<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): January 26, 1998
Medaphis Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 000-19480 58-1651222
(State or other jurisdiction of incorporation) Commission File Number (IRS Employer Identification Number)
</TABLE>
2700 CUMBERLAND PARKWAY
SUITE 300
ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 444-5300
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Located on Page: 4
Total Number of Pages: 25
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<PAGE> 2
Item 5. Other Events.
On January 23, 1998, the Registrant obtained a fully underwirtten
committment from an affiliate of Donaldson, Lufkin & Jenrette for a $100 million
revolving loan facility (the "Facility"). Under the terms of the committment
letter, the Facility will be a three-year revolving credit facility, guaranteed
by Medaphis' domestic subsidiaries and secured by a first priority security
interest on substantially all of the material assets of the Registrant and its
subsidiaries. Advances under the Facility will be based on a borrowing base
formula in respect of the Registrant's billed and unbilled receivables and the
Facility will contain customary financial and other covenants. The Facility is
conditioned upon customary conditions and completion an offering of $150 million
in senior notes maturing in 2005. The proceeds of the notes and the initial
borrowing under the Facility will be used to refinance Medaphis' existing $210
million loan facility maturing in 1999, and for general corporate purposes. A
copy of the term sheet with respect to the Facility is filed as exhibit 10.1 to
this Current Report on Form 8-K
On January 26, 1998, the Registrant issued a press release, a copy of
which is filed as Exhibit 99.1 to this Form 8-K, relating to the Facility.
In addition, on January 27, 1998, the Registant issued a press release,
a copy of which is filed as Exhibit 99.2 to this Form 8-K, relating to certain
changes and additions to management of the Registrant.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
10.1 Term Sheet, dated January 23, 1998, with respect to
$100 million revolving credit facility
99.1 Press Release issued by the Registrant on January 26,
1998
99.2 Press Release issued by the Registrant on January 27,
1998
2
<PAGE> 3
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.
Date: January 27, 1998
MEDAPHIS CORPORATION
By: /s/ Mark Colonnese
----------------------------------
Mark Colonnese
Senior Vice President
and Controller
3
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ----------- ------
<S> <C> <C>
10.1 Term Sheet, dated January 23, 1998, with respect to $100 million 5
revolving credit facility
99.1 Press Release issued by the Registrant on January 26, 1998 21
99.2 Press Release issued by the Registrant on January 27, 1998 23
</TABLE>
4
<PAGE> 1
EXHIBIT 10.1
ANNEX I
TERM SHEET
(Unless otherwise defined, terms used
in this Term Sheet have the meanings
ascribed thereto in the commitment letter
dated January 23, 1998 (the "Commitment Letter"),
to which this Term Sheet is annexed).
I. PARTIES
Borrower: Medaphis Corporation ("Medaphis" or the "Borrower").
Arranger: Donaldson, Lufkin & Jenrette Securities Corporation or one
or more of its affiliates ("DLJ Securities" or the
"Arranger").
Syndication
Agent: DLJ Capital Funding, Inc. or one or more of its affiliates
("DLJ Capital Funding" or the "Syndication Agent").
Administrative
Agent: A financial institution to be identified by the Arranger
and the Syndication Agent and consented to by the Borrower.
The Syndication Agent and the Administrative Agent are
herein collectively referred to as the "Agents".
Lenders: DLJ Capital Funding and a group of financial institutions
(collectively, the "Lenders") as may be acceptable to the
Arranger, the Syndication Agent and the Borrower.
<PAGE> 2
II. THE REVOLVING FACILITY
Closing Date: No later than March 31, 1998.
General Description
of the Revolving
Facility: A maximum amount of $100,000,000 in senior, first-priority
secured financing to be provided to the Borrower pursuant
to a revolving credit facility (the "Revolving Facility").
Revolving Loans made under the Revolving Facility are
herein collectively referred to as "Revolving Loans". The
Revolving Loans may be borrowed, prepaid and reborrowed by
the Borrower from time to time prior to the Revolving
Facility Commitment Termination Date (as set forth below).
Use of Proceeds: A portion of the proceeds of the Revolving
Loans, together with proceeds from the issuance of the
Senior Unsecured Notes (as defined below) shall be used to
(i) repay (the "Refinancing") the Bridge Notes (as defined
below), (ii) provide for general corporate purposes of the
Borrower and its subsidiaries, and (iii) pay associated
fees and expenses. The Refinancing, the offering of the
Senior Unsecured Notes and all other transactions, if any,
related thereto are collectively referred to as the
"Transaction".
Revolving Facility: Pursuant to the Revolving Facility (i) Revolving
Loans and Swing Line Loans (as defined below) may be
borrowed, prepaid and reborrowed by the Borrower, and (ii)
Letters of Credit (as defined below) may be issued,
extended, reimbursed and reissued on behalf of the
Borrower, in each case from time to time prior to
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<PAGE> 3
the Revolving Facility Commitment Termination Date (as set
forth below).
Revolving Facility
Commitment Amount: $100,000,000.
Revolving Facility
Commitment
Termination Date: The third anniversary of the Closing Date.
Borrowing Base
Restrictions on
Availability: Availability under the Revolving Facility will be subject
to a borrowing base in the amount equal to the lesser of
(a) $100,000,000 and (b) the sum of: (i) 85% of eligible
billed accounts receivables which are 90 days old or less,
(ii) 50% of eligible billed accounts receivables which are
greater than 90 days old but less than 120 days old and
(iii) 65% of unbilled receivables of the Healthcare
Services Group which are less than 90 days old. Eligibility
criteria to be mutually agreed upon.
Letter of Credit
Sub-Facility
Availability: Outstanding Letters of Credit and related reimbursement
obligations may not exceed $10,000,000 in the aggregate.
Each issuance of a Letter of Credit will constitute usage
under the Revolving Facility and will reduce availability
under the Revolving Facility, dollar-for-dollar. Letters of
Credit must expire on the earlier of (i) one year from the
date of issuance (unless extended subject to customary
evergreen provisions) and (ii) unless cash collateralized,
the Revolving Facility Commitment Termination Date.
Swing Line
Sub-Facility
Availability: Up to $7,500,000 of the Revolving Facility will be available
for swing
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<PAGE> 4
line advances ("Swing Line Loans") to be made to the
Borrower by the Administrative Agent. Swing Line Loans will
constitute usage under the Revolving Facility (except for
purposes of computing the Commitment Fee, as defined below)
and will reduce availability under the Revolving Facility,
dollar-for-dollar.
Interest Rate: At the Borrower's option, the Revolving Loans will
bear interest at the Administration Agent's (i) alternate
base rate or (ii) reserve-adjusted LIBO rate, plus, in
each case, the following applicable margins:
<TABLE>
<CAPTION>
Alternate LIBO Rate
Base Rate Loans
---- -----
Loans
-----
<S> <C>
1.50% 2.50%
</TABLE>
Commencing six months following the Closing Date the
margins set forth above for Revolving Loans will be subject
to the following performance based pricing-grid:
<TABLE>
<CAPTION>
Leverage Alternate LIBO Rate
-------- Base Rate Loans
Ratio ---- -----
----- Loans
-----
<S> <C> <C>
> 3.75 1.75% 2.75%
<= 3.75 > 3.00 1.50% 2.50%
<= 3.00 > 2.50 1.25% 2.25%
<= 2.50 > 2.00 0.75% 1.75%
<= 2.00 > 1.50 0.25% 1.25%
<= 1.50 0.00% 1.00%
</TABLE>
Swing Line Loans will bear interest at the Administrative
Agent's alternate base rate plus the applicable margin for
Revolving Loans.
Interest
Payment Dates: Interest periods for LIBO rate Revolving Loans shall be, at
the Borrower's option, one, two, three, or six months.
Interest on LIBO rate
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Revolving Loans shall be payable on the last business day
of the applicable interest period for such Revolving Loans
and, if earlier, every three months after the commencement
of such interest period. Interest on alternate base rate
Revolving Loans shall be payable quarterly in arrears.
Letter of Credit
Fees: A Letter of Credit fee shall accrue on the daily average
undrawn portion of all outstanding Letters of Credit in an
amount per annum equal to the then applicable margin for
LIBO rate Revolving Loans, payable quarterly in arrears to
each Lender on the basis of its percentage of the Revolving
Facility Commitment Amount, plus a Letter of Credit
fronting fee shall accrue in an amount equal to 0.25% per
annum on the stated amount of the each Letter of Credit,
payable quarterly in arrears to the Issuer for its own
account, as the Issuer of Letters of Credit. In addition,
customary administrative, issuance, amendment, payment and
negotiation fees shall be payable to the Issuer for its own
account, as the Issuer of the Letters of Credit on the date
of each issuance or extension of such Letter of Credit.
Commitment Fee: Commencing on the Closing Date, a non-refundable fee
(the "Commitment Fee") shall accrue in the amount of 0.5%
per annum on the daily average amount of the unused portion
of the Revolving Facility Commitment Amount (whether or not
then available), payable quarterly in arrears and on the
final maturity of the Revolving Facility (whether by stated
maturity or otherwise).
Commencing six months following the Closing Date, the
Commitment Fee will be subject to the following performance
based pricing-grid:
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<PAGE> 6
<TABLE>
<CAPTION>
Leverage Commitment
-------- Fee
Ratio
-----
<S> <C>
>= 2.5 .50%
< 2.5 >= 2.0 .375%
< 2.0 .25%
</TABLE>
Optional
Prepayments: Outstanding Revolving Loans are voluntarily pre-payable,
and Lender's commitments are voluntarily terminable by the
Borrower, in whole or in part, without penalty; provided,
however, that LIBO rate breakage costs, if any, shall be
for the account of the Borrower.
Mandatory
Prepayments: Customary for the type of transaction proposed including,
without limitation, with (i) 100% of net cash proceeds from
the issuance of debt (subject to certain exceptions), (ii)
100% of net cash proceeds from the sale of assets (subject
to certain exceptions), and (iii) 50% of net cash proceeds
from the issuance of equity (subject to certain
exceptions). All such mandatory prepayments shall be
applied to the repayment of the outstanding principal
amount under the Revolving Facility (without reduction of
the Revolving Facility Commitment Amount).
Security: The Revolving Facility will be secured (subject to certain
to be agreed upon exceptions) by a first-priority perfected
lien (subject to permitted liens) on all of the material
property and assets (tangible and intangible) of the
Borrower and each of its direct and indirect domestic
subsidiaries, including, without limitation, all
intercompany indebtedness, and all capital stock (or
similar equity interests) of each of the Borrower's direct
and indirect domestic
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<PAGE> 7
subsidiaries, whenever acquired and wherever located.
Guarantees: To be delivered by all direct and indirect domestic
subsidiaries of the Borrower.
Conditions Precedent
to Initial Extensions
of Credit: Customary for the type of transaction proposed including,
without limitation, the following, which shall be satisfied
prior to or substantially contemporaneous with the making
of the initial extensions of credit:
1. Completion of a due diligence review of the Borrower
and its subsidiaries satisfactory to the Arranger.
2. Execution and delivery of credit, security,
guarantee and other related documentation embodying
the structure, terms and conditions contained herein
reasonably satisfactory to the Arranger.
3. No material adverse change in the financial
condition, operations, assets, business, properties
or prospects of the Borrower or any of its
subsidiaries taken as a whole, since September 30,
1997 (except as disclosed in any filing of the
Borrower on Form 10-Q or Form 8-K with the
Securities and Exchange Commission on or prior to
January 14, 1998).
4. Receipt of closing certificates, resolutions, and
opinions of counsel, customary for the type of
transaction proposed and in each case reasonably
satisfactory
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<PAGE> 8
in form and substance to the Arranger.
5. The Arranger, the Agents and the Lenders shall have
received all fees and, so long as an invoice
therefore has been presented to the Borrower
reasonably prior to the Closing Date, expenses
required to be paid on or before the Closing Date.
6. All governmental and third party approvals necessary
or advisable in connection with the Transaction and
the financing contemplated hereby shall have been
obtained and be in full force and effect.
7. There shall exist no pending or threatened material
litigation, proceedings or investigations which (x)
would contest the consummation of the Transaction or
(y) except as disclosed in any filing of the
Borrower on Form 10-Q or Form 8-K with the
Securities and Exchange Commission on or prior to
January 14, 1998, could reasonably be expected to
have a material adverse effect on the financial
condition, operations, assets, businesses,
properties or prospects of the Borrower and its
subsidiaries taken as a whole.
8. The Administrative Agent, on behalf of the Lenders,
shall have received a first priority perfected lien
and guarantee, as set forth above under the captions
"Security" and "Guarantees", respectively, in each
case to the reasonable satisfaction of the Arranger.
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<PAGE> 9
9. The Borrower shall have received gross proceeds of
$150,000,000 from the issuance of senior unsecured
notes (the "Senior Unsecured Notes") and the
Arranger shall be reasonably satisfied with all
terms and conditions of all documentation related
thereto.
10. The Borrower's senior secured increasing rate notes
(the "Bridge Notes") shall have been repaid.
11. Receipt of (i) consolidated financial statements for
the fiscal year ended December 31, 1997 audited by
Price Waterhouse that are consistent in all material
respects with the disclosures previously made in
writing by the Borrower to the Arranger or its
affiliates in respect thereof or are otherwise
satisfactory in all material respects to the
Arranger.
Additional Conditions
Precedent: The making of each Loan will be conditioned upon (i) all
representations in the Credit Documentation being true and
correct in all material respects and (ii) there being no
event of default or condition which, with the giving of
notice or passage of time (or both), would constitute an
event of default.
Representations
and Warranties: Customary for the type of transaction proposed,
with appropriate materiality carve-outs.
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<PAGE> 10
Affirmative
Covenants: Customary for the type of transaction proposed, with
appropriate materiality carve-outs.
Negative
Covenants: Customary for the type of transaction proposed, including,
but not limited to, the following:
1. Restricting the incurrence of additional debt, sale
leasebacks and contingent liabilities.
2. Restricting the incurrence or sufferance of liens
and similar encumbrances.
3. Restricting the making of cash dividends or similar
distributions in respect of the Borrower's capital
stock, including direct or indirect redemptions of
any such capital stock.
4. Restricting the sale of assets or similar transfers,
other than in the ordinary course of business and
abandoned assets.
5. Restricting the making of investments or
acquisitions (in a single transaction or in a series
of related transactions).
6. Restricting mergers, consolidations and similar
combinations.
7. Restricting transactions with affiliates.
8. Restricting the refinancing, defeasance, repurchase
or prepayment of the Senior Unsecured Notes.
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<PAGE> 11
9. Limiting the making of capital expenditures.
Financial
Covenants: Customary for the type of transaction proposed and
consisting of the financial covenants set forth below (to
be tested quarterly), with the definitions to be mutually
agreed upon (all accounting terms to be interpreted, and
all accounting determinations and computations to be made,
in accordance with generally accepted accounting
principles):
1. Maintenance of a maximum ratio of total debt to
EBITDA (the "Leverage Ratio"), for the periods and
respective levels as follows:
<TABLE>
<S> <C> <C>
9/98 and 12/98 - 4.00
3/99 - 3.75
6/99 - 3.50
9/99 - 3.25
12/99 - 3.00
3/00 and 6/00 - 2.75
9/00 and 12/00 - 2.50
thereafter - 2.25
</TABLE>
2. Maintenance of a minimum ratio of EBITDA to cash
interest expense (the "Interest Coverage Ratio") for
the periods and respective levels as follows:
<TABLE>
<S> <C> <C>
3/98 and 6/98 - 2.00
9/98 and 12/98 - 2.25
3/99 - 2.50
6/99 - 2.75
9/99 - 3.00
12/99 - 3.25
3/00 - 3.50
6/00 - 3.75
9/00 and
</TABLE>
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<PAGE> 12
thereafter - 4.00
3. Maintenance of minimum EBITDA for the periods and
respective levels as follows (1998 to be cumulative,
and 1999 and thereafter to be calculated on a
rolling four-quarter basis):
<TABLE>
<S> <C> <C>
3/98 - $10.0
6/98 - $25.0
9/98 - $44.0
12/98 - $62.5
3/99 - $67.5
6/99 - $70.0
9/99 - $72.5
12/99 - $75.0
3/00 - $80.0
6/00, thereafter $85.0
</TABLE>
4. Maintenance of minimum net worth equal to
$475,000,000 plus 50% of positive net income (and
exclusive of an accelerated write-off of intangible
assets).
Events of
Default: Customary for the type of transaction proposed, including,
without limitation, a cross-default to other indebtedness
of the Borrower and its subsidiaries in excess of a to be
agreed upon amount, and a change of control (to be defined
in a manner reasonably satisfactory to the Borrower and the
Arranger).
Miscellaneous: Customary provisions to be included, including, without
limitation, the following:
1. Customary indemnity and capital adequacy provisions,
including but not limited to gross-up provisions for
changes in U.S. withholding taxes) and decreased
profitability resulting from
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<PAGE> 13
changes in U.S. or foreign capital adequacy
requirements, guidelines or policies or
their interpretation or application,
subject in each case to customary
protection (including rights to substitute
Lenders) provided to borrowers, and any
other customary yield and increased cost
protection deemed necessary by the Lenders
to provide customary protection.
2. The Lenders will be permitted to assign and
participate Revolving Loans, notes and
commitments to financial institutions in a
minimum amount to be agreed upon. Any
assignments would be by novation and, would
require the consent of the Borrower and the
Agents (unless such assignment was to
another Lender or an affiliate of another
Lender and the costs to the Borrower would
not be increased as a result thereof), such
consent not to be unreasonably withheld or
delayed. Participations shall be without
restrictions and participants will have the
same benefits as the Lenders with regard to
increased costs, capital adequacy, etc.,
and provision on a confidential basis of
information on the Borrower; provided, that
the right of participants to vote on
amendments, waivers, etc. will be limited
to certain customary issues such as,
without limitation, extension of the final
scheduled maturity date of the Revolving
Loans participated in by such participant.
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<PAGE> 14
3. Confidentiality obligations on the part of
the Agents and the Lenders.
4. Indemnification of the Arranger, the
Agents, each of the Lenders and each of
their respective affiliates, directors,
officers, agents and employees from and
against any losses, claims, damages,
liabilities or other expenses,
substantially as set forth in Annex II
hereto.
5. The Borrower shall pay all of the fees and
reasonable out-of-pocket expenses of the
Arranger and the Agents as set forth in
Annex II hereto.
6. Amendments and waivers of the Credit
Documentation will require the approval of
Lenders holding a majority of the Revolving
Loans and commitments, except that the
consent of all the Lenders shall be
required with respect to certain customary
issues.
6. Waiver of jury trial.
7. New York governing law; consent to
non-exclusive New York jurisdiction.
This Term Sheet is intended as an outline only and does not purport to
summarize all the conditions, covenants, representations, warranties and other
provisions which would be contained in the definitive Credit Documentation. The
commitments, undertakings and obligations described herein will be subject to
negotiation and execution of definitive Credit Documentation in form and
substance satisfactory to the Arranger, the Syndication Agent and their legal
counsel.
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<PAGE> 15
ANNEX II
INDEMNIFICATION PROVISIONS
Unless otherwise defined, terms used herein shall have the meanings
assigned thereto in the commitment letter (the "Commitment Letter") and term
sheet (the "Term Sheet") to which this Annex II is attached.
Medaphis Corporation (the "Indemnitor") hereby agrees to pay all fees
and reasonable out-of-pocket costs and expenses (including all reasonable
out-of-pocket costs and expenses arising in connection with the syndication of
the Revolving Facility and any due diligence investigation performed by the
Arranger prior to the date hereof, and fees and expenses of the legal counsel
to the Arranger and the Agents, including any local legal counsel) arising out
of or in connection with the negotiation, preparation, execution, delivery or
administration of the Commitment Letter, the Term Sheet, the Fee Letter and the
definitive Credit Documentation and any amendment, modification or waiver
thereto, and the Indemnitor shall be obligated to pay such fees and expenses
whether or not definitive Credit Documentation is executed or delivered or the
Transaction is consummated.
In addition, the Indemnitor hereby indemnifies and holds harmless all
Indemnified Parties (as defined below) from and against all Liabilities (as
defined below). "Indemnified Party" shall mean the Arranger, the Syndication
Agent, the Administrative Agent, each of the Lenders, each affiliate of any of
the foregoing and the respective directors, officers, trustees, agents and
employees of each of the foregoing, and each other person controlling any of
the foregoing within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended. "Liabilities" shall mean any and all losses, claims, damages,
liabilities or other reasonable out-of-pocket costs or expenses to which an
Indemnified Party may become subject which arise out of or relate to or result
from any action or proceeding relating to or connected with the transaction
described in the Commitment Letter, the Fee Letter or the Term Sheet, except to
the extent such Liabilities result from the gross negligence, bad faith or
willful misconduct of the Indemnified Party seeking indemnification hereunder.
In addition to the foregoing, the Indemnitor agrees to reimburse each
Indemnified Party for all
<PAGE> 16
reasonable out-of-pocket legal or other expenses incurred in connection with
investigating, defending or participating in any action, suit or other
proceeding relating to any Liabilities (whether or not such Indemnified Party
is a party to any such action, suit or proceeding). With respect to all of the
foregoing, the Indemnified Parties shall be represented by a single legal
counsel so long as no conflict of interest shall result from such counsel's
representation of all Indemnified Parties.
Any terms or provisions of this Annex II to the contrary
notwithstanding, upon (i) the execution and delivery of definitive Credit
Documentation by the Borrower, the Arranger, the Agents and the Lenders and
(ii) the making of the initial Revolving Loans under the Revolving Facility,
the terms and provisions of this Annex II shall be superseded in their entirety
by the terms and provisions of such Credit Documentation, and the terms and
provisions of this Annex II shall be of no further force or effect.
-2-
<PAGE> 1
EXHIBIT 99.1
[MEDAPHIS LOGO]
INVESTOR CONTACT: CARYN DICKERSON
(770) 444-5348
MEDIA CONTACTS: MICHAEL SITRICK
DONNA WALTERS
(800) 288-8809
JOHN GRIMALDI
(212) 755-2850
MEDAPHIS ANNOUNCES NEW LONG-TERM FINANCING PACKAGE
ATLANTA, GEORGIA -January 26, 1998-- Medaphis Corporation (NASDAQ: MEDA) today
said that it has received a commitment for a $100 million revolving credit
facility as part of a new planned $250 million financing package.
Under the terms of a senior bank financing commitment letter between Medaphis
and an affiliate of Donaldson, Lufkin & Jenrette Securities Corporation, DLJ
will fully underwrite a $100 million, three-year revolving credit facility that
will be guaranteed by Medaphis' domestic subsidiaries and secured by a
first-priority lien on substantially all material assets of the Company and its
domestic subsidiaries. The financing is contingent upon customary conditions and
completion of an offering of $150 million in senior notes maturing in 2005. The
proceeds of the financing package will be used to refinance Medaphis' existing
$210 million loan facility, maturing in 1999, and for general corporate
purposes. The financing package is expected to close by March 31, 1998.
David McDowell, Chairman and Chief Executive Officer of Medaphis, said,
"Completion of this financing package will represent a major milestone for
Medaphis. This new financing will return the Medaphis capital structure to more
traditional longer-term debt. When closed, we should be able to focus all of our
energy on the execution of our 1998 and longer-term business objectives."
Medaphis is a leading provider of business management services and information
products to healthcare providers, corporations and other organizations. Based in
Atlanta, Georgia, Medaphis currently services approximately 20,700 physicians
and 2,700 hospitals across the nation, and more than 100 systems integration
customers in industries including multi-unit retailing, energy,
telecommunications, financial services, manufacturing and transportation.
-more-
<PAGE> 2
The senior notes may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. This
press release shall not constitute an offer to sell or the solicitation of an
offer to buy senior notes or any other securities. The terms of the senior bank
financing commitment letter are being filed with the Securities and Exchange
Commission. This Press Release contains statements which constitute
"forward-looking statements" within the meaning of the Securities Act of 1933
and the Securities and Exchange Act of 1934, as amended by the Private
Securities Litigation Reform Act of 1995. Forward-looking statements contained
in this Press Release include the intent, belief or current expectations of the
Company and members of its senior management team with respect to bank
financing, the public or private offering of debt securities, debt and equity
market conditions, as well as the assumptions upon which such statements are
based. Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance, and involve risks and
uncertainties, and that actual results may differ materially from those
contemplated by such forward-looking statements. Important factors currently
known to management that could cause actual results to differ materially from
those contemplated by the forward-looking statements in this Press Release
include, but are not limited to, adverse developments in the bank financing or
public or private markets for debt or equity securities or adverse developments
with respect to the Company's liquidity position or operation of the Company's
business units.
Additional factors that would cause actual results to differ materially from
those contemplated within this Press Release can also be found in the Company's
Safe Harbor Compliance Statement filed as Exhibit 99.1 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 1997.
###
<PAGE> 1
EXHIBIT 99.2
[MEDAPHIS LOGO]
INVESTOR CONTACT: CARYN DICKERSON
(770) 444-5348
MEDIA CONTACTS: MICHAEL SITRICK
(770) 444-5707
DONNA WALTERS
(800) 288-8809
MEDAPHIS ANNOUNCES SIX SENIOR EXECUTIVE APPOINTMENTS
AS PART OF MOVE INTO NEXT PHASE OF BUSINESS PLAN
ATLANTA, GEORGIA -- JANUARY 27, 1998 -- Medaphis Corporation (NASDAQ: MEDA)
today announced six senior executive appointments as part of the Company's move
into the next phase of its business plan. The appointments, which are intended
to broaden and strengthen the Company's management team, include an Executive
Vice President and Chief Operating Officer, an Executive Vice President and
Chief Financial Officer and four Senior Vice Presidents: Chief Information
Officer, Chief Compliance Officer, Human Resources and Marketing. Three of the
executives appointed to these positions come from within the Company.
Yesterday, the Company announced that it had received a commitment for a $100
million revolving credit facility as part of a new planned $250 million
financing package. The financing, which will return the Medaphis capital
structure to more traditional long-term debt, is contingent upon customary
conditions and completion of an offering of $150 million in senior notes
maturing in 2005. The financing package is expected to close by March 31, 1998.
C. James Schaper, 46, who has served as Executive Vice President of Medaphis
since March 1997 and leads its Per-Se Technologies operations, retains those
responsibilities in addition to others he is taking on in his new role as Chief
Operating Officer for Medaphis Corporation. Allen W. Ritchie, 40, whose
experience includes serving as President, Finance and Administration of AGCO
Corporation, headquartered in Atlanta, GA, joins the Company as Executive Vice
President and Chief Financial Officer, succeeding Jerome H. Baglien.
-more-
<PAGE> 2
William N. Dagher, formerly Vice President of MedPartners, Inc., rejoins
Medaphis as Senior Vice President and Chief Information Officer. Kevin P.
Castle, 41, formerly Senior Vice President of GE Capital Technology Management
Services, has been named Senior Vice President Human Resources. Promoted from
within Medaphis' business units to new corporate-wide positions are Steven P.
Ely, 42, to Senior Vice President Marketing and Christopher L. Ideker, 40, who
has been named Senior Vice President and Chief Compliance Officer. The Company
said that all of the appointments are effective immediately.
David E. McDowell, Chairman and Chief Executive Officer of Medaphis, said that
these management changes, when coupled with the Company's existing management
structure, should significantly enhance Medaphis' ability to execute its 1998
business plan and longer-term business objectives.
"Jim Schaper has shown tremendous leadership in the actions he has taken to
direct the strategy, realign the operations and maximize the potential of the
Company's application software, information technology and consulting services
business," Mr. McDowell said. "I am confident that he will be able to make
significant contributions across all of the Company's business segments in his
new role."
He added, "Allen Ritchie's background and accomplishments should, likewise,
contribute greatly to the growth and profitability of the Company as we move
forward. His depth and breadth of experience, as well as his leadership
abilities, should serve Medaphis and its employees and shareholders well."
Mr. McDowell said that each of the Company's four new senior vice presidents has
accomplished a great deal in their particular discipline. "Steve Ely has been
instrumental in designing the marketing strategy for the company's software
products and information technology segment. Chris Ideker has upgraded the
compliance activities in our physician services business to a best practices
standard and will continue his leadership role in all of Medaphis' compliance
activities. William Dagher brings a wealth of experience in technology
information and healthcare systems. Kevin Castle has demonstrated exceptionally
strong management and people skills."
Commenting on Mr. Baglien's decision to leave the Company, Mr. McDowell said
that both management and the Company's Board of Directors were grateful for Mr.
Baglien's dedication and numerous contributions.
"Jerry's skills and hard work are evident to anyone who has followed this
Company," he said. "The improvements in our financial group are significant and
many. We are both pleased and proud of the work he has done here. We are
well-positioned for the next phase in the execution of our business strategy."
-more-
<PAGE> 3
The Company released the following additional background on the new executives
joining Medaphis:
- - Allen W. Ritchie served as President and Chief Executive Officer of Royal
Precision, Inc. from October 1997 to present. He served as President,
Finance and Administration of AGCO Corporation, headquartered in Atlanta,
GA from July 1996 until January 1997 and President of AGCO from January
1996 to July 1996. From September 1991 until December 1995, he was AGCO's
Chief Financial Officer and an Executive Vice President since July 1994.
Mr. Ritchie also served on the Board of Directors of AGCO and as a member
of the Board's Strategic Planning Committee.
- - Kevin P. Castle has served as Senior Vice President of GE Capital
Technology Services since November 1995. From September 1993 until
November 1995, Mr. Castle was Senior Vice President, Operations of Alltel
Information Services, Inc., a subsidiary of Alltel Corporation. Mr.
Castle was Assistant Vice President, Customer Integration, of GTE Mobile
Communications, Inc. from 1991 to 1993.
- - William N. Dagher has served as Vice President of MedPartners since April
1994. From May 1993 to April 1994, he was a Director of Client Service at
Medaphis Corporation. From 1990 to 1993, he was National Director of
physician practice management at KPMG Peat Marwick.
Medaphis is a leader in delivering healthcare information, products and
services, together with enabling technologies in selected industries. Based in
Atlanta, Georgia, Medaphis currently services approximately 20,700 physicians
and 2,700 hospitals across the nation, and more than 100 systems integration
customers in service industries such as healthcare, communications, energy and
financial services.
The senior notes referred to in this Press Release may not be offered or sold in
the United States absent registration or an applicable exemption from
registration requirements. This Press Release shall not constitute an offer to
sell or the solicitation of an offer to buy senior notes or any other
securities. This Press Release contains statements that constitute
"forward-looking statements" within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995. "Forward-looking" statements contained in this
Press Release include the intent, belief or current expectations of the Company
and members of its senior management team with respect to bank financing, the
public or private offering of debt securities, debt and equity market conditions
and the Company's future business operations as well as the assumptions upon
which such statements are based. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance, and
involve risks and uncertainties, and that actual results may differ materially
from those contemplated by such forward-looking statements. Important factors
currently known to management that could cause actual results to differ
materially from those contemplated by the forward-looking statements in this
Press Release include, but are not limited to, adverse developments in the bank
financing or public or private markets for debt or equity securities or adverse
developments with respect to the Company's liquidity position or operation of
the Company's business units.
Additional factors that would cause actual results to differ materially from
those contemplated within this Press Release can also be found in the Company's
Safe Harbor Compliance Statement filed as Exhibit 99.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
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