ILM I
with and into Merger Sub, (the "ILM I Merger Agreement") for aggregate cash
consideration of approximately $11.63 per outstanding share of ILM I common
stock, $.01 par value (the "ILM I Merger"). Consummation of the ILM I Merger is
not a condition to consummation of the Merger. If, however, the ILM I Merger is
consummated but the Merger is not consummated, the Company has agreed to cause
ILM II Holding to transfer its 75% fee simple interest in a certain California
senior housing facility to ILM I (or one of its wholly owned subsidiaries) at
the fair market value of such property. ILM I has made the reciprocal agreement
(with respect to its 25% fee simple interest in such property) in the ILM I
Merger Agreement.
There can be no assurance whether the Merger (or any of the transactions
contemplated thereby) will be consummated or, if consummated, as to the timing
thereof.
Item. 7 Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) The following Exhibits are filed as part of this Current Report on
Form 8-K:
2. First Amendment to the Amended and Restated Agreement and
Plan of Merger, dated April 18, 2000, among the Company,
CSLC, and Merger Sub (including all exhibits and schedules
thereto).
99.1. Press Release of the Company dated April 18, 2000.
(Page 3 of 5 pages)
<PAGE>
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.
ILM II SENIOR LIVING, INC.
By: /s/J. William Sharman, Jr.
-------------------------
J. William Sharman, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
Dated: April 24, 2000
(Page 4 of 5 pages)
<PAGE>
EXHIBIT INDEX
No. Page No.
2. First Amendment to the Amended and Restated Agreement
and Plan of Merger dated April 18, 2000, among
the Company, CSLC and Merger Sub (including
schedules and exhibits thereto).
99.1 Press Release of the Company dated April 18, 2000
(Page 5 of 5 pages)
FIRST AMENDMENT TO
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
FIRST AMENDMENT TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
dated April 18, 2000 (this "Amendment"), among CAPITAL SENIOR LIVING
CORPORATION, a Delaware corporation ("CSLC"); CAPITAL SENIOR LIVING
ACQUISITION, LLC, a Delaware limited liability company, all of the
outstanding membership interests in which are wholly-owned by CSLC ("Sub");
and ILM II SENIOR LIVING, INC., a Virginia finite-life corporation (the
"Company").
W I T N E S S E T H :
---------------------
WHEREAS, CSLC, Sub and the Company entered into an Amended and Restated
Agreement and Plan of Merger dated October 19, 1999 (the "Original Agreement");
WHEREAS, the parties to the Original Agreement desire to amend certain
terms of the Original Agreement as hereinafter set forth;
WHEREAS, the respective Boards of Directors of CSLC and the Company have
determined that it is fair to and in the best interests of their respective
stockholders to consummate the acquisition of the Company by CSLC, by means of a
cash out merger of the Company with and into Sub, upon the terms and subject to
the conditions set forth in the Original Agreement as amended by this Amendment
(the "Merger");
WHEREAS, the respective Boards of Directors of CSLC and the Company, and
CSLC as sole member of Sub, have approved the Merger and the Original Agreement
as amended by this Amendment and the transactions contemplated hereby and
thereby;
NOW, THEREFORE, in consideration of the mutual premises and the
representations, warranties, agreements and covenants herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. The Original Agreement is hereby amended as follows:
(a) The Merger Consideration set forth in Section 2.1(c) of the
Original Agreement is hereby amended by deleting the number "$14.471836" and
inserting in its place $13.041483";
(b) The termination fee (to CSLC) set forth in both the second and
third paragraphs of Section 5.6(b) of the Original Agreement is hereby amended
by deleting the number "$2,964,400" in each of such second and third paragraphs
and inserting in its place "$1,858,200";
<PAGE>
(c) The tern4nation fee (to the Company) set forth in Section 5.6(e) of
The Original Agreement is hereby amended by deleting the number "$850,000" and
inserting in its place "$1,540,000";
(d) Section 3.1(m) of the Original Agreement is hereby amended by
deleting therefrom the words "October 6, 1999" and inserting is their place
"April 17, 2000."
(e) Section 3.2(j) of the Original Agreement is hereby amended by
deleting the provisions thereof in their entirety and inserting in their place;
"(j) Receipt of Financing Commitment. CSLC has paid
for and obtained, and heretofore has provided the
Company with true and complete executed copies of
that certain commitment letter of GMAC Commercial
Mortgage Corporation ("GMAC") dated April 14, 2000
and addressed to CSLC, pursuant to which GMAC has
committed, upon the terms and subject to the
conditions specified therein, to provide to CSLC an
aggregate sum in cash which, together with funds
segregated by CSLC, will be sufficient in amount to
pay, in full at the Effective Time, but not later
than July 31, 2000, to the holders of Company Common
Stock, the Exchange Funds (the "Financing
Commitment")."
(f) Section 5.6(c) of the Original Agreement is hereby amended by
deleting the second sentence thereof in its entirety.
(g) Section 5.17 of the Original Agreement is hereby amended by
deleting the provisions thereof in their entirety.
(h) Section 6.3(d) of the Original Agreement is hereby amended by
deleting the provisions thereof in their entirety and inserting in their place,
(d) payment of Exchange Funds. CSLC shall have
received the proceeds of the Financing Commitment, or
otherwise shall have obtained and segregated for
payment to the Company sufficient cash funds, to pay
in full at the Effective Time to the holders of the
Company Common Stock, the Exchange Funds."
(i) All references to the Original Agreement shall hereafter
refer to the Original Agreement as amended by this Amendment.
2. Except as amended is this Amendment, the Original Agreement remains in
full force and effect. All capitalized terms used in this Amendment which are
not otherwise defined in this Amendment shall be as defined in the Original
Agreement.
3. This Amendment may be executed in one or more counterparts (including
by facsimile transmission), all of which shall be considered one and the same
agreement and shall
<PAGE>
become effective when one or more counterparts have been signed by all of the
parties hereto and delivered to the other parties; it being hereby understood
that all parties need not sign the same counterpart.
IN WITNESS WHEREOF, CSLC, Sub, and the Company have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all on this 18th day of April 2000.
CAPITAL SENIOR LIVING CORPORATION
By: /s/JAMES A. STROUD
--------------------------------------
Name: JAMES A. STROUD
Title: Chairman of the Company
CAPITAL SENIOR LIVING ACQUISITION, LLC
By: /s/LAWRENCE A. COHEN
---------------------------------------
Name: LAWRENCE A. COHEN
Title: Chief Executive Officer
ILM II SENIOR LIVING, INC.
By: /s/J. WILLIAM SHARMAN, JR.
-------------------------------------
Name: J. WILLIAM SHARMAN, JR.
Title: Chairman of the Board of Directors,
President and Chief Executive Officer
ILM II SENIOR LIVING, INC.
AND
CAPITAL SENIOR LIVING CORPORATION
AMEND
PENDING MERGER AGREEMENT
FOR IMMEDIATE RELEASE:
April 18, 2000, Tysons Corner, Virginia: ILM II Senior Living, Inc. ("ILM
II") announced today that it has entered into an amendment to the existing
merger agreement with Capital Senior Living Corporation (NYSE: SCU) whereby ILM
II and Capital have agreed that ILM II will be acquired by Capital for
$67,571,000 (or $13.04 per ILM II share) in cash, pursuant to a merger of ILM II
into a wholly owned subsidiary of Capital. The previous merger consideration
announced in October 1999 was $74,982,000 (or $14.47 per ILM II share) in cash.
Capital reported to ILM II that it has obtained the signed commitment of
GMAC Commercial Mortgage Corporation and its affiliates to provide Capital with
substantially all of the cash funds necessary to pay the merger consideration.
The GMAC financing commitment contains customary funding and termination
conditions and market "outs", and expires by its terms on July 31, 2000.
The ILM II reported that it recently had been advised by Capital that, due
to deteriorating conditions in the senior living industry and decline in the
combined loan value of ILM II properties, Capital was informed by its
prospective lenders that they would not be able to raise sufficient financing to
fund the original $74,982,000 purchase price.
In connection with the amendment, Capital has agreed to pay ILM II certain
increased termination fees in certain circumstances. In addition, Capital has
agreed to reduce the amount of fees and expenses it would receive upon
termination of the merger in certain circumstances.
Consummation of the merger is subject to a variety of conditions,
including: (i) approval by the holders of not less than 66-2/3% of the
outstanding ILM II common stock; (ii) the receipt of requisite approvals from
all public and governmental authorities; (iii) the transfer to ILM II of certain
assets owned by ILM II 's wholly owned subsidiary together with the cancelation
of related mortgage indebtedness, and the tax liquidation of such subsidiary;
(iv) the closing having occurred not later than September 30, 2000; and (v)
certain additional conditions to closing customary in transactions of this
nature. There is no assurance that consummation of the merger will occur.
Simultaneously with entering into the amended ILM II merger agreement, ILM
I Senior Living, Inc. ("ILM I") entered into an amended merger agreement with
Capital providing for the
<PAGE>
merger of ILM I into a wholly owned subsidiary of Capital for $87,429,000 in
cash (or $11.63 per ILM I share). The previous ILM I merger consideration was
$97,018,000 in cash (or $12.90 per ILM I share). Consummation of the ILM I
Merger is not a condition to consummation of ILM II Merger.
ILM Senior Living Inc., together with ILM II Senior Living, Inc. and their
affiliates, own 13 senior living communities in nine states with a capacity for
approximately 2,100 residents.
Capital is one of the largest providers of senior living services in the
United States in terms of resident capacity. Capital has served as the manager
of ILM II's senior living communities for three years.
THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" BASED ON OUR
CURRENT EXPECTATIONS AND PROJECTIONS AND FUTURE EVENTS. THESE FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES WHICH COULD CAUSE
OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE
ANTICIPATED AND CERTAIN OF WHICH ARE BEYOND OUR CONTROL. THE WORDS "BELIEVE,"
"EXPECT," "ANTICIPATE" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING
STATEMENTS. WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE.
