<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 24, 1998
OMEGA HEALTHCARE INVESTORS, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-11316 NO. 38-3041398
------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
905 WEST EISENHOWER CIRCLE, SUITE 110, ANN ARBOR, MI 48103
--------------------------------------------------------------------
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (734) 747-9790
NOT APPLICABLE
--------------
(Former name or former address, if changed since last report.)
<PAGE> 2
Item 5. Other Events
In October, 1997 the Company purchased 24 nursing homes and 2 rehabilitation
hospitals from Regency Health Services (Regency) for a net purchase price of
$80.9 million, after assumption of unsecured borrowings of $4.9 million which
bear interest at an effective cost of approximately 6%. Simultaneously, Regency
was acquired by Sun Healthcare Group, Inc. (Sun) and entered into a lease
agreement with the Company for these same facilities. Subsequent to the actual
funding of the purchase, the Company reached an agreement with Sun whereby it
agreed to invest an additional $15 million in these properties when cash flow
coverage ratios for the acquired facilities exceeded 2.00:1.00. Such ratios
have been exceeded, and an additional $15 million purchase consideration was
funded on April 24, 1998. This increases the Company's investment in the
facilities to $100.8 million. The yield on the additional investment is 9.50%.
Rent on the additional investment is subject to annual increases as with
respect to the original investment.
Following is condensed consolidated information derived from filings with the
Securities and Exchange Commission by Sun for the periods ended December 31,
1997 and December 31, 1996.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Cash flows:
Operating Activities................. $ 21,733 $ 26,812
Financing Activities................. 661,327 107,619
Investing Activities................. (680,121) (142,189)
Operations:
Net Revenues......................... 2,010,820 1,316,308
Net Earnings......................... 34,801 21,536
<CAPTION>
AS OF DECEMBER 31
-----------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Financial Position:
Current Assets....................... $ 645,211 $ 363,148
Current Liabilities.................. 325,692 151,566
Total Assets......................... 2,579,236 1,229,426
Total Liabilities.................... 1,945,898 654,592
Shareholders' Equity................. 617,053 572,137
</TABLE>
<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, thereto duly authorized.
OMEGA HEALTHCARE INVESTORS, INC.
April 30, 1998 By /s/ David A. Stover
-----------------------------
David A. Stover,
Chief Financial Officer
<PAGE> 4
Exhibit Index
Exhibit 99.1 First Amendment of Purchase Agreement, Master Lease
Agreement, Facility Leases and Guaranty between Delta
Investors I, LLC and Sun Healthcare Group, Inc.
Exhibit 99.2 First Amendment of Purchase Agreement, Master Lease Agreement,
Facility Leases and Guaranty between Delta Investors
II, LLC and Sun Healthcare Group, Inc.
Exhibit 99.3 Pro Forma Consolidated Statements of Operations for the Year
Ended December 31, 1997
<PAGE> 1
Exhibit 99.1
FIRST AMENDMENT OF PURCHASE AGREEMENT, MASTER LEASE
AGREEMENT, FACILITY LEASES AND GUARANTY
THIS FIRST AMENDMENT OF PURCHASE AGREEMENT, MASTER LEASE AGREEMENT,
FACILITY LEASES AND GUARANTY (Agreement) is entered into as of this 24th day
of April, 1998, between DELTA INVESTORS I, LLC (Lessor), the entities
identified on the signature page hereof (each a Lessee and collectively
Lessees) and SUN HEALTHCARE GROUP, INC. (Guarantor).
RECITALS
This Agreement is made and entered into with reference to the following
recitals :
Lessor, the Lessees and Guarantor entered into a Master Lease Agreement
dated as of October 7, 1997 (Master Lease Agreement), which covers ten (10)
licensed healthcare facilities leased by Lessor to Lessees pursuant to Facility
Leases with Lessees of the same date (the Facilities and the Facility
Leases). The Facilities were acquired by Lessor from the Lessees or Affiliates
of the Lessees pursuant to a Purchase Agreement of the same date (Purchase
Agreement).
Pursuant to an Amended and Restated Guaranty of October 7, 1997 (the
Guaranty), Guarantor guaranteed the payment of all sums due and the
performance of all of the Lessees obligations under the Facility Leases.
Lessor, Lessees and Guarantor previously agreed that if the ratio of
Cash Flow to Debt Service of the Facilities exceeded 2.0:1 for the calendar year
ending December 31, 1997, the Purchase Price for the Facilities would be
increased by Five Million Five Hundred Twenty Thousand Seven Hundred Twenty
Eight Dollars ($5,520,728.00), and that if the Purchase Price were to be so
increased, the Base Rent under each of the Facility Leases would increase in
proportion to the increase in the Purchase Price, and it is the purpose of this
Agreement to amend the Master Lease Agreement, the Purchase Agreement, the
Facility Leases and the Guaranty to set forth the agreement of the parties with
respect to such increases.
Capitalized terms used but not defined in this Agreement have the
meanings given to such terms in the Facility Leases, the Standard Terms and
Conditions and the Purchase Agreement.
1. Additional Purchase Price. The Purchase Price set forth in the Purchase
Agreement is hereby amended to be One Hundred Million Eight Hundred
Thirty Seven Thousand Four Hundred Fifty Three Dollars
($100,837,453.00). The increase in the Purchase Price is allocated
among the Facilities as set forth on EXHIBIT A attached hereto. The
amount of
1
<PAGE> 2
the increase, Five Million Five Hundred Twenty Thousand Seven
Hundred Twenty Eight Dollars ($5,520,728.00), shall be paid by Lessor
to Lessees or their agent by wire transfer, net of the amounts to be
paid by Lessees as set forth in Sections 3 and 4, below, on or before
April 30, 1998.
2. Amendments. Effective on the day the increased Purchase Price is paid
to Lessees or their agent as set forth in Section 1, above:
1. The Purchase Agreement shall be deemed amended as herein set
forth and from and after such day the Facility Leases shall be
deemed amended to increase the Base Rent as set forth on
EXHIBIT A, and the Guaranty and each and every other
Transaction Document shall be deemed amended accordingly.
Unless the increased Purchase Price is paid on the first day
of a month, the Base Rent for the calendar month in which the
Purchase Price is paid shall be prorated for such month.
2. The Facility Leases shall also be amended as follows:
1. The reference to this Section S1.08" in Section S1.07
is amended to this Section S1.07"; and
2. The reference to the amount set opposite the name of
the Facility on Exhibit F hereto in Section S1.11
(amending the Standard Terms and Conditions) is
amended to the amount set opposite the name of the
Facility on Exhibit G to the Purchase Agreement.
3. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
SIGNATURE PAGES FOLLOW
2
<PAGE> 3
IN WITNESS WHEREOF the parties hereto hereby execute this
Agreement as of the day and year first set forth above.
DELTA INVESTORS I, LLC
By: OMEGA HEALTHCARE INVESTORS, INC.
Its Sole Member
By: /s/ F. Scott Kellman
--------------------
F. Scott Kellman
Its: Executive Vice President
LESSEES:
Care Enterprises Inc., a
Delaware corporation
Circleville Health Care
Corp., an Ohio corporation
Beckley Health Care Corp.,
a West Virginia corporation
Care Enterprises West, a
Utah corporation
Regency Rehab Hospitals, Inc.,
a California corporation
Braswell Enterprises, Inc.,
a California corporation
Meadowbrook Rehabilitation
Center, a California
corporation
By: /s/ Craig Hayes
---------------
Their: Agent
SUN HEALTHCARE GROUP, INC., a
Delaware corporation
By: /s/ Craig Hayes
---------------
Its: Vice President
3
<PAGE> 1
EXHIBIT 99.2
FIRST AMENDMENT OF PURCHASE AGREEMENT, MASTER LEASE
AGREEMENT, FACILITY LEASES AND GUARANTY
THIS FIRST AMENDMENT OF PURCHASE AGREEMENT, MASTER LEASE AGREEMENT,
FACILITY LEASES AND GUARANTY (Agreement) is entered into as of this 24th day
of April, 1998, between DELTA INVESTORS II, LLC (Lessor), the entities
identified on the signature page hereof (each a Lessee and collectively
Lessees) and SUN HEALTHCARE GROUP, INC. (Guarantor).
RECITALS
This Agreement is made and entered into with reference to the following
recitals :
Lessor, the Lessees and Guarantor entered into a Master Lease Agreement
dated as of October 7, 1997 (Master Lease Agreement), which covers seventeen
(17) licensed healthcare facilities leased by Lessor to Lessees pursuant to
Facility Leases with Lessees of the same date (the Facilities and the
Facility Leases). The Facilities were acquired by Lessor from the Lessees or
Affiliates of the Lessees pursuant to a Purchase Agreement of the same date
(Purchase Agreement).
Pursuant to an Amended and Restated Guaranty of October 7, 1997 (the
Guaranty), Guarantor guaranteed the payment of all sums due and the
performance of all of the Lessees obligations under the Facility Leases.
Lessor, Lessees and Guarantor previously agreed that if the ratio of
Cash Flow to Debt Service of the Facilities exceeded 2.0:1 for the calendar year
ending December 31, 1997, the Purchase Price for the Facilities would be
increased by Nine Million Four Hundred Seventy Nine Thousand Two Hundred Seventy
Two Dollars ($9,479,272.00), and that if the Purchase Price were to be so
increased, the Base Rent under each of the Facility Leases would increase in
proportion to the increase in the Purchase Price, and it is the purpose of this
Agreement to amend the Master Lease Agreement, the Purchase Agreement, the
Facility Leases and the Guaranty to set forth the agreement of the parties with
respect to such increases.
Capitalized terms used but not defined in this Agreement have the
meanings given to such terms in the Facility Leases, the Standard Terms and
Conditions and the Purchase Agreement.
1. Additional Purchase Price. The Purchase Price set forth in the Purchase
Agreement is hereby amended to be One Hundred Million Eight Hundred
Thirty Seven Thousand Four Hundred Fifty Three Dollars
($100,837,453.00). The increase in the Purchase Price is allocated
among the Facilities as set forth on EXHIBIT A attached hereto. The
amount of the increase, Nine Million Four Hundred Seventy Nine Two
Hundred Seventy Two
1
<PAGE> 2
Dollars ($9,479,272.00), shall be paid by Lessor to Lessees
or their agent by wire transfer, net of the amounts to be paid
by Lessees as set forth in Sections 3 and 4, below, on or before April
30, 1998.
2. Amendments. Effective on the day the increased Purchase Price is paid
to Lessees or their agent as set forth in Section 1, above:
a. The Purchase Agreement shall be deemed amended as herein set
forth and from and after such day the Facility Leases shall be
deemed amended to increase the Base Rent as set forth on
EXHIBIT A, and the Guaranty and each and every other
Transaction Document shall be deemed amended accordingly.
Unless the increased Purchase Price is paid on the first day
of a month, the Base Rent for the calendar month in which the
Purchase Price is paid shall be prorated for such month.
b. The Facility Leases shall also be amended as follows:
i. The reference to this Section S1.08" in Section S1.07
is amended to this Section S1.07"; and
ii. The reference to the amount set opposite the name of
the Facility on Exhibit F hereto in Section S1.11
(amending the Standard Terms and Conditions) is
amended to the amount set opposite the name of the
Facility on Exhibit G to the Purchase Agreement.
3. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be
deemed an original, but all of which together shall
constitute one and the same instrument.
SIGNATURE PAGES FOLLOW
2
<PAGE> 3
IN WITNESS WHEREOF the parties hereto hereby execute this
Agreement as of the day and year first set forth above.
DELTA INVESTORS II, LLC
By: OMEGA HEALTHCARE INVESTORS, INC.
Its Sole Member
By: /s/ F. Scott Kellman
--------------------
F. Scott Kellman
Its: Executive Vice President
LESSEES:
Care Enterprises Inc., a
Delaware corporation
Dunbar Health Care Corp., a West
Virginia corporation
Marion Health Care Corp., an Ohio
corporation
Salem Health Care Corp., a West Virginia
corporation
Care Enterprises West, a Utah
corporation
Regency-North Carolina, Inc., a North
Carolina corporation
Braswell Enterprises, Inc.,
a California corporation
Coalinga Rehabilitation
Center, a California
corporation
Fullerton Rehabilitation Center, a
California corporation
Newport Beach
Rehabilitation Center, a
California corporation
San Bernardino Rehabilitation
Hospital, Inc., a
California corporation
Vista Knoll Rehabilitation
Center, Inc., a California
corporation
By: /s/ Craig Hayes
---------------
Their: Agent
3
<PAGE> 4
SUN HEALTHCARE GROUP, INC., a Delaware
corporation
By: /s/ Craig Hayes
---------------
Its: Vice President
4
<PAGE> 1
EXHIBIT 99.3
The following table sets forth certain unaudited summary financial
information for the Company on a pro forma basis. The pro forma information for
the year ended December 31, 1997 gives effect to the Company's acquisition of 24
nursing homes and 2 rehabilitation hospitals from Sun Healthcare Group as if net
fundings in October 1997 ($80.9 million) and April 1998 ($15 million) had been
completed on January 1, 1997. The initial funding relates to the purchase of
facilities from Regency Health Services in October 1997, while the April 1998
funding related to an amended agreement with Sun Healthcare. The pro forma
information also gives effect to additional borrowings assumed in the
transactions and on the Company's line of credit as if each had been completed
on January 1, 1997. The pro forma financial information is not necessarily
indicative of what the Company's results of operations would have been assuming
the above events actually occurred as of the dates indicated, nor do they
purport to project the Company's results of operations for any future date or
for any future period.
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(Unaudited)
<S> <C> <C> <C>
REVENUE:
Rental income $54,073 $7,721 $61,794
Mortgage interest income 28,727 28,727
Other investment income 6,888 6,888
Miscellaneous 1,132 1,132
------- ------ -------
90,820 7,721 98,541
EXPENSES:
Depreciation and amortization 16,910 2,388 19,298
Interest 24,423 5,379 29,802
General and administrative 4,636 4,636
------- ------ -------
45,969 7,767 53,736
------- ------ -------
Net earnings (loss) 44,851 (46) 44,805
Preferred stock dividends 3,546 3,546
------- ------ -------
Net earnings available to Common $41,305 ($46) $41,259
======= ====== =======
PER SHARE:
Net earnings available to Common, Basic $2.16 $2.16
Net earnings available to Common, Diluted $2.16 $2.16
Weighted average number of shares outstanding, basic 19,085 19,085
Weighted average number of shares outstanding, diluted 19,137 19,137
</TABLE>
