<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 24, 1997
Transworld HealthCare, Inc.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
New York
--------------------------------------------
(State or other jurisdiction of incorporation)
1-11570 13-3098275
- ----------------------- ----------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
555 Madison Avenue, New York, New York 10022
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 750-0064
------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired
The required financial statements are not included in this
filing. Transworld will file such required statements within
the time period required by the rules and regulations of the
Securities and Exchange Commission.
(b) Pro Forma Financial Information.
The required pro forma financials are not included in this
filing. Transworld will file such required pro forma
statements within the time period required by the rules and
regulations of the Securities and Exchange Commission.
(c) Exhibits.
Recommended Cash Offer by Henry Cooke Corporate Finance Ltd.
on behalf of Transworld Healthcare (UK) Limited, a subsidiary
of Transworld HealthCare, Inc. for Omnicare plc is filed as
Exhibit 2.1 hereto.
Certain statements contained herein are forward-looking
statements that have been made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements involve known and unknown
risks and uncertainties which may cause the actual results in
the future periods or plans for future periods to differ
materially from those described herein as anticipated,
believed or estimated.
-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 hereunto duly authorized.
Transworld HealthCare, Inc.
(Registrant)
Date: July 2, 1997 By: /s/ WAYNE A. PALLADINO
------------------------
Wayne A. Palladino
Senior Vice President and
Chief Financial Officer
-3-
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description
2.1 Recommended Cash Offer by Henry Cooke
Corporate Finance Ltd. on behalf of Transworld
Healthcare (UK) Limited, a subsidiary of
Transworld Healthcare, Inc. for Omnicare
plc is filed as Exhibit 2.1 hereto.
<PAGE> 1
Exhibit 2.1
IF YOU ARE IN DOUBT ABOUT THIS OFFER YOU SHOULD CONSULT AN INDEPENDENT FINANCIAL
ADVISER AUTHORISED UNDER THE FINANCIAL SERVICES ACT 1986.
IF YOU HAVE SOLD OR OTHERWISE TRANSFERRED ALL OF YOUR SHARES IN OMNICARE, PLEASE
FORWARD THIS DOCUMENT AND THE ACCOMPANYING FORM OF ACCEPTANCE AT ONCE TO THE
PURCHASER OR TRANSFEREE OR TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM
THE SALE OR TRANSFER WAS EFFECTED, FOR TRANSMISSION TO THE PURCHASER OR
TRANSFEREE. HOWEVER, SUCH DOCUMENTS SHOULD NOT BE FORWARDED OR TRANSMITTED IN OR
INTO THE UNITED STATES, CANADA OR AUSTRALIA. IF YOU HAVE SOLD ONLY PART OF YOUR
HOLDING OF SHARES, YOU SHOULD RETAIN THESE DOCUMENTS.
- --------------------------------------------------------------------------------
RECOMMENDED CASH OFFER
BY
HENRY COOKE CORPORATE FINANCE LTD
ON BEHALF OF
TRANSWORLD HEALTHCARE (UK) LIMITED
A SUBSIDIARY OF
TRANSWORLD HEALTHCARE, INC.
FOR
OMNICARE PLC
- --------------------------------------------------------------------------------
A letter from the Deputy Chairman of Omnicare containing the recommendation of
the Independent Omnicare Directors is set out on pages 4 and 5. Acceptances
should be despatched as soon as possible, and in any event so as to be received
not later than 3.00 pm on 24 June 1997. The procedure for acceptance is set out
in section 11 of the letter from Henry Cooke Corporate Finance Ltd on pages 6 to
12 of this document and in the Form of Acceptance.
Henry Cooke Corporate Finance Ltd, which is regulated by The Securities and
Futures Authority Limited, is acting for Transworld and Transworld Inc. and for
no one else in connection with the Offer and will not be responsible to anyone
other than Transworld and Transworld Inc. for the protections provided to
customers of Henry Cooke Corporate Finance Ltd or for giving advice in relation
to the Offer.
English Trust Company Limited, which is regulated by The Securities and Futures
Authority Limited, is acting for Omnicare and for no one else in connection with
the Offer and will not be responsible to anyone other than Omnicare for the
protections provided to customers of English Trust Company Limited or for giving
advice in relation to the Offer.
The Offer referred to in this document is not being made directly or indirectly
in or into the United States, Canada or Australia. Neither this document nor the
accompanying Form of Acceptance is being, and must not be, distributed,
forwarded or transmitted in, into or from the United States (whether by use of
the mail or by any means or instrumentality of interstate or foreign commerce or
any facility of a national securities exchange thereof), Canada or Australia and
doing so may render invalid any purported acceptance. All Omnicare Shareholders
(including nominees, trustees or custodians) who would, or otherwise intend to,
forward this document and the accompanying Form of Acceptance to any
jurisdiction outside the United Kingdom should read the further details in this
regard which are contained in paragraph 6 of Part B of Appendix I to this
document before taking any action.
<PAGE> 2
DEFINITIONS
In this document and the accompanying Form of Acceptance the following
definitions apply, unless the context requires otherwise:
AIM the Alternative Investment Market of
the London Stock Exchange
Canada Canada, its territories, provinces and
all areas subject to its jurisdiction
or any political sub-division thereof
certificated or in certificated form an Omnicare Share which is not in
uncertificated form
Code the City Code on Takeovers and Mergers
CREST the relevant system (as defined in the
Regulations) in respect of which
CRESTCo is the Operator (as defined in
the Regulations)
CRESTCo CRESTCo Limited
CREST member a person who has been admitted by
CRESTCo as a system-member(as defined
in the Regulations)
CREST participant a person who is, in relation to CREST,
a system-participant (as defined in the
Regulations)
CREST sponsor a CREST participant admitted to CREST
as a CREST sponsor
CREST sponsored member a CREST member admitted to CREST as a
sponsored member
dollars or $ US dollars
English Trust English Trust Company Limited
Form of Acceptance the form of acceptance to be used in
connection with the Offer
Henry Cooke Henry Cooke Corporate Finance Ltd
Independent Omnicare Directors the directors of Omnicare other than
Timothy Aitken
London Stock Exchange London Stock Exchange Limited
Offer the recommended offer by Henry Cooke on
behalf of Transworld contained in this
document to acquire all the Omnicare
Shares which are not already owned by
the Transworld Group
Offeror Transworld
Omnicare Omnicare plc
Omnicare Group Omnicare and its subsidiaries
Omnicare Optionholders participants in the Omnicare Share
Option Scheme and holders of options to
subscribe for Omnicare Shares
Omnicare Share Option Scheme the Omnicare plc 1995 Executive Share
Option Scheme
Omnicare Shareholders holders of Omnicare Shares
Omnicare Shares or Shares existing issued and fully-paid ordinary
shares of 10 pence each in Omnicare and
any further such shares which are
allotted or issued after the date
hereof pursuant to the Omnicare Share
Option Scheme or otherwise, while the
Offer remains open for acceptance (or
prior to such earlier date, not being
earlier than the date on which the
Offer becomes or is declared
unconditional as to acceptances or, if
later, the first closing date of the
Offer, as Transworld may decide)
Panel the Panel on Takeovers and Mergers
Participant ID the identification code or membership
number used in CREST to identify a
particular CREST member or other CREST
participant
Receiving Agent or Registrars of Exchange Registrars Limited,
Omnicare 18 Park Place, Cardiff CF1 3PD
Regulations the Uncertificated Securities
Regulations 1995
TFE instruction a Transfer from Escrow instruction (as
defined by the CREST manual issued by
CRESTCo)
Transworld Transworld Healthcare (UK) Limited
Transworld Group Transworld Inc. and its subsidiaries
Transworld Inc. or Company Transworld Healthcare, Inc.
TTE instruction a Transfer to Escrow instruction (as
defined by the CREST manual issued by
CRESTCo)
uncertificated or in uncertificated an Omnicare Share which is for the time
form being recorded on the register of
members of Omnicare as being held
in uncertificated form
United States or US the United States of America (including
the States thereof and the District of
Columbia), its territories, its
possessions and other areas subject to
its jurisdiction
2
<PAGE> 3
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Letter from M G Scorey, Deputy Chairman of Omnicare 4
Letter from Henry Cooke
1. Introduction 6
2. The Offer 6
3. Terms and Conditions 6
4. Financial effects of acceptance 7
5. UK taxation 7
6. Information regarding Transworld Inc. 8
7. Information regarding Transworld 9
8. Information regarding Omnicare 9
9. Reasons for the Offer 9
10. Management and employees 9
11. Procedure for acceptance 9
12. Settlement 12
13. Further information 12
Appendices
I. Conditions and Further Terms of the Offer 13
II. Financial and Other Information on Transworld Inc. 26
III. Financial and Other Information on Transworld 42
IV. Financial and Other Information on Omnicare 43
V. Additional Information 52
</TABLE>
3
<PAGE> 4
LETTER FROM M G SCOREY, DEPUTY CHAIRMAN OF OMNICARE
OMNICARE PLC
REGISTERED NUMBER 3073148
Directors Registered office
Timothy M Aitken (Chairman)* Enterprise Drive
Michael G Scorey Four Ashes
Charles L Kernahan Wolverhampton
Mark S Hanley WV10 7DF
Stephen P Gullick
Richard G Green*
*Non-Executive
3 June 1997
To Omnicare Shareholders and, for information only, to Omnicare Optionholders
Dear Sir or Madam
RECOMMENDED CASH OFFER FROM TRANSWORLD
On 28 May 1997, it was announced that your board and the board of Transworld
Inc. had reached agreement on the terms of a recommended cash offer to be made
by Henry Cooke on behalf of Transworld, a wholly-owned subsidiary of Transworld
Inc., to acquire the whole of the share capital of Omnicare, issued and to be
issued, not already owned by the Transworld Group. As Timothy Aitken is also a
director of Transworld Inc., I am now writing to you to explain the reasons for
and benefits of the Offer and why the Independent Omnicare Directors recommend
you to accept it. Details of the Offer are set out in the accompanying letter
from Henry Cooke.
REASONS FOR AND BENEFITS OF THE OFFER
The board of Omnicare believes there are substantial benefits that can be
derived from the acquisition of Omnicare by Transworld. In particular, it
believes that the acquisition will enable the business of Omnicare to grow more
rapidly than would be possible as a relatively small independent company. The
significant financial resources of Transworld Inc. will enable Omnicare to take
advantage of opportunities for expansion in the European market. In addition,
Transworld Inc. has considerable experience in the sophisticated, more mature
home healthcare market in the United States and will be able to make its skills
available to develop the business of Omnicare.
THE OFFER
You will find set out on pages 6 to 12 a letter from Henry Cooke, containing the
Offer on behalf of Transworld to acquire your shares on the basis of 167p in
cash for each Omnicare Share.
The Offer of 167p for each Omnicare Share values the issued share capital of
Omnicare at approximately (pounds sterling)19.76 million. The Offer price
represents a premium of 30.0 per cent over the middle market quotation of 128.5
pence per Omnicare Share as derived from the AIM Appendix to the London Stock
Exchange Daily Official List at the close of business on 23 April 1997, the day
prior to the announcement by the board of Omnicare that it had received an
approach that might lead to a recommended offer for Omnicare.
The Offer will extend to any Omnicare Shares unconditionally allotted or issued
while the Offer remains open for acceptance (or prior to such earlier date, not
being earlier than the date on which the Offer becomes or is declared
unconditional as to acceptances or, if later, the first closing date of the
Offer, as Transworld may decide), pursuant to the exercise of options under the
Omnicare Share Option Scheme or otherwise.
Proposals will be made to Omnicare Optionholders following the Offer becoming or
being declared unconditional to invite them to surrender their options in return
for a payment in respect of each Omnicare Share under option equal to the
difference between the Offer price of 167 pence per Omnicare Share and the
option exercise price.
4
<PAGE> 5
The conditions and further terms of the Offer are set out in Appendix I to this
document.
Details of the financial effects on Omnicare Shareholders of accepting the Offer
are shown on page 7 of this document.
MANAGEMENT AND EMPLOYEES
All of the executive directors of Omnicare will remain as directors of Omnicare.
Transworld Inc. has given assurances to your board that the existing employment
rights of all the Omnicare Group's management and employees, including pension
rights, will be fully safeguarded. Your board believes that the career
opportunities of Omnicare Group employees will be enhanced within the enlarged
Transworld Group.
ACTION TO BE TAKEN
Your attention is drawn to pages 9 to 12 of this document and to the
accompanying Form of Acceptance, which set out the procedure for acceptance of
the Offer. In order to accept the Offer, you should complete and return the
enclosed Form of Acceptance in accordance with the instructions printed thereon
as soon as possible and, in any event, so as to be received by the Receiving
Agent no later than 3.00 pm on 24 June 1997.
If you are in any doubt about this offer, you should consult an independent
financial adviser authorised under the Financial Services Act 1986.
FURTHER INFORMATION
Your attention is drawn to the further information contained in Appendices I to
V to this document.
RECOMMENDATION
The Independent Omnicare Directors, who have been so advised by English Trust,
consider the terms of the Offer to be fair and reasonable and in the best
interest of Omnicare Shareholders. Accordingly, the Independent Omnicare
Directors unanimously recommend you to accept the Offer. Timothy Aitken is also
a director of Transworld Inc. and, accordingly, has not participated in board
discussions concerning the Offer. The only director of Omnicare who holds
Omnicare Shares has irrevocably undertaken to accept the Offer in respect of his
holding of 11,250 Omnicare Shares, or 0.1 per cent of the current issued share
capital of Omnicare.
Stanton Industries Limited has irrevocably undertaken to accept the Offer in
respect of its holding of 4,238,250 Omnicare Shares, representing 35.82 per
cent. of the current issued share capital of Omnicare. On 28 May 1997,
Transworld acquired 1,765,000 Omnicare Shares from Hyperion Partners II L.P.
Accordingly, Transworld owns, or has received irrevocable undertakings to accept
the Offer in respect of, in aggregate, 6,014,500 Shares, representing 50.83 per
cent. of Omnicare's issued share capital.
Yours faithfully
Michael G Scorey
Deputy Chairman
5
<PAGE> 6
LETTER FROM HENRY COOKE
---------------------------------
HENRY COOKE CORPORATE FINANCE LTD
---------------------------------
ONE KING STREET, MANCHESTER M2 6AW
Registered number 2384902
3 June 1997
To Omnicare Shareholders and, for information only, to Omnicare Optionholders
Dear Sir or Madam
RECOMMENDED CASH OFFER ON BEHALF OF TRANSWORLD FOR OMNICARE
1. INTRODUCTION
It was announced on 28 May 1997 that the boards of Transworld Inc. and of
Omnicare had reached agreement on the terms of a recommended cash offer to be
made by Henry Cooke on behalf of Transworld, a wholly-owned subsidiary of
Transworld Inc., to acquire the whole of the share capital of Omnicare, issued
and to be issued, not already owned by the Transworld Group. This document
contains the formal offer. The Form of Acceptance to be used in connection with
the Offer is enclosed.
The only director of Omnicare who holds Omnicare Shares has irrevocably
undertaken to accept the Offer in respect of his holding of 11,250 Omnicare
Shares, representing 0.1 per cent. of Omnicare's current issued share capital.
Stanton Industries Limited has irrevocably undertaken to accept the Offer in
respect of its holding of 4,238,250 Omnicare Shares, representing 35.82 per
cent. of Omnicare's current issued ordinary share capital. On 28 May 1997,
Transworld acquired 1,765,000 Omnicare Shares from Hyperion Partners II L.P.
Accordingly, Transworld owns, or has received irrevocable undertakings to accept
the Offer in respect of, in aggregate, 6,014,500 shares, representing 50.83 per
cent. of Omnicare's issued share capital.
Your attention is drawn to the letter from your Deputy Chairman, set out on
pages 4 and 5 of this document, from which you will see that the Independent
Omnicare Directors, who have been so advised by English Trust, consider the
terms of the Offer to be fair and reasonable and that the Independent Omnicare
Directors unanimously recommend you to accept the Offer, as the only director of
Omnicare who holds Omnicare Shares has irrevocably undertaken so to do in
respect of his own beneficial holding. Timothy Aitken is a director of both
Omnicare and Transworld Inc. and, accordingly, has not participated in Omnicare
board discussions concerning the Offer.
Instructions on how to accept the Offer are set out in section 11 of this
letter, "Procedure for acceptance", on pages 9 to 12.
2. THE OFFER
On behalf of Transworld, we hereby offer to acquire, on the terms and subject to
the conditions set out or referred to in this document and in the Form of
Acceptance, all the Omnicare Shares not already owned by the Transworld Group,
on the following basis:
<TABLE>
<S> <C>
For each Omnicare Share 167p in cash
</TABLE>
The Offer of 167p for each Omnicare Share values the issued share capital of
Omnicare at approximately (pounds sterling) 19.76 million. The Offer price
represents a premium of 30.0 per cent. over the middle market quotation of
128.5 pence per Omnicare Share as derived from the AIM Appendix to the London
Stock Exchange Daily Official List at the close of business on 23 April 1997,
the day prior to the announcement by the board of Omnicare that it had
received an approach that might lead to a recommended offer for Omnicare.
ACCEPTANCES OF THE OFFER SHOULD BE DESPATCHED AS SOON AS POSSIBLE AND IN ANY
EVENT SO AS TO BE RECEIVED BY 3.00 PM ON 24 JUNE 1997.
3. TERMS AND CONDITIONS
The Omnicare Shares which are the subject of the Offer will be acquired by
Transworld free from all liens, charges, equitable interests and encumbrances
and together with all rights now or hereafter attaching thereto, including the
right to receive all dividends and other distributions declared, made or paid
after 28 May 1997.
6
<PAGE> 7
The conditions and further terms of the Offer are set out in Appendix I to this
document.
The Offer will extend to any Omnicare Shares unconditionally allotted or issued
while the Offer remains open for acceptance (or prior to such earlier date, not
being earlier than the date on which the Offer becomes or is declared
unconditional as to acceptances or, if later, the first closing date of the
Offer, as Transworld may decide), pursuant to the exercise of options under the
Omnicare Share Option Scheme or otherwise.
Proposals will be made to Omnicare Optionholders following the Offer becoming or
being declared unconditional to invite them to surrender their options in return
for a payment in respect of each Omnicare Share under option equal to the
difference between the Offer price of 167 pence per Omnicare Share and the
option exercise price.
4. FINANCIAL EFFECTS OF ACCEPTANCE
(a) Capital
The table below shows the effect on capital value for a holder of 100 Omnicare
Shares accepting the Offer:
<TABLE>
<CAPTION>
Pound Sterling
<S> <C>
Consideration 167.00
Market value of Omnicare Shares(i) 128.50
------
Change in value 38.50
------
This represents an increase of 30.00%
======
</TABLE>
(b) Income
The table below shows the effect on gross income for a holder of 100 Omnicare
Shares accepting the Offer:
<TABLE>
<CAPTION>
Pound Sterling
<S> <C>
Gross income on pound sterling 167 cash(ii) 13.26
Gross dividend income from 100 Omnicare Shares(iii) 2.03
-----
Change in gross income 11.23
=====
This represents an increase of 553%
=====
</TABLE>
Notes:
The financial comparisons set out above have been made on the following bases:
(i) The market value of Omnicare Shares is based on the middle market
quotation of 128.5p per Omnicare Share as derived from the AIM Appendix
to the London Stock Exchange Daily Official List for 23 April 1997 (being
the day prior to the announcement by the board of Omnicare that it had
received an approach that might lead to a recommended offer for
Omnicare).
(ii) The gross income on the cash consideration has been calculated on the
assumption that the cash is reinvested to yield approximately 7.94 per
cent. being the gross yield on the 2008 Treasury 9 per cent. gilt on 30
May 1997 (the latest practicable date prior to the posting of this
document).
(iii) The gross dividend from Omnicare Shares is based on the interim dividend
of 0.625p (net) per share and the final dividend of 1p (net) per share
paid in respect of the year ended 31 December 1996, together with the
associated tax credits of 20/80ths of the amounts paid.
(iv) No account has been taken of any liability to taxation.
5. UK TAXATION
The following paragraphs, which are intended as a general guide only and are
based on current legislation and Inland Revenue practice, summarise advice
received by Transworld regarding the position of Omnicare Shareholders, who are
resident or ordinarily resident in the UK for tax purposes and who hold their
Omnicare Shares as an investment, in respect of UK taxation.
To the extent that an Omnicare Shareholder receives cash under the Offer, this
will constitute a disposal of shares for the purposes of UK taxation of capital
gains which may give rise to a liability to taxation. Liability to UK taxation
of capital gains will depend upon the particular circumstances of the individual
Omnicare Shareholder.
Omnicare Shareholders who acquired or acquire their Omnicare Shares by
exercising options under the Omnicare Share Option Scheme are reminded that they
may incur a charge to UK income tax upon exercising their options.
IF YOU ARE IN ANY DOUBT AS TO YOUR TAXATION POSITION, YOU SHOULD CONSULT YOUR
INDEPENDENT PROFESSIONAL ADVISER WITHOUT DELAY.
7
<PAGE> 8
6. INFORMATION REGARDING TRANSWORLD INC.
(a) Business Description
Transworld Inc. is a regional provider of a broad range of alternate site
healthcare services and products in the United States. Transworld Inc. provides
the following services and products to patients in their homes or in an
outpatient setting:
- - respiratory therapy, home medical equipment and specialised mail-order
pharmaceuticals and medical supplies, including respiratory and diabetic
medications and supplies, wound-care dressings and ostomy and orthotic
products;
- - patient services, including nursing and para-professional services and
radiation therapy; and
- - infusion therapy.
In January 1997, Transworld Inc. acquired a 49 per cent. interest in Health
Management, Inc. ("HMI"), and has entered into an agreement providing for the
acquisition of the reminder of HMI, subject to the satisfaction of the
conditions contained therein. HMI provides integrated pharmaceutical management
services to patients with chronic medical conditions.
Transworld Inc. has a market capitalisation of approximately $147 million, and
is quoted on the Nasdaq National Market in the United States.
(b) Consolidated Financial Information
For the year ended 31 October 1996, Transworld Inc. recorded a profit before tax
and extraordinary items of $3.72 million (1995: $1.49 million) on net sales of
$76.30 million (1995: $71.59 million). At 31 October 1996, shareholders' funds
amounted to $67.23 million (1995: $24.09 million).
For the three months ended 31 January 1997 (unaudited), Transworld Inc. reported
a profit before tax of $2.01 million (1996: $1.42 million) on net sales of
$20.30 million (1996: $19.64 million). At 31 January 1997, shareholders' funds
amounted to $68.28 million.
(c) Pending Acquisition
Transworld Inc. has pending and uncompleted the acquisition of VIP Health
Services, Inc. and Kwik Care, Ltd, nursing and home-help services providers in
the New York metropolitan area. In the year ended 31 December 1996, these two
companies reported aggregate turnover of some $29 million (1995: $35 million)
and reported aggregate proforma net income after tax of $349,000 (1995: loss
$978,000). The outstanding consideration payable by Transworld Inc., should the
acquisition be completed, amounts to $8.0 million.
(d) Post Balance Sheet Events
In January 1997, Transworld Inc. acquired a 49 per cent. interest in Health
Management, Inc. ("HMI") for $8,964,292 payable in cash, and has entered into a
conditional agreement providing for the acquisition of the remainder of HMI for
$2.8 million payable in cash, subject to the satisfaction of the conditions
contained therein. Completion of this acquisition is expected by July 1997. In
addition, Transworld Inc. has entered into agreements to purchase certain debts
of HMI as set out in paragraph 6(a) of Appendix V of this document. HMI provides
integrated pharmaceutical management services to patients with chronic medical
conditions. For the year ended 30 April 1996 and the nine months ended 31
January 1997 (unaudited) respectively, HMI reported net sales of $159 million
and $120 million and net losses of $10.9 million and $31.3 million.
On 21 April 1997, Hyperion Partners II L.P. and its affiliate, Hyperion TW Fund
L.P., invested $50.7 million of equity capital in Transworld Inc. and on 26
March 1997 Hyperion Partners II L.P. conditionally subscribed for an additional
$12.2 million of such equity.
(e) Current Trading and Future Prospects
Transworld Inc.'s current trading is in line with the directors' expectations.
Transworld Inc. intends to broaden its activities as a provider of alternate
site healthcare services and products by both organic growth and carefully
targeted acquisitions.
(f) Ownership
Transworld Inc.'s principal shareholders are Hyperion Partners II L.P. and
Hyperion TW Fund L.P. These funds hold, in aggregate, 9,415,333 shares of common
stock representing 62.3 per cent. of the issued share capital of Transworld Inc.
The ultimate general partner of each of the funds is Hyperion Funding II Corp.
8
<PAGE> 9
Further information relating to Transworld Inc. and Hyperion Funding II Corp.
and its funds is set out in Appendix II.
7. INFORMATION REGARDING TRANSWORLD
Transworld is a newly-incorporated, wholly-owned subsidiary of Transworld Inc.
established for the purposes of the Offer. Further information relating to
Transworld is set out in Appendix III.
8. INFORMATION REGARDING OMNICARE
(a) Business Description
The Omnicare Group provides respiratory equipment and services to patients at
home, under the terms of contracts and licences with various National Health
Service agencies. It also dispenses and supplies a range of medical and surgical
products, principally stoma products, to patients at home, as well as providing
those patients with advisory and other services through its network of regional
care centres.
The main types of equipment supplied for respiratory therapy are oxygen
concentrators, which are installed and maintained in patients' homes, and oxygen
cylinders, which are supplied to pharmacies for delivery to patients' homes. The
end users of the respiratory therapy are patients with long term lung conditions
such as chronic bronchitis and emphysema. Oxygen concentrators are used by those
patients who have a need for long term oxygen therapy, whilst oxygen cylinders
provide relief for patients who only require oxygen for short periods.
The stoma and related products which are delivered to patients' homes are mainly
disposable items required by patients who have undergone colostomy, ileostomy
and urostomy surgery.
The directors of Omnicare are presently negotiating the acquisition of a
substantial company operating a home healthcare and healthcare services
business. The directors of Transworld support the development of Omnicare, and
have confirmed that the enlarged Transworld Group intends to pursue
opportunities for the development of Omnicare in the event of the Offer becoming
unconditional.
(b) Consolidated Financial Information
For the year ended 31 December 1996, the Omnicare Group reported a profit before
tax of pound sterling 1.13 million (1995: pound sterling 612,000) on sales of
pound sterling 7.38 million (1995: pound sterling 1.77 million). As at 31
December 1996, shareholders' funds stood at pound sterling 2.40 million (1995:
pound sterling 1.35 million).
Further information relating to Omnicare is set out in Appendix IV.
9. REASONS FOR THE OFFER
The board of Omnicare believes there are substantial benefits which can be
derived from the acquisition of Omnicare by Transworld. In particular, it
believes that the acquisition will enable the business of Omnicare to grow more
rapidly than would be possible as a relatively small independent company. The
significant financial resources of Transworld Inc. will enable Omnicare to take
advantage of opportunities for expansion in the European market. In addition,
Transworld Inc. has considerable experience in the sophisticated, more mature
home healthcare market in the United States and will be able to make its skills
available to develop the business of Omnicare.
10. MANAGEMENT AND EMPLOYEES
Transworld Inc. believes that the prospects for the management and employees of
the Omnicare Group will be enhanced by the acquisition. Transworld Inc.'s
financial resources and experience in the sophisticated US home healthcare
market will help the Omnicare Group capitalise on its strong brand names and
facilitate expansion. The directors of Omnicare have been assured that the
existing employment rights of all employees of the Omnicare Group, including
their existing pension rights, will be fully safeguarded.
11. PROCEDURE FOR ACCEPTANCE
THIS SECTION SHOULD BE READ TOGETHER WITH THE NOTES ON THE FORM OF ACCEPTANCE.
You should note that, if you hold Omnicare Shares in both certificated and
uncertificated form, you should complete a separate Form of Acceptance for each
holding. If you hold Omnicare Shares in uncertificated form, but under different
member account IDs, you should complete a separate Form of Acceptance in respect
of each member account ID. Similarly, if you hold Omnicare Shares in
certificated form but under different designations, you should complete a
separate Form of Acceptance in respect of each designation.
9
<PAGE> 10
ADDITIONAL FORMS OF ACCEPTANCE ARE AVAILABLE FROM EITHER OF THE ADDRESSES SET
OUT IN SUB-PARAGRAPH (B) BELOW.
(a) To accept the Offer
To accept the Offer, the Form of Acceptance must be completed and returned,
whether or not your Omnicare Shares are in CREST. You should complete Boxes 1
and 2 and, if your Omnicare Shares are in CREST, Box 4, and sign Box 2 of the
Form of Acceptance in the presence of a witness, who should also sign in
accordance with the instructions printed therein.
(b) Return of Form of Acceptance
The completed Form of Acceptance, together, if your Omnicare Shares are in
certificated form, with your share certificate(s) for your Omnicare Shares
and/or other document(s) of title, should be returned by post or by hand to
Exchange Registrars Limited, 18 Park Place, Cardiff CF1 3PD or by hand only
(during normal business hours) to Exchange Registrars Limited, New Garden House,
78 Hatton Garden, London EC1N 8JA in each case as soon as possible but in any
event so as to be received not later than 3.00 pm on 24 June 1997. A reply-paid
envelope is enclosed for your convenience. No acknowledgement of receipt of
documents will be given. The instructions printed on the Form of Acceptance
shall be deemed to form part of the terms of the Offer.
(c) Shares in uncertificated form (that is, in CREST)
If your Omnicare Shares are in uncertificated form, you should insert in Box 4
of the enclosed Form of Acceptance the participant ID and member account ID
under which such shares are held by you in CREST and otherwise complete and
return the Form of Acceptance as described above. In addition, you should take
(or procure to be taken) the action set out below to transfer the Omnicare
Shares in respect of which you wish to accept the Offer to an escrow balance,
specifying Exchange Registrars Limited (in its capacity as a CREST participant
under the participant ID referred to below) as the Escrow Agent, as soon as
possible and in any event so that the transfer to escrow settles not later than
3.00 pm on 24 June 1997.
If you are a CREST sponsored member, you should refer to your CREST sponsor
before taking any action. Your CREST sponsor will be able to confirm details of
your participant ID and the member account ID under which your Omnicare Shares
are held. In addition, only your CREST sponsor will be able to send the TTE
instruction to CRESTCo in relation to your Omnicare Shares.
You should send (or, if you are a CREST sponsored member, procure that your
CREST sponsor sends) a TTE instruction to CRESTCo which must be properly
authenticated in accordance with CRESTCo's specifications and which must
contain, in addition to the other information that is required for a TTE
instruction to settle in CREST, the following details:
- - the number of Omnicare Shares to be transferred to an escrow balance;
- - your member account ID. This must be the same member account ID as the
member account ID that is inserted in Box 4 of the Form of Acceptance;
- - your participant ID. This must be the same participant ID as the
participant ID that is inserted in Box 4 of the Form of Acceptance;
- - the participant ID of the Escrow Agent, Exchange Registrars Limited, in
its capacity as a CREST receiving agent. This is 2RA94;
- - the member account ID of the Escrow Agent. This is NOMC;
- - the Form of Acceptance Reference Number. This is the Reference Number
that appears on page 3 of the Form of Acceptance. This Reference Number
should be inserted in the first eight characters of the shared note field
on the TTE instruction. Such insertion will enable the Receiving Agent to
match the transfer to escrow to your Form of Acceptance. You should keep
a separate record of this Reference Number for future reference;
- - the intended Settlement Date. This should be as soon as possible and in
any event not later than 24 June 1997; and
- - the Corporate Action Number for the Offer. This is 2.
After settlement of the TTE instruction, you will not be able to access the
Omnicare Shares concerned in CREST for any transaction or charging purposes. If
the Offer becomes or is declared unconditional in all
10
<PAGE> 11
respects, the Escrow Agent will transfer the Omnicare Shares concerned to itself
in accordance with paragraph 7(e) of Part B of Appendix I to this document.
You are recommended to refer to the CREST manual published by CRESTCo for
further information on the CREST procedure outlined above. For ease of
processing, you are requested, wherever possible, to ensure that a Form of
Acceptance relates to only one transfer to escrow.
If no Form of Acceptance Reference Number, or an incorrect Form of Acceptance
Reference Number, is included on the TTE instruction, the Offeror may treat any
amount of Omnicare Shares transferred to an escrow balance in favour of the
Escrow Agent specified above for the participant ID and member account ID
identified in the TTE instruction as relating to any Form of Acceptance which
relates to the same member account ID and participant ID (up to the amount of
Omnicare Shares inserted or deemed to be inserted on the Form of Acceptance
concerned).
You should note that CRESTCo does not make available special procedures, in
CREST, for any particular corporate action. Normal system timing and limitations
will therefore apply in connection with a TTE instruction and its settlement.
You should therefore ensure that all necessary action is taken by you (or by
your CREST sponsor) to enable a TTE instruction relating Omnicare Shares to
settle prior to 3.00 pm on 24 June 1997. In this connection, you are referred in
particular to those sections of the CREST manual concerning practicable
limitations of the CREST system and timings.
The Offeror will make an appropriate announcement if any of the details
contained in this paragraph 11 alter for any reason.
(d)Share certificates not readily available or lost
If your Omnicare Shares are in certificated form but your share certificate(s)
and/or other document(s) of title is/are not readily available or is/are lost,
the relevant Form of Acceptance should nevertheless be completed, signed and
returned as stated above so as to arrive not later than 3.00 pm on 24 June 1997,
together with any share certificate(s) and/or other document(s) of title that
you have available, accompanied by a letter stating that the balance will follow
or that you have lost one or more of your share certificate(s) and/or
document(s) of title. You should then arrange for the relevant share
certificate(s) and/or other document(s) of title to be forwarded as soon as
possible thereafter. No acknowledgement of receipt of document(s) will be given.
In the case of loss, you should write as soon as possible to Omnicare's
registrars, Exchange Registrars Limited, 18 Park Place, Cardiff CF1 3PD, for a
letter of indemnity for lost share certificate(s) and/or other document(s) of
title which, when completed in accordance with the instructions given, should be
returned to the Receiving Agent at either of its addresses as set out in
sub-paragraph (b) above.
(e)Deposits of Omnicare Shares into, and withdrawals of Omnicare Shares from,
CREST
Normal CREST procedures (including timings) apply in relation to any Omnicare
Shares that are, or are to be, converted from uncertificated to certificated
form, or from certificated to uncertified form, during the course of the Offer
(whether any such conversion arises as a result of a transfer of Omnicare Shares
or otherwise). Holders of Omnicare Shares who are proposing so to convert any
such shares are recommended to ensure that the conversion procedure is
implemented in sufficient time to enable the person holding or acquiring the
share as a result of the conversion to take all necessary steps in connection
with an acceptance of the Offer (in particular, as regards delivery of shares
certificate(s) and/or other document(s) of title or transfers to an escrow
balance as described above) prior to 3.00 pm on 24 June 1997.
(f)Validity of acceptances
Without prejudice to paragraphs 5(k) and 6 of Part B of Appendix I to this
document, the Offeror and Henry Cooke reserve the right to treat acceptances of
the Offer as valid if not entirely in order or not accompanied by the relevant
share certificate(s) and/or other relevant document(s) of title or not
accompanied by the relevant transfer to escrow or if received by the Receiving
Agent, or otherwise by or on behalf of the Offeror, at any place or places
determined by them otherwise than as set out herein or in the Form of
Acceptance.
(g)Overseas shareholders
The attention of Omnicare Shareholders who are citizens or residents of
jurisdictions outside the United Kingdom is drawn to paragraphs 6 and 7 of Part
B of Appendix I and to the relevant provisions of the Form of Acceptance,
including Boxes 5 and 6.
If you are in any doubt as to the procedure for acceptance, please contact
Exchange Registrars Limited by telephone on 01222 371210 or at one of the
addresses referred to in sub-paragraph (b) above. You are
11
<PAGE> 12
reminded that, if you are a CREST sponsored member, you should contact your
CREST sponsor before taking any action.
12.SETTLEMENT
Subject to the Offer becoming or being declared unconditional in all respects,
settlement of the consideration to which any Omnicare Shareholder is entitled
under the Offer will be effected (i) in the case of acceptances received,
complete in all respects, by the date on which the Offer becomes or is declared
unconditional in all respects, within 14 days of such date or (ii) in the case
of acceptances of the Offer received, complete in all respects, after the date
on which the Offer becomes or is declared unconditional in all respects but
while it remains open for acceptance, within 14 days of such receipt, in the
following manner:
(a)Omnicare Shares in uncertificated form (that is, in CREST)
Where an acceptance relates to Omnicare Shares in uncertificated form,
settlement of the cash consideration to which the accepting Omnicare Shareholder
is entitled will be posted or despatched by means of CREST by Transworld
procuring the creation of an assured payment obligation in favour of the
accepting Omnicare Shareholder's payment bank, in respect of the cash
consideration due, in accordance with the CREST assured payment arrangements.
Transworld reserves the right to settle all or any part of the consideration
referred to in this sub-paragraph (a), for all or any accepting Omnicare
Shareholder(s), in the manner referred to in sub-paragraph (b) below, if, for
any reason, it wishes to do so.
(b)Omnicare Shares in certificated form
Where an acceptance relates to Omnicare Shares in certificated form, settlement
of any cash due will be despatched by first class post (or by such other methods
as the Panel may approve). All such cash payments will be made in pounds
sterling by cheque drawn on a UK clearing bank.
(c)General
If the Offer does not become or is not declared unconditional in all respects
(i) share certificate(s) and/or other document(s) of title will be returned by
post (or such other method as may be approved by the Panel) within 14 days of
the Offer lapsing to the person or agent whose name and address (outside the
United States, Canada and Australia) is set out above Box 1 of the Form of
Acceptance or, if none is set out, to the first named holder at his or her
registered address (outside the United States, Canada and Australia) and (ii)
the Escrow Agent will, immediately after the lapsing of the Offer (or within
such longer period, not exceeding 14 days after the Offer lapsing, as the Panel
may approve), give TFE instructions to CRESTCo to transfer all Omnicare Shares
held in escrow balances to the original available balances of the Omnicare
Shareholders concerned.
All documents and remittances sent by, to or from Omnicare Shareholders or their
appointed agents will be sent at their own risk.
13.FURTHER INFORMATION
Your attention is drawn to the following Appendices which form part of this
document.
Appendix I Conditions and Further Terms of the Offer
Appendix II Financial and Other Information on Transworld Inc.
Appendix III Financial and Other Information on Transworld
Appendix IV Financial and Other Information on Omnicare
Appendix V Additional Information
Yours faithfully
for Henry Cooke Corporate Finance Ltd
R DAVID SMITH
DIRECTOR
12
<PAGE> 13
APPENDIX I CONDITIONS AND FURTHER TERMS OF THE OFFER
PART A
CONDITIONS TO THE OFFER
The Offer is subject to the following conditions:
(a) valid acceptances being received (and not, where permitted, withdrawn) by
not later than 3.00 pm on 24 June 1997 (or such later time and/or date as
Transworld may, subject to the rules of the Code, decide) in respect of
not less than 90 per cent. (or such lesser percentage as Transworld may
decide) of the Omnicare Shares to which the Offer relates, provided that
this condition will not be satisfied unless Transworld and/or its
wholly-owned subsidiaries have acquired or agreed to acquire (pursuant to
the Offer or otherwise), directly or indirectly, Omnicare Shares
carrying over 50 per cent. of the voting rights then normally exercisable
at general meetings of Omnicare on such basis as may be required by the
Panel (including for this purpose, to the extent (if any) required by the
Panel, any voting rights attaching to any shares which are
unconditionally allotted or issued before the Offer becomes or is
declared unconditional as to acceptances, whether pursuant to the
exercise of conversion or subscription rights or otherwise); and for
this purpose, the expression "Omnicare Shares to which the Offer relates"
shall be construed in accordance with sections 428-430E of the Companies
Act 1985.
(b) no government or governmental, quasi-governmental, supranational,
statutory or regulatory body, or any court, institution, investigative
body, association, trade agency or professional or environmental body or
(without prejudice to the generality of the foregoing) any other person
or body in any jurisdiction (each, a "Relevant Authority") having decided
to take, instituted, implemented or threatened any action, proceedings,
suit, investigation or enquiry or enacted, made or proposed any statute,
regulation or order or otherwise taken any other step or done any thing,
and there not being outstanding any statute, legislation or order, that
would or might:
(i) require, prevent, materially delay or materially affect the
divestiture by Transworld or any of its subsidiaries, subsidiary
undertakings or associated undertakings (including any company of
which 20 per cent. or more of the voting capital is held by the
Transworld Group) or any partnership, joint venture, firm or
company in which any of them may be interested) (together the
"wider Transworld Group") or Omnicare or any of its subsidiaries,
subsidiary undertakings or associated undertakings (including any
company of which 20 per cent. or more of the voting capital is
held by Omnicare or any of its subsidiaries, subsidiary
undertakings or associated undertakings) (the "Omnicare Group")
or any partnership, joint venture, firm or company in which any
of them may be interested (together the "wider Omnicare Group")
of all or any portion of their businesses, assets or property or
impose any limitation on the ability of any of them to conduct
their respective businesses or own their respective assets or
properties or any part thereof and which in any such case is
material in the context of the Offer;
(ii) restrict, restrain, prohibit, delay, impose additional material
conditions or material obligations with respect to, or otherwise
interfere with the implementation of, the Offer or the
acquisition of any Omnicare Shares by Transworld or any matters
arising therefrom;
(iii) result in a delay in the ability of Transworld, or render
Transworld unable, to acquire some or all of the Omnicare Shares;
(iv) impose any material limitation on the ability of any member of
the wider Transworld Group to acquire or hold or exercise
effectively, directly or indirectly, all rights of all or any of
the Omnicare Shares (whether acquired pursuant to the Offer or
otherwise);
(v) require any member of the wider Transworld Group or the wider
Omnicare Group to offer to acquire any shares or other securities
or rights thereover in any member of the wider Omnicare Group
(other than Omnicare) owned by any third party;
(vi) make the Offer or its implementation or the proposed acquisition
of Omnicare or of any Omnicare Shares or any other shares or
securities in, or control of, Omnicare, illegal, void or
unenforceable;
(vii) impose any limitation, which is material in the context of the
Omnicare Group, on the ability of any member of the wider
Transworld Group or the wider Omnicare Group to co-ordinate its
business, or any part of it, with the business of any other
member of the wider Transworld Group or the wider Omnicare Group;
or
13
<PAGE> 14
(viii) otherwise materially and adversely affect any or all of the
businesses, assets, prospects or profits of any member of the
wider Transworld Group or the wider Omnicare Group or the
exercise of rights of shares attaching to shares of any company
in the Omnicare Group,
and all applicable waiting periods during which such Relevant Authority
could institute, implement or threaten any such action, proceeding, suit,
investigation, enquiry or reference or otherwise intervene having
expired, lapsed or been terminated;
(c) all authorisations, orders, grants, consents, clearances, licences,
permissions and approvals necessary in respect of the Offer, the proposed
acquisition of any shares or securities in, or control of, Omnicare or
the carrying on of the business of any member of the wider Omnicare Group
or the wider Transworld Group being obtained in terms satisfactory to
Transworld from all appropriate Relevant Authorities and such
authorisations, orders, grants, consents, clearances, licences,
permissions and approvals remaining in full force and effect and there
being no intimation of any intention to revoke or not to renew the same
and all necessary filings having been made, all appropriate waiting and
other time periods (including extensions thereto) under any applicable
legislation and regulations in any jurisdiction having expired, lapsed or
been terminated and all necessary statutory or regulatory obligations in
any jurisdiction in respect of the Offer or the proposed acquisition of
Omnicare by Transworld or of any Omnicare Shares or any matters arising
therefrom having been complied with;
(d) no indications having been received from the Relevant Authorities or any
party with whom any member of the wider Omnicare Group has any
contractual or other relationship that the interests held by any member
of the wider Omnicare Group under licences, leases, consents, permits and
other rights will be adversely amended or otherwise affected by the Offer
or the proposed acquisition of Omnicare or any matters arising therefrom,
that such licences, leases, consents, permits and other rights are in
full force and effect and that there is no intention to revoke or amend
any of the same;
(e) save as disclosed in writing by Omnicare to Transworld prior to 28 May
1997, there being no provision of any agreement, instrument, permit,
licence or other arrangement to which any member of the wider Omnicare
Group is a party or by or to which it or any of its assets may be bound
or subject which, as a consequence of the Offer or the acquisition of
Omnicare or because of a change in the control or management of Omnicare
or any member of the Omnicare Group or any matters arising therefrom or
otherwise, could or might (to an extent which is material in the context
of the Offer) have the result that:
(i) any moneys borrowed by, or other indebtedness, actual or
contingent, of, any member of the wider Omnicare Group becomes or
is capable of being declared repayable immediately or earlier
than the repayment date stated in such agreement, instrument or
other arrangement or the ability of any member of the wider
Omnicare Group to borrow moneys or incur indebtedness is
withdrawn or adversely affected;
(ii) any mortgage, charge or other security interest is created over
the whole or any part of the business, property or assets of any
member of the wider Omnicare Group or any such security (whenever
arising) becomes enforceable;
(iii) any such agreement, instrument, permit, licence or other
arrangement, or any right, interest, liability or obligation of
any member of the wider Omnicare Group therein, is terminated or
adversely modified or any action is taken or onerous obligation
arises thereunder in each case to an extent which is material in
the context of the Offer;
(iv) the value of any member of the wider Omnicare Group or its
financial or trading position is prejudiced or adversely affected
in each case to an extent which is material in the context of the
Offer;
(v) any material asset or, other than in the ordinary course of
business, any asset of the wider Omnicare Group is charged or
disposed of;
(vi) the interest or business of any member of the wider Omnicare
Group in or with any other person, firm or company (or any
arrangement relating to such interest or business) is terminated
or adversely affected in each case to an extent which is material
in the context of the Offer; or
(vii) any member of the wider Omnicare Group ceases to be able to carry
on business under any name under which it currently does so,
which cessation is material in the context of the Offer;
(f) since 31 December 1996 (being the date to which the latest published
audited report and accounts of Omnicare were made up) and save as
disclosed in Omnicare's published report and accounts for the
14
<PAGE> 15
year ended 31 December 1996 or announced by Omnicare on the London Stock
Exchange or disclosed in writing by Omnicare to Transworld in each case
prior to 28 May 1997, no member of the Omnicare Group having:
(i) issued or agreed to issue or authorised or proposed the issue of
additional shares of any class or issued or authorised or
proposed the issue of or granted securities convertible into or
rights, warrants or options to acquire such shares or convertible
securities (save as between Omnicare and wholly-owned
subsidiaries of Omnicare) or redeemed, purchased or reduced or
announced any intention to do so or made any other change to any
part of its share capital;
(i) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any dividend, bonus or other distribution
other than dividends lawfully paid to Omnicare or wholly-owned
subsidiaries of Omnicare;
(iii) authorised or proposed or announced its intention to propose any
merger or acquisition or disposal or transfer of assets or shares
or any change in its share or loan capital;
(iv) issued or authorised or proposed the issue of any debentures or
incurred or increased any indebtedness or contingent liability;
(v) disposed of or transferred, mortgaged or encumbered any asset or
any right, title or interest in any asset or entered into or
varied any contract, commitment or arrangement (whether in
respect of capital expenditure or otherwise) which is of a long
term or unusual nature or which involves or could involve an
obligation of a nature or magnitude which is material or
authorised, proposed or announced any intention to do so;
(vi) entered into any contract, reconstruction, amalgamation,
arrangement or other transaction otherwise than in the ordinary
course of business or announced any intention to do so;
(vii) entered into, or varied the terms of, any contract or agreement
with any of the directors of Omnicare;
(viii) taken any corporate action or had any legal proceedings started
or threatened against it for its winding-up, dissolution or
reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar
officer of all or any of its assets and revenues;
(xi) waived or compromised any claim other than in the ordinary course
of business;
(x) made any amendment to its memorandum or articles of association;
(xi) entered into any contract, transaction or arrangement which is or
may be restrictive on the business of any member of the wider
Omnicare Group or the wider Transworld Group;
(xii) entered into any contract, commitment or agreement with respect
to any of the transactions or events referred to in this
condition (f); and
(xiii) been unable or admitted that it is unable to pay its debts or
having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business;
(g) since 31 December 1996 (being the date to which the latest published
audited report and accounts of Omnicare were made up) and save as
disclosed in Omnicare's published report and accounts for the year ended
31 December 1996 or announced by Omnicare on the London Stock Exchange or
disclosed in writing by Omnicare to Transworld in each case prior to 28
May 1997:
(i) no litigation, arbitration, prosecution or other legal
proceedings having been instituted, announced or threatened or
become pending or remained outstanding by or against any member
of the wider Omnicare Group or to which any member of the wider
Omnicare Group is or may become a party (whether as plaintiff,
defendant or otherwise) which would have a material and adverse
effect in the context of the Offer;
(ii) no adverse change having occurred in the business, assets,
financial or trading position, profits or prospects of any member
of the wider Omnicare Group which is material in the context of
the Offer;
15
<PAGE> 16
(h) Transworld not having discovered that:
(i) any business, financial or other information concerning any
member of the Omnicare Group disclosed, publicly or otherwise to
Transworld, by or on behalf of any member of the Omnicare Group
either contains a misrepresentation of fact or omits to state a
fact necessary to make the information contained therein not
misleading which, in either case, is material in the context of
Offer; or
(ii) any member of the wider Omnicare Group is subject to any
liability, actual or contingent, which is not disclosed in the
annual report and accounts of Omnicare for the financial year
ended 31 December 1996 and which is material in the context of
the Offer; and
(i) Transworld not having discovered that:
(i) any past or present member of the wider Omnicare Group has not
complied with all applicable legislation or regulations of any
jurisdiction with regard to the disposal, discharge, spillage,
leak or emission of any waste or hazardous substance or any
substance likely to impair the environment or to harm human
health or otherwise relating to environmental matters (which
non-compliance might give rise to any liability (whether actual
or contingent) on the part of any member of the wider Omnicare
Group which is material in the context of the wider Omnicare
Group taken as a whole) or that there has otherwise been any such
disposal, discharge, spillage, leak or emission (whether or not
the same constituted a non-compliance by any person with any such
legislation or regulations and wherever the same may have taken
place) which in any such case might give rise to any liability
(whether actual or contingent) on the part of any member of the
wider Omnicare Group which is material in the context of the
Offer;
(ii) there is or is likely to be any material liability (whether
actual or contingent) to make good, repair, reinstate or clean up
any property now or previously owned, occupied or made use of by
any past or present member of the wider Omnicare Group or any
controlled waters under any environmental legislation,
regulation, notice, circular or order of any Relevant Authority
or otherwise; or
(iii) circumstances exist whereby a person or class of persons might
have any material claim or claims in respect of any product or
process of manufacture or materials used therein now or
previously manufactured, sold or carried out by any past or
present member of the wider Omnicare Group.
Transworld reserves the right to waive all or any of conditions (b) to (i)
(inclusive) above, in whole or in part. Conditions (b) to (i) (inclusive) must
be satisfied as at, or waived on or before, 21 days after the later of 24 June
1997 and the date on which condition (a) is fulfilled (or, in each case, such
later date as the Panel may agree) provided that Transworld shall be under no
obligation to waive or treat as satisfied any of conditions (b) to (i)
(inclusive) by a date earlier than the latest date specified above for the
satisfaction thereof notwithstanding that the other conditions of the Offer may
at such earlier date have been waived or fulfilled and that there are at such
earlier date no circumstances indicating that any of such conditions may not be
capable of fulfilment.
If Transworld is required by the Panel to make an offer for Omnicare Shares
under the provisions of Rule 9 of the Code, Transworld may make such alterations
to the conditions as are necessary to comply with the provisions of that Rule.
The Offer will lapse if the Offer is referred to the Monopolies and Mergers
Commission before 3.00 pm on the later of 24 June 1997 and the date when the
Offer become or is declared unconditional as to acceptances.
16
<PAGE> 17
APPENDIX I CONDITIONS AND FURTHER TERMS OF THE OFFER
PART B
FURTHER TERMS OF THE OFFER
The following further terms apply unless the context requires otherwise. Except
where the context requires otherwise, any reference in this Part B of Appendix I
and in the Form of Acceptance to:
(i) "Offer" means the Offer and any revision thereof or extension thereto;
(ii) "Offer becoming unconditional" includes the Offer being declared
unconditional and shall be construed as a reference to the Offer being
declared or becoming unconditional as to acceptances whether or not any
other condition thereof remains to be fulfilled;
(iv) "acceptance condition" means the condition as to acceptances set out in
paragraph 1(i) of Part A of this Appendix I;
(v) an extension of the Offer shall include an extension of the date by which
the acceptance condition has to be fulfilled;
(vi) "Offer document" means any document containing the Offer.
1. ACCEPTANCE PERIOD
(a) The Offer will initially remain open for acceptance until 3.00 pm on 24
June 1997. Although no revision is envisaged, if the Offer is revised it
will remain open for acceptance for a period of at least 14 days from the
date of posting of written notification of the revision to Omnicare
shareholders. Except with the consent of the Panel, no such written
notification of the revision of the Offer may be posted to Omnicare
shareholders after 19 July 1997 or, if later, the date falling 14 days
prior to the last date on which the Offer can become unconditional.
(b) The Offer, whether revised or not, shall not (except with the consent of
the Panel) be capable of becoming unconditional after midnight on 2
August 1997 (or any earlier time and/or date beyond which Transworld has
stated that the Offer will not be extended and in respect of which it has
not withdrawn that statement) nor of being kept open after that time
and/or date unless it has previously become unconditional. However,
Transworld reserves the right, with the consent of the Panel, to extend
the Offer to ( a) later time(s) and/or date(s). Except with the consent
of the Panel, Transworld may not, for the purpose of determining whether
the acceptance condition has been satisfied, take into account
acceptances received, or purchases of Omnicare shares made, in respect of
which relevant documents have been received by Exchange Registrars
Limited after 1.00 pm on 2 August 1997 (or any earlier time and/or date
beyond which Transworld has stated that the Offer will not be extended
and in respect of which it has not withdrawn that statement) or such
later time and/or date as Transworld may, with the permission of the
Panel, decide. If the Offer is extended beyond midnight on 2 August 1997,
acceptances received and purchases made in respect of which relevant
documents have been received by Exchange Registrars Limited after 1.00 pm
on the relevant date may (except where the Code otherwise permits) only
be taken into account with the consent of the Panel.
(c) If the Offer becomes unconditional, it will remain open for acceptance
for not less than 14 days from the date on which it would otherwise have
expired. If the Offer has become unconditional and it is stated that the
Offer will remain open until further notice, then not less than 14 days'
notice will be given prior to the closing of the Offer.
(d) If a competitive situation (as determined by the Panel) arises after
Transworld has given a "no extension" statement or a "no increase"
statement, Transworld may (if it has specifically reserved the right to
do so at the time such statement was made, or otherwise with the consent
of the Panel) withdraw such statement provided that notice is given to
that effect within four business days of the announcement of the
competing offer and Omnicare shareholders are informed in writing thereof
(or, in the case of Omnicare shareholders with registered addresses
outside the United Kingdom or whom Transworld knows to be nominees
holding Omnicare shares for such persons, by announcement in the United
Kingdom) at the earliest opportunity thereafter. Transworld may (if it
has reserved the right to do so) choose not to be bound by the terms of a
"no increase" statement or a "no extension" statement if it would
otherwise prevent the posting of an increased or improved Offer which is
recommended for acceptance by the board of Omnicare, or in other
circumstances permitted by the Panel.
17
<PAGE> 18
(e) For the purpose of determining at any particular time whether the
acceptance condition has been satisfied, Transworld shall not be bound
(unless otherwise required by the Panel) to take into account any
Omnicare Shares which have been unconditionally allotted or issued before
such determination takes place, unless Exchange Registrars Limited on
behalf of Transworld has received written notice of the relevant details
of such allotment or issue (including the price thereof) before that
time. Telex or facsimile transmission will not be sufficient for this
purpose.
2. ANNOUNCEMENTS
(a) By 8.30 am on the business day (the "relevant day") next following the
day on which the Offer is due to expire or becomes unconditional or is
revised or extended, or such later time and/or date as the Panel may
agree, Transworld will make an appropriate announcement and
simultaneously inform the London Stock Exchange of the position. Such
announcement will (unless otherwise permitted by the Panel) also state
(as nearly as practicable) the total number of Omnicare Shares and rights
over Omnicare Shares (i) for which acceptances of the Offer have been
received (showing the extent, if any, to which such acceptances have been
received from persons acting or deemed to be acting in concert with
Transworld), (ii) acquired or agreed to be acquired by or on behalf of
Transworld or any person acting or deemed to be acting in concert with
Transworld during the Offer Period and (iii) held by or on behalf of
Transworld or any person acting or deemed to be acting in concert with
Transworld prior to the Offer Period, and will specify the percentage of
the share capital of Omnicare represented by these figures. Any decision
to extend the time and/or date by which the acceptance condition has to
be fulfilled may be made at any time up to, and will be announced not
later than, 8.30 am on the relevant day (or such later time and/or date
as the Panel may agree) and the announcement will state the next expiry
date (unless the Offer is unconditional in all respects in which case a
statement may be made that the Offer will remain open until further
notice). In computing the number of Omnicare Shares represented by
acceptances and/or purchases there may, at the discretion of Transworld,
be included or excluded for announcement purposes acceptances and
purchases which are not complete in all respects or are subject to
verification where such acceptances or purchases of Omnicare Shares could
be counted towards fulfilling the acceptance condition in accordance with
paragraph 5(k) below.
(b) References in this Part B of Appendix I to the making of an announcement
by Transworld include the release of an announcement by public relations
consultants or by the Henry Cooke to the press, and the delivery or
telephone, telex or facsimile or other electronic transmission of an
announcement to the London Stock Exchange. An announcement made otherwise
than to the London Stock Exchange will be notified simultaneously to the
London Stock Exchange.
3. RIGHTS OF WITHDRAWAL
(a) If Transworld, having announced the Offer to be unconditional, fails to
comply by 3.30 pm on the relevant day (or such later time and/or date as
the Panel may agree) with any of the other relevant requirements
specified in paragraph 2(a) above, an accepting Omnicare shareholder may
immediately thereafter withdraw his acceptance by written notice (signed
by the accepting shareholder or his agent duly appointed in writing and
evidence of whose appointment in a form reasonably satisfactory to
Transworld is produced with the notice) given by post or by hand to
Exchange Registrars Limited, 18 Park Place, Cardiff CF1 3PD or by hand
only (during normal business hours) to Exchange Registrars Limited, New
Garden House, 78 Hatton Garden, London EC1N 8JA on behalf of Transworld.
Subject to paragraph 1(b) above, this right of withdrawal may be
terminated not less than eight days after the relevant day by Transworld
confirming, if that be the case, that the Offer is still unconditional
and complying with the other requirements specified in paragraph 2(a)
above. If any such confirmation is given, the first period of 14 days
referred to in paragraph 1(c) above will run from the date of such
confirmation and compliance.
(b) If by 3.00 pm on 15 July 1997 (or such later time and/or date as the
Panel may agree) the Offer has not become unconditional, an accepting
Omnicare shareholder may withdraw his acceptance at any time thereafter
at either of the addresses and in the manner referred to in paragraph
3(a) above before the earlier of (i) the time that the Offer becomes
unconditional and (ii) the final time for lodgement of acceptances which
can be taken into account in accordance with paragraph l(b) above. If
Transworld withdraws a "no extension" statement or a "no increase"
statement in accordance with paragraph 1(d) above, any Omnicare
shareholder who accepts the Offer after the date of such statement may
withdraw his acceptance thereafter at the address and in the manner
referred to in paragraph 3(a) above for a period of eight days after the
date of posting of written notice to that effect by Transworld to the
relevant Omnicare shareholder.
18
<PAGE> 19
(c) Except as provided by this paragraph 3, acceptances and elections shall
be irrevocable. In this paragraph 3 "written notice" (including any
letter of appointment, direction or authority) means notice in writing
bearing the original signature(s) of the relevant accepting Omnicare
shareholder(s) or his/their agent(s) duly appointed in writing (evidence
of whose appointment in a form reasonably satisfactory to Transworld is
produced with the notice) and telex or facsimile transmissions or copies
will not be sufficient. No notice which appears to Transworld, its
agents or advisers, to have been sent from the United States or Canada or
by a North American person will be treated as valid.
4. REVISED OFFER
(a) Although no such revision is envisaged, if the Offer (in its original or
any previously revised form(s)) is revised (either in its terms or
conditions or otherwise) and such revision represents on the date on
which such revision is announced (on such basis as Henry Cooke reasonably
may consider appropriate) an improvement or no diminution in the value of
the consideration of the Offer as so revised compared with the value of
the consideration previously offered, the benefit of the revised Offer
will (subject to this paragraph 4 and paragraph 6 below) be made
available to Omnicare shareholders who have accepted the Offer in its
original or any previously revised form(s) (hereinafter called "Previous
Acceptor(s)"). The acceptance by or on behalf of a Previous Acceptor of
the Offer (in its original or any previously revised form(s)) shall,
subject as provided in this paragraph 4 and paragraph 6 below, be deemed
to be an acceptance of the Offer as so revised and shall also constitute
the separate appointment of any director of Transworld or Henry Cooke as
his attorney and/or agent with authority to accept any such revised Offer
on behalf of such Previous Acceptor.
(b) Although no such revision is envisaged, if any revised Offer provides for
Omnicare shareholders who accept it to elect for (or accept) alternative
forms of consideration, the acceptance by or on behalf of a Previous
Acceptor of the Offer (in its original or any previously revised form(s))
shall, subject as provided below, also constitute an appointment of any
director of Transworld or Henry Cooke as his attorney and/or agent to
make on his behalf elections for and/or to accept such alternative forms
of consideration on his behalf as such attorney and/or agent in his
absolute discretion thinks fit and to execute on behalf of and in the
name of such Previous Acceptor all such further documents (if any) as may
be required to give effect to such acceptances and/or elections. In
making any such acceptance or election, such attorney and/or agent shall
take into account the nature of any previous acceptances and/or elections
made by the Previous Acceptor and such other facts or matters as he may
reasonably consider relevant.
(c) The deemed acceptances referred to in paragraphs 4(a) and (b) above shall
not apply and the authorities conferred by paragraphs 4(a) and (b) above
shall not be exercised if as a result thereof a Previous Acceptor would
(on such basis as Henry Cooke may consider appropriate) receive less in
cash than he would have received as a result of his acceptance of the
Offer in the form in which it was originally accepted by him unless the
Previous Acceptor has previously otherwise agreed in writing.
(d) The deemed acceptances referred to in paragraphs 4(a) and (b) above shall
not apply and the authorities conferred by paragraphs 4(a) and (b) above
shall be ineffective to the extent that a Previous Acceptor shall lodge
with Exchange Registrars Limited, within 14 days of the posting of the
document pursuant to which the revision of the Offer referred to in
paragraphs 4(a) and (b) above is made available to Omnicare shareholders
(or such later date as Transworld may determine), a form in which he
validly elects to receive the consideration receivable by him under that
revised Offer in some other manner.
(e) The powers of attorney and authorities referred to in this paragraph 4
and any acceptance of a revised Offer and/or election pursuant thereto
shall be irrevocable unless and until the Previous Acceptor becomes
entitled to withdraw his acceptance under paragraph 3 above and duly and
validly does so.
(f) Transworld reserves the right to treat an executed Form of Acceptance
relating to the Offer (in its original or any previously revised form(s))
which is received after the announcement or the issue of the Offer in any
revised form as a valid acceptance of the revised Offer and/or election
pursuant thereto and such acceptance shall constitute an authority and
request in the terms of this paragraph 4 mutatis mutandis on behalf of
the relevant Omnicare shareholders.
5. GENERAL
(a) Except with the consent of the Panel, the Offer will lapse unless all the
conditions to the Offer have been fulfilled by or (if capable of waiver)
waived by or (where appropriate) have been determined by Transworld to be
or remain satisfied as at midnight on 15 July 1997 or within 21 days
after the date on
19
<PAGE> 20
which the Offer becomes unconditional (whichever is the
later) or such later date as Transworld may, with the consent of the
Panel, decide, provided that Transworld shall be under no obligation to
waive or treat as satisfied any condition by a date earlier than the
latest date specified above for the satisfaction thereof notwithstanding
that the other conditions of the Offer may at such earlier date have been
waived or fulfilled and that there are, at such earlier date, no
circumstances indicating that any such conditions may not be capable of
fulfilment. If the Offer lapses, for any reason, it shall cease to be
capable of acceptance and Transworld, Henry Cooke and Omnicare
shareholders shall thereupon cease to be bound by prior acceptances. If
the Offer is referred to the Monopolies and Mergers Commission before 24
June 1997 or the date when the Offer becomes unconditional (whichever is
the later) the Offer will lapse.
(b) No acknowledgement of receipt of any Form of Acceptance, share
certificate(s) or other documents will be given. All communications,
notices, certificates, documents of title, other documents and
remittances to be delivered by or to or sent to or from Omnicare
shareholders (or their designated agents) or as otherwise directed will
be delivered by or to or sent to or from them (or their designated
agents) at their risk.
(c) The expression "Offer Period" when used in this document means the period
commencing on 24 April 1997, the date on which the board of Omnicare
announced that it had received an approach which might lead to an offer
for Omnicare, and ending on whichever of the following dates shall be the
latest:-
(i) 24 June 1997;
(ii) the date on which the Offer lapses; and
(iii) the date on which the Offer becomes unconditional.
(d) All references in this document and in the Form of Acceptance to 24 June
1997 shall (except in paragraph 5(c) above and where the context
otherwise requires), if the expiry date of the Offer shall be extended,
be deemed to refer to the expiry date of the Offer as so extended.
(e) Except with the consent of the Panel, settlement of the consideration to
which any Omnicare shareholder is entitled under the Offer will be
implemented in full in accordance with the terms of the Offer without
regard to any lien, right of set-off, counterclaim or other analogous
right to which Transworld may otherwise be, or claim to be, entitled as
against such Omnicare shareholder. Cash consideration will be settled by
way of cheques drawn on a UK clearing bank or by means of CREST by
Transworld procuring the creation of an assured payment obligation in
favour of the accepting Omnicare shareholder's payment bank in accordance
with the CREST approved payment arrangements.
(f) Subject to paragraph 5(k) below, notwithstanding that no share
certificate(s) and/or other documents of title is/are delivered in
respect of it, a duly completed Form of Acceptance (i) executed as a deed
by SEPON Limited and endorsed on behalf of the London Stock Exchange to
the effect that the Omnicare Shares to which it refers are the whole or
part of a holding registered in the name of SEPON Limited and/or are
Omnicare Shares to which SEPON Limited is unconditionally entitled
immediately to become the registered holder or (ii) executed by any
other person(s) and endorsed on behalf of the London Stock Exchange
Limited to the effect that such person(s) is/are unconditionally entitled
immediately to become the registered holder(s) of the Omnicare Shares to
which it refers and that one or more transfer(s) in favour of such
person(s) in respect thereof is/are in the course of registration shall
(if otherwise in order) be treated by Transworld and Henry Cooke as an
acceptance valid in all respects on the date of its actual receipt
provided that, on its presentation to the registrars of Omnicare, it is
unconditionally accepted for registration.
(g) The instructions, terms, provisions and authorities contained in or
deemed to be incorporated in the Form of Acceptance constitute part of
the terms of the Offer. Words and expressions defined in this document
shall, unless the context otherwise requires, have the same meanings when
used in the Form of Acceptance.
(h) The Offer, the Form of Acceptance and all acceptances thereof and all
elections thereunder or pursuant thereto and all contracts made pursuant
thereto and action taken or made or deemed to be taken or made under any
of the foregoing shall be governed by and construed in accordance with
English law.
(i) Any accidental omission to despatch this document or the Form of
Acceptance or any notice required to be given under the terms of the
Offer to, or any failure to receive the same by, any person to whom the
Offer is made or should be made shall not invalidate the Offer in any way
or create any implication that the Offer has not been made to any such
person.
20
<PAGE> 21
(j) Subject to paragraph 5(k) below, Transworld and Henry Cooke reserve the
right to treat acceptances of the Offer and/or elections pursuant thereto
as valid if received by or on behalf of either of them at any place or
places or in any manner determined by them otherwise than as stated
herein or in the Form of Acceptance.
(k) Notwithstanding the right reserved by Transworld to treat (a) Form(s) of
Acceptance as valid even though not entirely in order or not accompanied
by the relevant share certificate(s) and/or other document(s) of title or
not accompanied by the relevant transfer to escrow, except with the
consent of the Panel an acceptance of the Offer will only be counted
towards fulfilling the acceptance condition if the requirements of Note 4
and, if applicable, Note 6 on Rule 10 of the Code are satisfied in
respect of it. Except with the consent of the Panel, a purchase of
Omnicare Shares by Transworld or its nominee(s) (or, if Transworld is
required to make an offer or offers under the provisions of Rule 9 of the
Code, by a person acting in concert with Transworld for the purpose of
such offer(s) or its nominee(s)) will only be counted towards fulfilling
the acceptance condition if the requirements of Note 5 and, if
applicable, Note 6 on Rule 10 of the Code are satisfied in respect of it.
(l) Except with the consent of the Panel, the Offer will not become
unconditional until Exchange Registrars Limited has issued a certificate
to Transworld or Henry Cooke (or their respective agents) which states
the number of Omnicare Shares in respect of which acceptances have been
received which meet the requirements of Note 4 on Rule 10 of the Code and
the number of Omnicare Shares otherwise acquired (whether before or
during the Offer Period) which meet the requirements of Note 5 on Rule 10
of the Code and, in each case, if applicable, Note 6 on Rule 10 of the
Code. Copies of such certificate will be sent to the Panel and to the
financial advisers of Omnicare as soon as possible after it is issued.
(m) All powers of attorney and authorities on the terms conferred by or
referred to in this part B of appendix I or in the Form of Acceptance are
given by way of security for the performance of the obligations of
Omnicare shareholders concerned and are irrevocable in accordance with
section 4 of the Powers of Attorney Act 1971, except in the circumstances
where the donor of such power of attorney or authority is entitled to
withdraw his acceptance in accordance with paragraph 3 above and duly
does so.
(n) The Offer extends to any Omnicare shareholders to whom this document, the
Form of Acceptance and any related documents may not have been despatched
or by whom such documents may not be received and such Omnicare
shareholders may collect copies of those documents from Exchange
Registrars Limited, 18 Park Place, Cardiff CF1 3PD. Transworld and Henry
Cooke reserve the right to notify any matter, including the making of the
Offer, to all or any Omnicare shareholders with a registered address
outside the UK (or whom Transworld knows to be nominees, trustees or
custodians for such persons) by announcement in the United Kingdom or
paid advertisement in a daily newspaper published and circulated in the
United Kingdom, in which event such notice shall be deemed to have been
sufficiently given notwithstanding any failure by an Omnicare shareholder
to receive such notice and all references in this document to notice, or
the provision of information in writing, by Transworld, Henry Cooke
and/or their respective agents and/or public relations consultants shall
be construed accordingly.
(o) The Offer is made at 11.59 pm on 3 June 1997 and is capable of acceptance
from and after that time. Form(s) of Acceptance are available for
collection from Exchange Registrars, New Garden House, 78 Hatton Garden,
London EC1N 8JA from that time. The Offer is being made by means of this
document.
(p) If the Offer does not become unconditional in all respects:
(i) Forms of Acceptance, share certificate(s) and other document(s)
of title will be returned by post (or by such other method as may
be approved by the Panel) within 14 days of the Offer lapsing to
the person or agent whose name and address outside the United
States, Canada or Australia is set out in the relevant box on the
Form of Acceptance or, if none is set out, to the first-named
holder at his registered address outside the United States,
Canada or Australia. No such documents will be sent to an address
in the United States, Canada or Australia; and
(ii) Exchange Registrars Limited will, immediately after the lapsing
of the Offer (or within such longer period as the Panel may
permit, not exceeding 14 days from the lapsing of the Offer),
give instructions to CRESTCo to transfer all Omnicare Shares held
in escrow balances and in relation to which it is the escrow
agent for the purposes of the Offer to the original available
balances of the Omnicare shareholders concerned.
(q) If sufficient acceptances are received, Transworld intends to apply the
provisions of sections 428 to 430F of the Companies Act 1985 to acquire
compulsorily any outstanding Omnicare Shares and to apply for
cancellation of Omnicare's listing on the Alternative Investment Market
of the London Stock Exchange.
21
<PAGE> 22
6. OMNICARE OVERSEAS SHAREHOLDERS
(a) The making of the Offer in, or to persons resident in, or citizens or
nationals of, jurisdictions outside the United Kingdom or who are
nominees of, or custodians, trustees or guardians for, citizens or
nationals of such jurisdictions ("overseas shareholders") may be
prohibited or affected by the laws of the relevant overseas jurisdiction.
Such overseas shareholders should inform themselves about and observe any
applicable legal requirements. It is the responsibility of any overseas
shareholder wishing to accept the Offer to satisfy himself as to the full
observance of the laws of the relevant jurisdiction in connection
therewith, including the obtaining of any governmental, exchange control
or other consents which may be required, the compliance with other
necessary formalities and the payment of any issue, transfer or other
taxes or duties due in such jurisdiction. Any overseas shareholder will
be responsible for payment of any issue, transfer or other taxes or other
requisite payments by whomsoever payable and Transworld, Henry Cooke and
any person acting on their behalf shall be fully indemnified and held
harmless by such shareholder for any such issue, transfer or other taxes
or other requisite payments as Transworld, Henry Cooke and any person
acting on their behalf may be required to pay.
(b) In particular, the Offer is not being made, directly or indirectly, in or
into or by the use of the mails of, or by any means or instrumentality of
interstate or foreign commerce of, or any facilities of a national
securities exchange of, the United States, Canada or Australia. This
includes, but is not limited to, facsimile transmission, telex and
telephone. Transworld will not (unless otherwise determined by Transworld
in its sole discretion and save as provided for in paragraph 6(d) below)
mail or deliver, or authorise the mailing or delivery of, this document,
the Form of Acceptance or any related offering document in or into the
United States, Canada or Australia, including to Omnicare shareholders
with registered addresses in the United States, Canada or Australia or to
persons whom Transworld knows to be trustees, nominees or custodians
holding Omnicare Shares for such persons. Persons receiving such
documents (including, without limitation, trustees, nominees or
custodians) should not distribute or send them in or into the United
States, Canada or Australia or use such mails or any such means or
instrumentality for any purpose directly or indirectly in connection with
the Offer and so doing may invalidate any purported acceptance. Persons
wishing to accept the Offer should not use such mails or any such means
or instrumentality for any purpose directly or indirectly related to
acceptance of the Offer or such election. Envelopes containing Form(s) of
Acceptance should not be postmarked in the United States, Canada or
Australia or otherwise despatched from the United States, Canada or
Australia, and all acceptors must provide addresses outside the United
States, Canada or Australia for the receipt of the remittance of cash, or
for the return of Form(s) of Acceptance, certificate(s) for Omnicare
Shares and/or other document(s) of title.
(c) As used in this document and in the Form of Acceptance, the "United
States" means the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction, "US person" means (i) any individual who is
a resident or citizen of the United States and (ii) a corporation,
partnership or other entity created or organised in or under the laws of
the United States or an estate or trust the income of which is subject to
United States federal income taxation regardless of the source and "North
American person" means a US person and any individual, corporation,
partnership, trust or other entity resident in Canada or receiving the
Offer in Canada, provided however that the terms "North American person"
and "US person" shall not include a branch or agency of a United States
bank or insurance company that is operating outside the United States for
valid business reasons as a locally registered branch or agency engaged
in the banking or insurance business and not solely for the purposes of
investing in securities not registered under the Act.
(d) The provisions of this paragraph 6 and/or any other terms of the Offer
relating to overseas shareholders may be waived, varied or modified as
regards (a) specific Omnicare shareholder(s) or on a general basis by
Transworld in its absolute discretion. Subject as aforesaid the
provisions of this paragraph 6 shall have precedence over any terms of
the Offer which are inconsistent therewith.
7. FORM OF ACCEPTANCE
Each Omnicare shareholder by whom, or on whose behalf, a Form of Acceptance is
executed irrevocably undertakes, represents, warrants and agrees to and with
Transworld and Henry Cooke and their respective agents (so as to bind him, his
personal representatives and his heirs, successors and assigns) that:-
(a) the execution of a Form of Acceptance shall constitute an acceptance of
the Offer in respect of the number of Omnicare Shares inserted or deemed
to be inserted in Box 1 of the Form of Acceptance on and subject to the
terms and conditions set out or referred to in this document and the Form
of Acceptance and that, subject to the rights of withdrawal set out in
paragraph 3 above, each such acceptance shall be irrevocable;
22
<PAGE> 23
(b) the Omnicare Shares in respect of which the Offer is accepted or deemed
to be accepted are sold free from all liens, charges, encumbrances,
equities, rights of pre-emption and any other third party rights of
whatsoever nature and together with all rights now or hereafter attaching
thereto, including the right to receive all dividends or other
distributions declared, paid or made after 28 May 1997;
(c) unless "YES" is put in Box 5 of the Form of Acceptance, such Omnicare
shareholder has not received or sent copies of this document, the Form of
Acceptance or any related offering documents in, into or from the United
States, Canada or Australia, has not utilised in connection with the
Offer, directly or indirectly, the mails of, or any means or
instrumentality (including, without limitation, facsimile transmission,
telex and telephone) of interstate or foreign commerce of, or any
facilities of a national securities exchange of, the United States, was
outside the United States when the Form of Acceptance was delivered, and
is not an agent or fiduciary acting on a non-discretionary basis for a
principal, unless such agent or fiduciary is an authorised employee of
such principal or such principal has given any instructions with respect
to Omnicare from outside the United States;
(d) the execution of the Form of Acceptance constitutes, subject to the Offer
becoming unconditional in all respects in accordance with its terms and
to the accepting Omnicare shareholder not having validly withdrawn his
acceptance, the irrevocable appointment of Transworld or Henry Cooke
and/or any of their respective directors or agents as such shareholder's
attorney and/or agent, and an irrevocable instruction to the attorney
and/or agent, to complete and execute all or any form(s) of transfer
and/or other document(s) at the discretion of the attorney and/or agent
in relation to the Omnicare Shares referred to in paragraph 7(a) in
favour of Transworld or such other person or persons as Transworld may
direct and to deliver such form(s) of transfer and/or other document(s)
at the discretion of the attorney and/or agent, together with the share
certificate(s) and/or other document(s) relating to Omnicare Shares, for
registration within six months of the Offer becoming unconditional in all
respects and to execute all such documents and to do all such other acts
and things as may in the opinion of such attorney and/or agent be
necessary or expedient for the purpose of, or in connection with, the
acceptance of the Offer and to vest in Transworld or its nominee(s) or as
it may direct such Omnicare Shares;
(e) the execution of the Form of Acceptance constitutes the irrevocable
appointment of Exchange Registrars Limited as such shareholder's attorney
and/or agent and an irrevocable instruction to the attorney and/or agent
(i) subject to the Offer becoming unconditional in all respects in
accordance with its terms and to the accepting Omnicare shareholder not
having validly withdrawn his acceptance, to transfer to itself (or such
other person or persons as Transworld or its agents may direct) by means
of CREST all or any of the Relevant Omnicare Shares (but not exceeding
the number of Omnicare Shares in respect of which the Offer is accepted
or deemed to be accepted) and (ii), if the Offer does not become
unconditional in all respects, to give instructions to CRESTCo
immediately after the lapsing of the Offer (or within such longer period
as the Panel may permit not exceeding 14 days from the lapsing of the
Offer) to transfer all Relevant Omnicare Shares to the original available
balance of the accepting Omnicare shareholder. As used in this Part B of
Appendix I "Relevant Omnicare Shares" means Omnicare Shares in
uncertificated form and in respect of which a transfer or transfers to
escrow has or have been effected pursuant to the procedures described in
paragraph 11(c) of the letter from Henry Cooke set out in this document
and where the transfer(s) to escrow was or were made in respect of
Omnicare Shares held under the same member account ID and participant ID
as the member account ID and participant ID relating to the Form of
Acceptance concerned (but irrespective of whether or not any Form of
Acceptance Reference Number, or a Form of Acceptance Reference Number
corresponding to that appearing on the Form of Acceptance concerned, was
included in the TTE instruction concerned);
(f) the execution of the Form of Acceptance constitutes, subject to the Offer
becoming unconditional in all respects in accordance with its terms and
to the accepting Omnicare shareholder not having validly withdrawn his
acceptance, separate irrevocable authorities and requests:
(i) to Omnicare or its agents, to procure the registration of the
transfer of the Omnicare shares referred to in paragraph 7(a)
pursuant to the Offer and the delivery of the share
certificate(s) and/or other document(s) of title in respect
thereof to Transworld or as it may direct;
(ii) if the Omnicare Shares concerned are in certificated form, to
Transworld or Henry Cooke or their agents, to procure the
despatch by post (or by such other method as may be approved by
the Panel) of a cheque for any cash to which an accepting
Omnicare shareholder becomes entitled pursuant to his acceptance
of the Offer (and at the risk of such person) to the person whose
name and address (outside the United States, Canada or Australia)
is set out above Box 1 of the Form of
23
<PAGE> 24
Acceptance or, if none is set out, to the person whose name and
address (outside the United States, Canada or Australia) is set
out in Box 3 of the Form of Acceptance or to the first-named
holder at his registered address (outside the United States,
Canada or Australia); and
(iii) if the Omnicare Shares concerned are in uncertificated form, to
Transworld or Henry Cooke or their agents, to procure the
creation of an assured payment obligation in favour of the
Omnicare shareholder's payment bank in accordance with the CREST
assured payment arrangements in respect of any cash consideration
to which such shareholder is entitled, provided that Transworld
may (if, for any reason, it wishes to do so) determine that all
or any part of any such cash consideration shall be paid by
cheque despatched by post;
(g) the execution of the Form of Acceptance constitutes a separate authority
to any director of Transworld and to any director of Henry Cooke and/or
their respective agents and the irrevocable appointment of any such
director and/or agent as such shareholder's attorney and/or agent within
the terms of paragraph 4 above;
(h) after the Offer becomes or is declared unconditional in all respects (or
if the Offer would become or be declared unconditional in all respects or
lapse immediately upon the outcome of the resolution in question or if
the Panel otherwise gives its consent) and pending registration:-
(i) Transworld shall be entitled to direct the exercise of any votes
attaching to any Omnicare Shares in respect of which the Offer
has been accepted or is deemed to have been accepted (and in
respect of which such acceptance has not been validly withdrawn)
and any other rights and privileges attaching to such Omnicare
Shares, including the right to requisition a general meeting or
separate class meeting of Omnicare, such votes (where relevant)
to be cast so far as possible to satisfy any outstanding
condition of the Offer; and
(ii) the execution of the Form of Acceptance by an Omnicare
shareholder constitutes, with regard to Omnicare Shares comprised
in such acceptance and in respect of which such acceptance has
not been validly withdrawn:
(A) an authority to Omnicare and/or its agents from such
Omnicare shareholder to send any notice, warrant, document
or other communication which may be required to be sent to
him as a member of Omnicare to Transworld at its
registered office;
(B) the irrevocable appointment of Transworld or any of its
directors or agents to sign such documents and do such
things as may in the opinion of such person seem necessary
or desirable in connection with the exercise of any votes
or other rights or privileges attaching to such Omnicare
Shares (including, without limitation, an authority to
sign any consent to short notice of a general or separate
class meeting on his behalf and/or to execute a form of
proxy in respect of such Omnicare Shares appointing any
person nominated by Transworld to attend general or
separate class meetings of Omnicare or its members or any
of them and to exercise the votes attaching to such
Omnicare Shares on his behalf), such votes (where
relevant) to be cast so far as possible to satisfy any
outstanding condition of the Offer; and
(C) the agreement of such Omnicare shareholder not to exercise
any of such rights without the consent of Transworld and
the irrevocable undertaking of such shareholder not to
appoint a proxy or representative for or to attend any
such meetings;
(i) he will deliver, or procure the delivery of, to Exchange
Registrars Limited, 18 Park Place, Cardiff CF1 3PD his share
certificate(s) and/or other document(s) of title in respect of
Omnicare Shares referred to in sub-paragraph 7(a) above, or an
indemnity acceptable to Transworld in lieu thereof, as soon as
possible and in any event within six months of the Offer becoming
unconditional in all respects;
(j) he will take (or procure to be taken) the action set out in
paragraph 11 of the letter from Henry Cooke set out in this
document to transfer all of the Offeree shares referred to in
sub-paragraph 7(a) above in uncertificated form to an escrow
balance as soon as possible and in any event so that the transfer
to escrow settles within six months of the Offer becoming
unconditional in all respects;
(k) if, for any reason, any Offeree shares in respect of which a
transfer to an escrow balance has been effected in accordance
with paragraph 11(c) of the letter from Henry Cooke contained in
this document are converted to certificated form, he will
(without prejudice to paragraph 7(h)(ii)(A) of this Part B of
Appendix I) immediately deliver or procure the immediate delivery
of the share certificate(s) or other document(s) of title in
respect of all such Offeree shares so converted to Exchange
Registrars Limited, 18 Park Place, Cardiff CF1 3PD or to
Transworld as its registered office or as Transworld or its
agents may direct;
24
<PAGE> 25
(l) the creation of an assured payment obligation in favour of his payment
bank in accordance with the CREST assured payments arrangements referred
to in paragraph (7)(f)(iii) above shall, to the extent of the obligation
so created, discharge in full any obligation of Transworld to pay him the
cash consideration to which he is entitled pursuant to the Offer;
(m) the terms and conditions of the Offer shall be deemed to be incorporated
in and form part of the Form of Acceptance, which shall be read and
construed accordingly;
(n) if he accepts the Offer, he shall do all such acts and things as shall be
necessary or expedient to vest in Transworld or its nominees or such
other persons as it may decide the Omnicare Shares as aforesaid;
(o) he agrees to ratify each and every act or thing which may be done or
effected by Transworld or Henry Cooke or the Receiving Bank or by any of
their directors or their respective agents or Omnicare or its agents, as
the case may be, in the proper exercise of any of his or its powers
and/or authorities conferred by or referred to in this Part B of Appendix
I and to indemnify each such person against any losses arising therefrom;
(p) the execution of the Form of Acceptance constitutes his submission, in
relation to all matters arising out of the Offer and the Form of
Acceptance, to the jurisdiction of the courts of England and his
agreement that nothing shall limit the right of Transworld or Henry Cooke
to bring any action, suit or proceeding arising out of or in connection
with the Offer or in any other manner permitted by law or in any court of
competent jurisdiction; and
(q) if any provision of this Part B of Appendix I shall be unenforceable or
invalid or shall not operate so as to afford Transworld and Henry Cooke
and/or any director of either of them or their agent the full benefit of
the authorities and powers of attorney expressed to be given therein, he
shall with all practicable speed do all such acts and things and execute
all such documents as may be required or desirable to enable Transworld
and Henry Cooke and/or any director of either of them or their agent to
secure the full benefit of such authorities and powers of attorney.
On execution the Form of Acceptance shall take effect as a Deed.
References in this Part B of Appendix I to "Omnicare shareholder" shall include
reference to the person or persons executing a Form of Acceptance and in the
event of more than one person executing a Form of Acceptance, the provisions of
this Part B of Appendix I shall apply to them jointly and to each of them.
References to the masculine gender shall include the feminine.
25
<PAGE> 26
APPENDIX II FINANCIAL AND OTHER INFORMATION ON TRANSWORLD INC.
1. DIRECTORS OF TRANSWORLD INC.
The directors of Transworld Inc. are:
Timothy M Aitken Chairman of the Board and Chief Executive Officer
Robert W Fine President, Chief Operating Officer and Director
Lewis S Ranieri Director
Scott A Shay Director
Richard A Yoken Director
2. PRINCIPAL AND REGISTERED OFFICE OF TRANSWORLD INC.
The principal and registered office of Transworld Inc. is at 75 Terminal Avenue,
Clark, New Jersey 07066.
3. FINANCIAL STATEMENTS
(1) Consolidated profit and loss accounts
A summary of the consolidated profit and loss accounts of Transworld Inc. for
the three years ended 31 October 1996, extracted from the published audited
accounts of Transworld Inc., on which the audit opinion was unqualified, is set
out below:
<TABLE>
<CAPTION>
Year ended 31 October
1994 1995 1996
$'000 $'000 $'000
<S> <C> <C> <C>
Revenues:
Net patient services $12,150 $18,870 $ 19,164
Net infusion services 10,551 9,935 9,970
Net respiratory, medical equipment and supplies sales 17,022 42,782 47,170
------ ------ ------
Total revenues 39,723 71,587 76,304
------ ------ ------
Cost of revenues:
Patient services 7,311 9,830 10,174
Infusion services 4,830 6,102 6,025
Respiratory, medical equipment and supplies sales 6,668 16,798 18,481
------ ------ ------
Total cost of revenues 18,809 32,730 34,680
------ ------ ------
Gross profit 20,914 38,857 41,624
Selling, general and administrative expenses 15,968 29,774 33,552
Non-recurring charges 3,898
------ ------ ------
Operating income 4,946 5,185 8,072
Interest expense, net 809 3,699 4,352
------ ------ ------
Income before income taxes, extraordinary loss and
cumulative effect of an accounting change 4,137 1,486 3,720
Provision for income taxes 1,656 627 1,702
------ ------ ------
Income before extraordinary loss and cumulative
effect of an accounting change 2,481 859 2,018
Extraordinary loss on early extinguishment of
debt (net of income tax benefit of $879,000) (1,435)
Cumulative effect of change in method of accounting for income taxes 300
------ ------ ------
Net income $ 2,781 $ 859 $ 583
======= ====== ======
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
Year ended 31 October
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Primary income per share of common stock from:
Income before extraordinary loss and cumulative effect of an
accounting change $ 0.50 $ 0.13 $ 0.26
Extraordinary loss on early extinguishment of debt (0.18)
Cumulative effect of change in method of accounting for income taxes 0.06
--------- --------- ---------
Net income per share $ 0.56 $ 0.13 $ 0.08
========= ========= =========
Fully diluted income per share of common stock from:
Income before extraordinary loss and cumulative effect of an
accounting change $ 0.47 $ 0.13 $ 0.26
Extraordinary loss on early extinguishment of debt (0.19)
Cumulative effect of change in method of accounting for income taxes 0.06
--------- --------- ---------
Net income per share $ 0.53 $ 0.13 $ 0.07
========= ========= =========
'000 '000 '000
Weighted average number of common shares outstanding:
Primary 5,006 6,776 7,741
========= ========= =========
Fully diluted 5,205 6,832 7,833
========= ========= =========
</TABLE>
(2) CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
A summary of the consolidated statement of retained earnings of Transworld Inc.
for the three years ended 31 October 1996 is set out below:
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
'000 $'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C>
Balance at 31 October 1993 3,993 $ 40 $10,304 $ 682 $11,026
Net income 2,781 2,781
Issuance of common stock for:
Acquisition of Radamerica, Inc. 250 3 4,997 5,000
Deposit on acquisition of VIP 146 1 749 750
Debt financing fees 225 2 1,242 1,244
Exercise of stock options 27 66 66
Repurchase of warrants (656) (656)
Issuance of stock options for debt
financing 160 160
------ ------- ------- ------- -------
Balance at 31 October 1994 4,641 46 16,862 3,463 20,371
Net income 859 859
Issuance of common stock for:
Exercise of warrants 200 2 1,684 1,686
Exercise of stock options,
including tax benefit 219 3 1,167 1,170
------ ------- ------- ------- -------
Balance at 31 October 1995 5,060 51 19,713 4,322 24,086
Net income 583 583
Issuance of common stock for:
Private offering 4,400 44 38,307 38,351
Payment on acquisition payable 370 4 3,828 3,832
Exercise of stock options and
warrants, including tax benefits 110 373 373
------ ------- ------- ------- -------
Balance at 31 October 1996 9,940 $ 99 $62,221 $ 4,905 $67,225
====== ======= ======= ======= =======
</TABLE>
27
<PAGE> 28
(3) CONSOLIDATED BALANCE SHEET
The consolidated balance sheet of Transworld Inc. as at 31 October 1996
extracted from the published audited accounts of Transworld Inc. as at that date
is set out below:
<TABLE>
<CAPTION>
As at
31 October 1996
$'000
<S> <C>
ASSETS
Current assets:
Cash and temporary investments $ 4,598
Accounts receivable, less allowance for doubtful accounts of $5.47 million 24,414
Inventories 1,829
Deferred income taxes 2,902
Prepaid income taxes 600
Prepaid expenses and other current assets 2,204
-------
Total current assets 36,547
Property & equipment, net 3,934
Notes receivable, related parties 964
Intangible assets, net 44,496
Other assets 4,786
-------
Total assets $90,727
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt, including obligations under capital leases $ 21
Accounts payable 2,975
Accrued expenses 5,548
Acquisitions payable 1,802
-------
Total current liabilities 10,346
Long-term debt, including obligations under capital leases 12,505
Deferred income taxes and other 651
-------
Total liabilities 23,502
-------
Commitments and contingencies:
Stockholders' equity
Preferred stock, $.01 par value; authorised 2,000,000 shares, issued and
outstanding _ none
Common stock, $.01 par value; authorised 30,000,000 shares,
issued and outstanding 9,940,000 shares 99
Additional paid-in capital 62,221
Retained earnings 4,905
-------
Total stockholders' equity 67,225
-------
Total liabilities and stockholders' equity $90,727
=======
</TABLE>
28
<PAGE> 29
(4)CONSOLIDATED STATEMENT OF CASH FLOWS
A summary of the consolidated statement of cash flows of Transworld Inc. for the
year ended 31 October 1996, extracted from the published audited accounts as at
that date is set out below:
<TABLE>
<CAPTION>
Year ended
31 October 1996
$'000
<S> <C>
Cash flows from operating activities:
Net income $ 583
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortisation 3,671
Provision for doubtful accounts 6,394
Deferred income taxes (200)
Extraordinary loss on early extinguishment of debt 2,314
Changes in assets and liabilities, excluding the effect of businesses acquired:
Increase in accounts receivable (11,426)
Increase in inventories (92)
Increase in prepaid expenses and other assets (1,511)
Decrease in accounts payable and other liabilities (2,996)
--------
Net cash used in operating activities (3,263)
--------
Cash flows used in investing activities:
Capital expenditures (1,040)
Acquisitions - net of cash acquired (1,785)
Payment on acquisition payable (11,078)
--------
Net cash used in investing activities (13,903)
--------
Cash flows provided by financing activities:
Proceeds from issuance of common stock 39,600
Payment of costs associated with issuance of common stock (1,249)
Payments on notes payable (10,013)
Proceeds from notes payable 10,000
Payments on short-term debt (2,000)
Proceeds from short-term debt 1,000
Payments on revolving loan (10,990)
Borrowing under revolving loan 18,482
Payments on long-term debt (21,091)
Proceeds from long-term debt 18
Payments for financing fees and issuance costs (3,331)
Stock options and warrants exercised, including tax benefit 423
--------
Net cash provided by financing activities 20,849
--------
Increase in cash 3,683
Cash and temporary investments, beginning of period 915
--------
Cash and temporary investments, end of period $ 4,598
========
Supplemental cash flow information:
Cash paid for interest $ 3,763
========
Cash paid for income taxes $ 2,086
========
Supplemental disclosure of non-cash investing and financing activities:
Details of business acquired in purchase transactions:
Fair value of assets acquired $ 4,058
========
Liabilities assumed or incurred $ 2,171
========
Cash paid for acquisitions (including related expenses) $ 1,887
Cash acquired 102
--------
Net cash paid for acquisition $ 1,785
========
</TABLE>
29
<PAGE> 30
(5) SELECTED NOTES EXTRACTED FROM THE PUBLISHED AUDITED ACCOUNTS OF TRANSWORLD
INC. AS OF 31 OCTOBER 1996 AND FOR THE THREE YEARS ENDED 31 OCTOBER 1996
(i) Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Transworld
Inc. and its wholly-owned subsidiaries. Intercompany transactions and
balances are eliminated in consolidation.
Cash and temporary investments
Cash and temporary investments include highly liquid short-term
investments purchased with initial maturities of 90 days or less.
Concentrations of credit risk
Transworld Inc. grants credit without collateral to its patients, who are
primarily insured under third-party agreements. Accounts receivable at 31
October 1996 are comprised of amounts due from Medicare/Medicaid (61 per
cent.) and various other third party payors and self-pay patients (none of
which comprise greater than ten per cent. of the balance).
Inventories
Inventories are valued at the lower of cost (first-in, first-out method)
or market. Inventories, which are primarily finished goods, include
pharmaceuticals, ancillary medical supplies and certain medical equipment.
Property and equipment
Property equipment, including revenue producing equipment, are carried at
cost and are being depreciated over their estimated useful lives of three
to seven years, using primarily the straight-line method. Revenue
producing equipment consists of home medical equipment (e.g. respiratory
equipment, beds, wheelchairs). Leasehold improvements are amortised over
the related lease terms or estimated useful lives, whichever is shorter.
Revenue recognition
Patient and infusion revenues are recognised when services are performed
and are recorded net of estimated contractual adjustments based on
agreements with third party payors, where applicable. Revenues from home
medical equipment are recognised over the period the equipment is rented
(typically on a month-to-month basis) and approximated $5.07 million,
$4.19 million and $3.90 million in 1996, 1995 and 1994 respectively.
Revenues from the sale of pharmaceuticals and supplies are recognised when
products are delivered and are recorded at amounts expected to be paid by
third party payors. Transworld Inc. receives a majority of its revenue
from third party insurance companies and Medicare and Medicaid. The amount
paid by third party payors is dependent upon the benefits included in the
patient's policy or as allowable amounts set by third party payors.
Certain revenues are subject to review by third party payors, and
adjustments, if any, are recorded when determined. For the years ended 31
October 1996, 1995 and 1994, Transworld Inc.'s net revenues attributable
to the Medicare and Medicaid programs were approximately 62 per cent., 59
per cent. and 52 per cent. respectively, of Transworld Inc.'s total
revenues.
Income taxes
During fiscal 1994, Transworld Inc. implemented Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No
109"). Under SFAS 109, deferred taxes are determined upon the cumulative
differences between financial statement and income tax assets and
liabilities, based on currently enacted tax rates. Deferred tax assets are
recorded if future realisation is more likely than not. The cumulative
effect of this accounting change increased the results of operations by
$300,000 for the year ended 31 October 1994.
Deferred taxes are provided primarily for bad debts, depreciation,
amortisation of intangibles and acquisition liabilities, which are
reported for Federal income tax purposes in different periods than for
financial reporting purposes.
Intangible assets
Intangible assets primarily includes goodwill, which amounted to $43.95
million at 31 October 1996, and is being amortised on a straight-line
basis over 40 years. Accumulated amortisation of goodwill at 31 October
1996 was $2.11 million. Also included in intangible assets at 31 October
1996 are
30
<PAGE> 31
covenants not to compete of $546,000, which are being amortised over
periods ranging from two to three years. Accumulated amortisation of such
covenants at 31 October 1996 was $1,276,000.
Transworld Inc. selected the 40 year amortisation period based on the
likely period of time over which the related economical benefit will be
realised. Transworld Inc. believes the estimated goodwill life is
reasonable given the continuing movement of patient care to
non-institutional settings, expanding demand due to demographic trends,
the emphasis of Transworld Inc. in establishing significant coverage in
its local and regional markets, the consistent practice with other
alternate site health care companies and other factors.
At each balance sheet date, management assesses whether there has been a
permanent impairment in the amount of goodwill.
Deferred financing costs
Costs incurred in obtaining long-term financing are amortised over the
terms of the long-term financing agreements using the interest method. At
31 October 1996, other assets include $2,824,000 of deferred financing
costs associated with the Credit Facility described in Note 5(iv), net of
accumulated amortisation of $176,000.
On 31 July 1996, $740,000 of unamortised costs associated with the Credit
Agreement was written-off as an extraordinary charge for the early
extinguishment of the Credit Agreement (Note 5(iv). Amortisation of
deferred financing costs is included in interest expense in the Statements
of Operations.
Earnings per share
Primary and fully diluted earnings per share are computed using the
weighted average number of shares of common stock outstanding, after
giving effect to contingently issuable shares under the acquisition
agreements and dilutive stock options and warrants using the treasury
stock method. Fully diluted earnings per share also reflect the
incremental dilution related to stock options due to the use of the market
price at the end of the period when it is higher than the average price
for the period.
The weighted average number of shares of common stock outstanding have
been restated for the years ended 31 October 1995 and 1994 to give effect
to market price guarantees under acquisition agreements. The only effect
of this restatement was to increase previously reported primary earnings
per share from income before cumulative effect of an accounting change and
net income by $0.01 for the year ended 31 October 1994.
The weighted average number of shares used in the primary and fully
diluted earnings per share computation for the years ended 31 October
1996, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Year ended 31 October
1994 1995 1996
'000 '000 '000
<S> <C> <C> <C>
Weighted average number of shares used in primary calculation:
Weighted average number of shares outstanding 4,159 4,937 6,622
Weighted average number of shares contingently issuable per
acquisition agreements 463 607 321
Incremental shares, after application of treasury stock method, of
stock options and warrants 384 1,232 798
----- ----- -----
Shares used in calculation of primary income per common share 5,006 6,776 7,741
===== ===== =====
Weighted average number of shares used in fully diluted calculation:
Weighted average number of shares outstanding 4,159 4,937 6,622
Weighted average number of shares contingently issuable per
acquisition agreements 463 607 321
Incremental shares, after application of treasury stock method, of
stock options and warrants 583 1,288 890
----- ----- -----
Shares used in calculation of fully diluted income per common
share 5,205 6,832 7,833
===== ===== =====
</TABLE>
31
<PAGE> 32
(ii) Pending acquisition
On 30 June 1994, the Company entered into stock purchase agreements, as
amended, to acquire all of the issued and outstanding capital stock of VIP
Health Services, Inc. and Kwik Care, Ltd (the "VIP Companies") for $11
million, consisting of $10.25 million in cash and 146,000 shares of common
stock (valued at $750,000 after taking into account restrictions on
transfer). The Company placed in escrow $1,500,000 ($750,000 in cash and
146,000 shares of common stock) during July 1994 as a down payment on the
acquisition of the VIP Companies (the "VIP Acquisition"), which amounts
are included in "Other Assets". The cash portion of the contract deposit
has, with the Company's consent, been loaned to the VIP Companies to be
used for working capital purposes.
The VIP Companies provide temporary nursing and related home health care
services in the City of New York and surrounding areas through both a
licensed and a Medicare certified agency. The consummation of the VIP
Acquisition is subject to, among other things, various closing conditions,
including receipt of necessary governmental approvals (including the
submission and approval of a plan of financing), the approval of the
lenders under the Credit Facility, the accuracy at closing of various
representations and warranties and the compliance by the sellers with
certain covenants and agreements contained in the stock purchase
agreements. In July 1996, the Company announced that the consummation of
the VIP Acquisition would not occur concurrently with the Second Closing
(as defined in Note (v)) under the unit purchase agreement (as described
in Note (v)), in that, among other things, the approvals and consents
necessary to consummate the transactions had not been and could not be
obtained at that time. The Company believes that the sellers are not in
compliance with certain provisions contained in the stock purchase
agreements concerning the VIP Companies and has notified the sellers of
the VIP Companies regarding the same. The Company cannot predict when or
whether all of the requisite consents and approvals will be obtained and
the other closing conditions will be satisfied, and, regardless, when or
whether the transaction will ultimately be consummated. For the years
ended 31 December 1994 and 1995 and the nine months ended 30 September
1996 (unaudited), the VIP Companies generated approximately $33.0 million,
$35.0 million and $21.9 million respectively, in revenues and proforma net
income (loss) (after consideration of proforma provision for income taxes)
of $850,000, $(978,000) and $334,000 respectively. The 1995 net loss
includes a special one-time bonus of $3,000,000 (pre tax) to one of the
VIP Companies' officers.
(iii) Property and equipment
Major classes of property and equipment consist of the following:
<TABLE>
<CAPTION>
31 October
1996
$'000
<S> <C>
Revenue producing equipment $ 2,826
Furniture, fixtures and equipment 4,708
Leasehold improvements 1,023
-------
8,557
Less, accumulated depreciation and amortisation 4,623
-------
$ 3,934
=======
</TABLE>
The net book value of revenue producing equipment was $1,232,000 at 31
October 1996.
(iv) Debt
On 5 August 1994, the Company entered into a credit agreement with an
institutional lender, as Agent, and various banks (the "Credit
Agreement"), which provided for a term loan of $18 million and revolving
loans of up to $10 million. On 2 March 1995, such agreement was amended
and provided for a total term loan of $23 million and revolving loans of
up to $12 million.
On 10 January 1996, the Company's Credit Agreement was amended to permit
the issuance of equity units, to permit the issuance of the 20 per cent.
Subordinated Notes described below, to allow the payment in cash of the
remaining $5,973,000 RespiFlow, Inc./MK Diabetic Support Services, Inc.
acquisition payable (plus interest from its due date of 15 August 1995),
which was paid on 10 January 1996, and to amend and modify certain
definitions and covenants in the Credit Agreement.
On 10 January 1996, an institutional investor purchased from the Company
$10 million of 20 per cent. subordinated notes (the "Subordinated Notes")
due 10 October 1996. On 30 May 1996, the interest rate
32
<PAGE> 33
on the Subordinated Notes was reduced to 12 per cent. On 31 July 1996, the
Subordinated Notes were repaid, with proceeds from the Second Closing (as
defined in note 5(v) below).
On 28 May 1996, the required lenders under the Credit Agreement consented
to the use of the $5.4 million proceeds from the Initial Closing (as
defined in note 5(v) below) to: (i) pay $1 million plus accrued interest
for the remainder of the DermaQuest Surgical Supply, Inc. acquisition
payable; (ii) pay interest accrued through the Initial Closing on the
Subordinated Notes; and (iii) to use the remainder for general corporate
and working capital purposes.
On 31 July 1996, the Company completed a new $100 million senior secured
revolving credit facility, underwritten by a commercial bank who is also
acting as Agent Bank (the "Credit Facility"). This new facility replaced
the Company's existing $35 million Credit Agreement. On 31 July 1996, the
Credit Agreement was repaid out of proceeds from the Second Closing and
borrowings under the Credit Facility. In connection with the repayment of
the Credit Agreement, the Company recorded a non-cash, after-tax,
extraordinary charge of $1.4 million (net of tax benefit of $879,000) in
the financial year ending 31 October 1996, relating to the write-off of
the deferred financing costs and discount associated with the Credit
Agreement.
Pursuant to the Credit Facility and subject to the terms thereof, up to
$85 million of the total facility may be used by the Company for the
acquisition of other alternate site health care providers with the balance
of the Credit Facility not used for acquisitions to be used for working
capital. The loans under the Credit Facility are collateralised by, among
other things, a lien on substantially all of the Company's and its
subsidiaries' assets, a pledge of the Company's ownership interest in its
subsidiaries and guarantees by the Company's subsidiaries. The loans
mature on 31 July 2001 with reductions in availability commencing 31 July
1998 through final maturity.
The Credit Facility provides that subject to the terms thereof, the
Company may make borrowings either at the Base Rate (as defined in the
Credit Facility), plus 1 per cent. or the Eurodollar Rate (5.375 per cent.
at 31 October 1996), plus 2 per cent. As of 31 October 1996, the Company
had $12.5 million outstanding under the Credit Facility and availability
under the Credit Facility was $87.5 million.
Subject to certain exceptions, the Credit Facility prohibits or restricts,
among other things, the incurrence of liens, the incurrence of
indebtedness, certain fundamental corporate changes, dividends, the making
of specified investments and certain transactions with affiliates. In
addition, the Credit Facility contains affirmative and negative financial
covenants customarily found in agreements of this kind including the
maintenance of certain financial ratios, such as interest coverage, debt
to earnings before interest, taxes, depreciation and amortisation
("EBITDA") and minimum EBITDA. On 31 October 1996, the Company was in
compliance with all financial covenants contained in the Credit Facility.
As of 31 October 1995, $1 million the amounts outstanding under the
revolving loans were classified as short-term debt. Such amount was repaid
in November 1995.
Long term debt, net of unamortised discount, consists of the following:
<TABLE>
<CAPTION>
31 October
1996
$'000
<S> <C>
Credit Facility, due 31 July 2001, with monthly
interest at Eurodollar Rate (5.375 per cent. at
31 October 1996), plus 2 per cent. collateralised
by a lien on all Company assets $12,492
Equipment leases with monthly principal plus interest
ranging from 7.25 per cent. to 12.5 per cent. through
1998, collateralised by related equipment 34
-------
12,526
Less, current maturities 21
-------
$12,505
=======
</TABLE>
33
<PAGE> 34
Annual maturities of long-term debt for each of the next five years are:
<TABLE>
<CAPTION>
Year ending 31 October $'000
<S> <C>
1997 $ 21
1998 13
2001 12,492
-------
$12,526
=======
</TABLE>
(v) Unit Purchase Agreement
On 20 November 1995, the Company entered into a unit purchase agreement,
as amended, with an institutional investor under which the Company sold an
aggregate of 4.4 million units at a purchase price of $9.00 per unit (for
an aggregate purchase price of $39.6 million) to the institutional
investor in two separate closings, subsequent to receipt of necessary
shareholder and governmental approval. Each unit is comprised of one share
of the Company's restricted common stock and a 0.6818 non-callable five
year stock purchase warrant with each whole warrant entitling the holder
to purchase an additional share of the Company's common stock at $12.45
per share (the "Warrants").
The initial closing (the "Initial Closing") was completed on 30 May 1996
following the receipt of shareholder approval (which was obtained at the
Company's annual meeting of shareholders on 16 April 1996), at which time
the Company sold 600,000 units or 9.8 per cent. of the issued and
outstanding shares of the Company, after giving effect to the sale, at a
purchase price of $9.00 per unit for an aggregate purchase price of $5.4
million. The second closing (the "Second Closing"), which was subject to
receipt of New York State Department of Health approval of the transaction
(which was received in June 1996) was completed on 31 July 1996. At the
Second Closing, the Company sold an additional 3.8 million units for an
aggregate purchase price of $34.2 million. Gross proceeds of $39.6 million
were reduced by $1.2 million of offering costs.
(vi) Non-recurring Charges
During the fourth quarter of 1995, the Company recorded non-recurring
charges totalling $3,898,000 related to the write-off of expenses related
to an abandoned public offering ($2,808,000), write-off of expenses
related to abandoned acquisition ($605,000) and expenses related to the
consolidation of certain of the Company's facilities ($485,000).
The decision to abandon the proposed public offering was made during the
fourth quarter following management's assessment of the ability to
complete the financing. Financing was subsequently arranged through an
institutional investor. The non-recurring charge of $2,808,000 is
primarily made up of legal, accounting, underwriting, printing, and
"roadshow" expenses.
(vii) Related Party Transactions
Notes receivable from related parties and stockholders consisted of the
following:
<TABLE>
<CAPTION>
31 October
1996
$'000
<S> <C>
Notes due from officers and employees $ 200
Notes due from related parties 964
------
1,164
Less current maturities, (included in prepaid expenses
and other current assets on the balance sheet) 200
------
$ 964
======
</TABLE>
Interest on the notes due from officers and employees are at rates ranging
from prime (8.25 per cent. at 31 October 1996) to prime plus 1 per cent.
and are due 30 April 1997.
The Company loaned an aggregate of $1,100,000 to two of the four sellers
of Radamerica. Interest on these notes is at prime (8.25 per cent. at 31
October 1996) plus 0.75 per cent. As of 31 October 1996, $136,000 of the
loans have been repaid.
Interest expense-related parties, net was $3,000, for the year ended 31
October 1996.
34
<PAGE> 35
(viii) Income taxes
During fiscal 1994, the Company changed its method of accounting for
income taxes in accordance with SFAS No. 109. The provision (benefit) for
income taxes from continuing operations before the extraordinary loss is
summarised as follows:
<TABLE>
<CAPTION>
Year ended 31 October
1994 1995 1996
$'000 $'000 $'000
<S> <C> <C> <C>
Current:
Federal $ 1,625 $ 1,944 $ 1,637
State 317 549 265
Deferred:
Federal (127) (1,465) (215)
State (159) (401) 15
------- ------- -------
Provision for income taxes $ 1,656 $ 627 $ 1,702
======= ======= =======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities recorded for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and
liabilities as of 31 October 1996 are as follows:
<TABLE>
<CAPTION>
31 October
<S> <C>
Deferred tax assets: 1996
Current: $'000
Provision for doubtful accounts $ 2,172
Inventory capitalisation 9
Accrued expenses 677
Other, net 44
-------
Current deferred tax assets 2,902
=======
Non-current:
State net operating losses 151
Other, net 57
Valuation allowance (130)
-------
Non-current deferred tax assets, included in other assets 78
-------
Deferred tax liabilities:
Non-current:
Depreciation and amortisation 490
Other, net 65
-------
Deferred tax liabilities 555
-------
Net deferred tax assets $ 2,425
=======
</TABLE>
As of 31 October 1996, the Company has state net operating tax losses of
$1,626,000 which, if unused, will expire in the years 1998 through 2011.
Reconciliations of the differences between income taxes on income from
continuing operations computed at Federal statutory tax rates and
consolidated provisions for income taxes are as follows:
<TABLE>
<CAPTION>
Year ended 31 October
1994 1995 1996
$'000 $'000 $'000
<S> <C> <C> <C>
Income taxes computed as Federal statutory tax rate $ 1,406 $ 505 $ 1,265
State income taxes, net of Federal benefits 105 (187) 350
Non-deductible expenses, primarily amortisation on intangible
assets 271 41 266
Valuation allowance, state taxes (170) 232 (155)
Other, net 44 36 (24)
------- ----- -------
Provision for income taxes $ 1,656 $ 627 $ 1,702
======= ===== =======
</TABLE>
35
<PAGE> 36
(ix) Stock Option Plan and Warrants
The Company has a nonqualified stock option plan ("1987 Plan") and a stock
option plan which provides for either incentive stock options or
nonqualified stock options ("1992 Plan"). The 1992 Plan gives eligible
employees, officers, directors and non-employee independent contractors
options to purchase up to 1,500,000 shares of stock, of which options to
purchase 725,000 shares of stock were outstanding as of 31 October 1996.
Under the 1987 Plan, options covering 24,000 shares have been granted and
are outstanding and no additional options may be granted. Options under
the 1992 Plan may be granted by the Compensation Committee of the Board of
Directors which determines the exercise price, vesting provisions and term
of such grants. The vesting provisions provide for the exercise price,
vesting provisions and term of such grants. The vesting provisions provide
for vesting of options over a period of between two and three years.
Following is a summary of transactions under both plans during the years
ended 31 October 1994, 1995 and 1996.
<TABLE>
<CAPTION>
Stock
Options
'000
<S> <C>
Outstanding - 31 October 1993 at $1.25 to $3.18 per share 465
Granted during 1994 ($4.38 to $8.88 per share) 380
Exercised during 1994 ($1.25 to $3.18 per share) (27)
Cancelled during 1994 ($2.78 to $4.38 per share) (59)
-------
Outstanding - 31 October 1994 at $1.25 to $8.88 per share 759
Granted during 1995 ($7.88 per share) 260
Exercised during 1995 ($1.25 to $5.50 per share) (148)
Cancelled during 1995 ($3.18 to $8.88 per share) (19)
-------
Outstanding - 31 October 1995 at $1.25 to $8.75 per share 852
Granted during 1996 ($8.88 to $10.00 per share) 70
Exercised during 1996 ($1.25 to $7.88 per share) (159)
Cancelled during 1996 ($3.18 to $8.75 per share) (14)
-------
Outstanding - 31 October 1996 $1.25 to $10.00 per share 749
=======
Available for future grants 517
=======
</TABLE>
Of the 759,000 options outstanding as of 31 October 1994, 499,000 were
exercisable as of that date.
Of the 852,000 options outstanding as of 31 October 1995, 471,000 were
exercisable as of that date.
As of 31 October 1996, 583,000 of the 749,000 options outstanding were
exercisable.
In connection with the initial public offering, the Company issued
warrants to purchase 1,600,000 common shares. The warrants are exercisable
at $6.50 per share and expire on 6 December 1997. During 1994, the Company
repurchased 500,000 of the public warrants, 250,000 for $1.25 per warrant
and 250,000 at $1.3125 per warrant in open market purchases.
(x) Commitments and Contingencies
The Company has employment agreements with certain of its executive
officers and management personnel which provide for minimum aggregate
annual compensation of $1,175,000 in fiscal 1997. The contracts expire
between August 1997 and January 1999 and contain customary termination and
non-compete provisions. Certain of the contracts, which amount to $770,000
of 1997 minimum aggregate compensation, contain change in control
provisions that would entitle each of the individuals up to 2.9 times of
their salary then in effect, except for one individual who is entitled to
2.0 times his salary, plus any unpaid bonus and unreimbursed expense upon
a change of control of the Company (as defined) or significant change in
the responsibilities of such person.
In fiscal 1996, the Company paid $350,000 to its former Chairman of the
Board and Chief Executive Officer ("Chairman") in connection with his
resignation. The Company also entered into a consulting agreement with its
former Chairman which provides for annual compensation of $150,000 less
the amount by which certain amounts paid to or on his behalf exceed
$60,000.
Beginning in fiscal 1995, the Company had adopted a performance based
bonus plan for the Company's executive officers and certain other
employees. Under this plan, amounts granted may be up to 50 per
36
<PAGE> 37
cent. of their base salaries at the sole discretion of the Compensation
Committee. Bonuses may be paid in whole or in part, in cash or shares of
common stock.
From 1 November 1994 to 1 March 1999, RespiFlow/MK Diabetic and DermaQuest
will be managed by E/L Associates, an affiliate of certain of the selling
shareholders of those entities. Pursuant to a management agreement, E/L
Associates will receive an annual management fee of $450,000 per year
until 1 March 1999 and is eligible to receive an incentive fee during each
year of the term of the agreement with respect to RespiFlow/MK Diabetic
and DermaQuest as follows: (i) a fee equal to 25 per cent. of the annual
pre-tax earnings of RespiFlow/MK Diabetic in excess of $3,600,000
($654,000 in 1995) and (ii) a fee equal to 25 per cent. of the annual
pre-tax earnings of DermaQuest in excess of $2,400,000 (in each case, as
defined). The Company has guaranteed the obligations of RespiFlow/MK
Diabetic and DermaQuest under this management agreement.
Effective 1 November 1995, the management agreement with E/L Associates
was amended to change the base compensation under the agreement to
$240,000, $390,000, $490,000 and $490.,000 in fiscal 1996 through 1999,
respectively, and to change the incentive compensation formula to 7 per
cent. of pre-tax income (as defined), payable based on achieving minimum
pre-tax earnings (as defined) of $3,800,000 at RespiFlow/MK Diabetic and
$3,000,000 at DermaQuest.
The Company has entered into various operating lease agreements for office
space and equipment. Certain of these leases provide for renewal options
extending to the year 2006.
Future minimum non-cancellable lease payments at 31 October 1996 are as
follows:
<TABLE>
<CAPTION>
$'000
<S> <C>
1997 $1,280
1998 1,214
1999 1,100
2000 588
2001 417
Thereafter 404
------
$5,003
======
</TABLE>
Total rental expense for the year ended 31 October 1996, 1995 and 1994
amounted to $1,645,000, $1,563,000 and $753,000, respectively.
On 2 November 1994, an action was filed in the Supreme Court of the State
of New York, County of Westchester against the Company, alleging that one
of its drivers negligently caused the death of plaintiff's husband while
operating his motor vehicle during a delivery for the Company. The
plaintiffs are seeking $12,580,000 in damages for wrongful death, pain and
suffering, loss of consortium and related claims. The Company has tendered
defence of this action to its insurance consortium and related claims. The
Company has tendered defence of this action to its insurance carrier and
management of the Company and counsel to the insurance carrier intend to
vigorously defend this lawsuit. As the case is in a preliminary stage, the
Company is not able to estimate any potential exposure or range of
exposure and has not recorded any amounts in its financial statements. It
is reasonably possible that irrespective of insurance coverage, the
ultimate outcome of this action may be materially unfavourable to the
Company's consolidated results of operations, financial position or cash
flows. However, the Company believes that the ultimate liability, if any,
will be within the policy limits of its insurance policies, and will not
have a material adverse effect on the Company's consolidated financial
position, results of operations or cash flows.
The Company is also involved in various other legal proceedings and claims
incidental to its normal business activities. The Company is vigorously
defending its position in all such proceedings. Management and its legal
counsel believe these matters should not have a material adverse impact on
the financial condition, cash flows, or results of operations.
(xi) Subsequent event
On 13 November 1996, the Company entered into a number of agreements
including a stock purchase agreement (the "Stock Purchase Agreement") and
a merger agreement (the "Merger Agreement") to acquire 100 per cent. of
the issued and outstanding stock and senior secured indebtedness of Health
Management, Inc. ("HMI") in a series of transactions. HMI is a Buffalo
Grove, Illinois based provider of integrated pharmacy management services
to patients with chronic medical conditions and to
37
<PAGE> 38
healthcare professionals, drug manufacturers and third-party payors
involved in such patients' care. For the year ended 30 April 1996 and the
six months ended 31 October 1996 (unaudited), HMI reported $158.86 million
and $40.52 million of net sales, respectively and net loss of $10.93
million and net profit of $432,000 respectively. Included in the amounts
reported above in the year ended 30 April 1996 net loss are charges of
$16.84 million related to (i) a write-off of medical device inventory
($2.84 million); (ii) an additional provision reflecting a change in the
estimation of the allowance for doubtful accounts ($8.4 million); (iii)
costs associated with organisational consolidation and other cost
reduction programs ($3.6 million); and (iv) professional fees related to
HMI's litigation and restatement of fiscal 1995 financial statements ($2
million).
The acquisition of 49 per cent. of the outstanding shares of HMI common
stock will be accounted for by the Company as a purchase and recorded
under the equity method of accounting until such time as the Company gains
control of HMI (greater than 50 per cent. ownership of the outstanding
common stock of HMI), at which point HMI will be consolidated with the
Company.
Also on 13 November 1996, the Company acquired HMI's senior secured
indebtedness under the credit agreement between HMI and its senior lenders
(the "HMI Credit Agreement") for $21.26 million directly from such
lenders. The Company also agreed to lend HMI up to $5 million for working
capital purposes and to forbear from exercising any remedies under the HMI
Credit Agreement until 31 January 1997.
On 13 January 1997, the Company agreed to changes to its Credit Facility
with its senior lenders in order to accommodate the purchase of the senior
secured indebtedness of HMI and the 8,964,000 shares of HMI common stock
purchased by the Company pursuant to the Stock Purchase Agreement. The
principal changes included temporary adjustments to certain financial
covenants until 30 April 1997, by which time the Company believes it will
have either consummated the acquisition pursuant to the Merger Agreement
and/or have obtained additional capital, such that it will be in
compliance with the terms of the Credit Facility. The Company also agreed
that, until the acquisition of HMI has been consummated, any additional
acquisitions would be subject to the specific approval of its senior
lenders.
On 14 January 1997, the Stock Purchase Agreement was completed, pursuant
to which the Company acquired 8,964,000 newly issued shares of HMI's
common stock, representing approximately 49 per cent. of HMI's outstanding
common stock for $1 per share or $8,964,000. The Company also entered into
a registration rights agreement providing for the registration of the
aforementioned shares, which commences on the earlier of 30 June 1997 or
the date on which the Merger Agreement, described below, is terminated.
The Company also received an option to purchase newly issued shares up to
an additional 2 per cent. of HMI's then outstanding common stock for $1
per share, which expires on 14 January 1998. Also as of 14 January 1997,
the Company had advanced $4,649,000 to HMI for working capital purposes.
The Merger Agreement, as amended on 13 January 1997, provides for the
acquisition by the Company of the remaining issued and outstanding common
shares of HMI, not previously owned by the Company for $1.50 per share.
Consummation of the Merger Agreement is subject to various closing
conditions, including receipt of the financing by the Company necessary to
complete the merger, approval of the lenders under the Credit Facility,
receipt of certain regulatory approvals and approval of HMI's
shareholders.
The aggregate cost of the acquisition is estimated to be $60 million and
the aggregate amount of capital required to complete the remaining portion
of the acquisition is approximately $30 million, of which the Company
expects a substantial portion will be provided through borrowings under
the Credit Facility. On 8 January 1997, HPII agreed to purchase an
additional 899,000 shares of the Company's Common Stock at a purchase
price of $11.125 per share for an aggregate purchase price of $10 million
(subject to, among other things, receipt of applicable regulatory
approvals) and it is anticipated that these funds may be used to complete
the HMI transaction. The Company anticipates completing this acquisition
at the end of the Company's second fiscal quarter of 1997.
HPII has purchased certain of HMI's trade payables aggregating
approximately $18 million at various discounts. Provided that the HMI
Merger Agreement is consummated, HPII has agreed to extend a 10 per cent.
discount of the outstanding face amount of such payables to the Company.
38
<PAGE> 39
(xii) Acquisitions
During the years ended 31 October 1994, 1995 and 1996, Transworld Inc.
completed the following acquisitions:
<TABLE>
<CAPTION>
Company Date of
Acquisition Nature of Business
<S> <C> <C>
RespiFlow, Inc. April 1994 Specialised mail-order
pharmacy
MK Diabetic Support Services, Inc. April 1994 Mail-order diabetic supplies
Radamerica, Inc. August 1994 Radiation therapy
DermaQuest Inc. November 1994 Mail-order medical supplies
Delaware Valley Lung Center, P.A. January 1995 Pulmonary therapy
Precision Health Care, Inc. March 1995 Mail-order orthotic
products
Health Meds, Inc. October 1996 Respiratory mail-order
pharmacy
U.S. HomeCare Infusion Therapy Services October 1996 Infusion therapy
Corporation of New Jersey
</TABLE>
4. FIRST QUARTER RESULTS
Set out below are extracts from the text of the unaudited statements of first
quarter results for Transworld Inc. for the three months ended 31 January 1997
and 1996.
<TABLE>
<CAPTION>
Three months ended
31 January
1997 1996
$'000 $'000
(except for per share
amounts)
<S> <C> <C>
Revenues:
Net respiratory, medical equipment and supplies sales $ 12,228 $ 12,434
Net patient services 4,765 4,814
Net infusion services 3,304 2,396
-------- --------
Total revenues 20,297 19,644
-------- --------
Cost of revenues:
Respiratory, medical equipment and supplies sales 5,013 4,964
Patient services 2,471 2,504
Infusion services 2,005 1,476
-------- --------
Total cost of revenues 9,489 8,944
-------- --------
Gross profit 10,808 10,700
Selling, general and administrative expenses 8,486 8,151
-------- --------
Operating income 2,322 2,549
Interest income (682) (17)
Interest expense 998 1,151
-------- --------
Income before income taxes 2,006 1,415
Provision for income taxes 883 594
-------- --------
Net income $ 1,123 $ 821
======== ========
Net income per share of common stock $ 0.10 $ 0.13
======== ========
Weighted average number of common shares outstanding ('000) 11,083 6,871
======== ========
</TABLE>
39
<PAGE> 40
<TABLE>
<CAPTION>
31 January 31 October
1997 1996
$'000 $'000
<S> <C> <C>
ASSETS
CURRENT assets:
Cash and temporary investments $ 2,249 $ 4,598
Accounts receivable, less allowance for doubtful
accounts of $6.23 million and $5.47 million 27,580 24,414
Inventories 2,104 1,829
Prepaid income taxes - 600
Prepaid expenses and other current assets 5,405 5,106
-------- -------
Total current assets 37,338 36,547
Property and equipment, net 4,076 3,934
Advances to and investment in Health Management, Inc. 30,227 -
Intangible assets, net of accumulated amortisation
of $3.80 million and $3.39 million 44,079 44,496
Other assets 6,470 5,750
-------- -------
$122,190 $90,727
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $ 9,252 $ 8,544
Acquisitions payable 125 1,802
-------- -------
Total current liabilities 9,377 10,346
Long-term debt, including obligations under capital leases 43,878 12,505
Deferred income taxes and other 651 651
-------- -------
Total liabilities 53,906 23,502
-------- -------
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value; authorised 2,000,000 shares,
issued and outstanding - none
Common stock, $0.01 par value; authorised 30,000,000 shares,
issued and outstanding 10,017,000 and 9,940,000 shares 100 99
Additional paid - in capital 62,156 62,221
Retained earnings 6,028 4,905
-------- -------
68,284 67,225
-------- -------
Total stockholders' equity $122,190 $90,727
======== =======
</TABLE>
5. OWNERSHIP
Transworld Inc.'s principal shareholders are Hyperion Partners II L.P. ("HPLP"),
and Hyperion TW Fund L.P. (collectively "the Funds"). The ultimate general
partner of the Funds is Hyperion Funding II Corp. ("Funding"). The Funds hold,
in aggregate, 9,415,333 shares of common stock representing 62.3 per cent. of
the issued share capital of Transworld Inc. HPLP has conditionally agreed to
subscribe for an additional 1,234,176 shares and hold warrants to subscribe for
3,000,000 shares. The Funds are US organised private investment limited
partnerships, whose limited partners consist of various institutional and
private investors. Funding is wholly owned by Lewis S Ranieri and Scott A Shay
who are the directors of Funding.
Lewis S Ranieri, aged 50, was vice chairman of Salomon Brothers Inc. ("Salomon")
where he helped to develop the capital markets as a source of funds for housing
and commercial real estate and to establish Salomon's leading position in the
mortgage-backed securities market. Mr Ranieri is a founder and director of HPLP.
Mr Ranieri is also chairman and chief executive officer of Ranieri & Co., Inc.,
a registered broker dealer.
40
<PAGE> 41
Scott A Shay, aged 39, was a director of Salomon where he was responsible at
various times for the thrift mergers and acquisitions practice and for mortgage
banking financing and mergers and acquisitions. Mr Shay is a founder and
director of HPLP. Mr Shay is also managing director of Ranieri & Co., Inc.
HPLP is a fund of $251.5 million of equity call capital and has invested:
- - $16.5 million in Capital Lease Funding, L.P. which finances properties
leased to investment grade tenants;
- - $24 million in Cardholder Management Services, L.P. which provides credit
card services to credit card issuing banks and credit unions; and
- - $50 million of the issued common stock of Transworld Inc.
In addition, HPLP is committed to backing a team of real estate development
professionals, who will act as developer of residential communities in
well-located small towns. HPLP intends to invest up to $15 million in the early
stages of these development activities.
Hyperion TW Fund L.P. is a fund of $40.65 million organised solely for the
purpose of investing in Transworld Inc.
6. Pending acquisition
Transworld Inc. has pending and uncompleted the acquisition of VIP Health
Services, Inc. and Kwik Care, Ltd, nursing and home-help services providers in
the New York metropolitan area. In the year ended 31 December 1996, these two
companies reported aggregate turnover of some $29 million (1995: $35 million)
and reported aggregate proforma net income after tax of $349,000 (1995: loss
$978,000). The outstanding consideration payable by Transworld Inc., should the
acquisition be completed, amounts to $8.0 million.
7. Material changes
In January 1997, Transworld Inc. acquired a 49 per cent. interest in Health
Management, Inc. ("HMI") for $8,964,292 payable in cash, and has entered into a
conditional agreement providing for the acquisition of the remainder of HMI for
$2.8 million payable in cash, subject to the satisfaction of the conditions
contained therein. Completion of this acquisition is expected by July 1997. In
addition, Transworld Inc. has entered into agreements to purchase certain debts
of HMI as set out in paragraph 6(a) of Appendix V of this document. HMI provides
integrated pharmaceutical management services to patients with chronic medical
conditions. For the year ended 30 April 1996 and the nine months ended 31
January 1997 (unaudited) respectively, HMI reported net sales of $159 million
and $120 million and net losses of $10.9 million and $31.3 million.
On 21 April 1997, Hyperion Partners II L.P. and its affiliate, Hyperion TW Fund
L.P., invested $50.7 million of equity capital in Transworld Inc. and on 26
March 1997 Hyperion Partners II L.P. conditionally subscribed for an additional
$12.2 million of such equity. Following these transactions, there are 15,120,402
shares of common stock of Transworld Inc. in issue, a further 1,234,176 such
shares have been conditionally subscribed for and warrants and options are
outstanding to subscribe for 5,453,486 such shares.
Save as disclosed in this Appendix II, there have been no material changes in
the financial or trading position of Transworld Inc. since 31 October 1996, the
date to which the last published audited accounts were made up.
41
<PAGE> 42
APPENDIX III FINANCIAL AND OTHER INFORMATION ON TRANSWORLD
1. INCORPORATION AND REGISTERED OFFICE
Transworld was incorporated in England and Wales on 14 May 1997 under the
Companies Act 1985 as a private limited company. The registered office of
Transworld is at 5 Appold Street, London EC2A 2HA.
2. DIRECTORS
The directors of Transworld are Robert W Fine and Wayne A Palladino.
3. SHARE CAPITAL
The authorised share capital of Transworld is Pound Sterling 2,500,000 divided
into 2,500,000 ordinary shares of Pound Sterling 1 each, 175,300 of which are
issued and credited as fully paid up. All the shares are beneficially owned by
Transworld Inc.
4. FINANCIAL STATEMENTS
Transworld has not published any accounts since its incorporation.
5. MATERIAL CHANGES
Transworld purchased 1,765,000 Omnicare Shares on 28 May 1997 pursuant to a sale
and purchase agreement entered into between Transworld and Hyperion Partners II
L.P. for an aggregate consideration of $2.86 million.
On 28 May 1997, Transworld entered into the subscription agreement described in
paragraph 6(a)(vii) of Appendix V. Save as set out in this paragraph 5
Transworld has not traded since its incorporation.
42
<PAGE> 43
APPENDIX IV FINANCIAL AND OTHER INFORMATION ON OMNICARE
1. FINANCIAL STATEMENTS
(1) CONSOLIDATED PROFIT AND LOSS ACCOUNTS
A summary of the consolidated profit and loss accounts of Omnicare for the three
financial years ended 31 December 1996, extracted from Omnicare's published
audited accounts, are set out below:
<TABLE>
<CAPTION>
Years ended 31 December
1994 1995 1996 1996 1996
Continuing
Notes Acquisition operations Total
Pound Sterling Pound Sterling Pound Sterling Pound Sterling Pound Sterling
'000 '000 '000 '000 '000
<S> <C> <C> <C> <C> <C> <C>
Turnover 1,667 1,772 5,484 1,898 7,382
Cost of sales (577) (569) (3,907) (696) (4,603)
---------- ---------- ----------- ---------- ----------
Gross profit 1,090 1,203 1,577 1,202 2,779
Operating costs (573) (599) (968) (703) (1,671)
---------- ---------- ----------- ---------- ----------
OPERATING PROFIT
BEFORE MANAGEMENT
CHARGES (iv) 517 604 609 499 1,108
Non-recurring ----------- ----------
management charges (89) _ _
---------- ---------- ---------
Operating profit 428 604 1,108
Interest payable (v) (8) (1) (3)
Interest receivable _ 9 23
---------- ---------- ----------
PROFIT ON ORDINARY
ACTIVITIES
BEFORE TAXATION 420 612 1,128
Taxation (vi) (85) (188) (380)
---------- ---------- ----------
Profit for the period 335 424 748
Dividends _ (34) (192)
---------- ---------- ----------
Retained profit after
taxation for the year
transferred to reserves 335 390 556
========== ========== ==========
Earnings per ordinary
share (pence) (viii) 5.4p 6.6p 8.0p
Earnings per ordinary
share adjusted for
non-recurring
management charges
(pence) 6.4p 6.6p 8.0p
Dividends per
ordinary share (pence) (vii) _ 0.5p 1.625p
========== ========== ==========
</TABLE>
All figures in the profit and loss accounts relate to continuing operations.
There are no recognised gains and losses other than those included in the
profits as stated above and accordingly no separate statement of total
recognised gains and losses has been prepared.
43
<PAGE> 44
(2) STATEMENT OF MOVEMENT ON RESERVES
<TABLE>
<CAPTION>
Share Profit and
Goodwill Other premium loss
reserves reserves account account Total
Pound Sterling Pound Sterling Pound Sterling Pound Sterling Pound Sterling
'000 '000 '000 '000 '000
<S> <C> <C> <C> <C> <C>
At 1 January 1996 _ 25 203 441 669
Issue of shares _ _ 4,776 _ 4,776
Profit retained for the year _ _ _ 556 556
Goodwill written off (4,787) _ _ _ (4,787)
--------- -------- -------- ---------- -------
At 31 December 1996 (4,787) 25 4,979 997 1,214
========= ======== ======== ========== =======
</TABLE>
(3) CONSOLIDATED BALANCE SHEET
The consolidated balance sheet of Omnicare as at 31 December 1996, extracted
from Omnicare's published audited accounts as at that date, is set out below:
<TABLE>
<CAPTION>
31 December
1996
Notes Pound Sterling
'000
<S> <C> <C>
Fixed assets
Tangible assets (ix) 1,354
-------
Current assets
Stocks (x) 567
Debtors (xi) 2,741
Cash at bank and cash equivalents 595
-------
3,903
Creditors: amounts falling due within one year (xii) 2,727)
-------
Net current assets 1,176
-------
Total assets less current liabilities 2,530
Provisions for liabilities and charges (xiii) (132)
-------
Net assets 2,398
=======
Capital and reserves
Called up share capital (xiv) 1,183
Share premium account 4,979
Goodwill reserve (4,787)
Other reserves 26
Profit and loss account 997
-------
Shareholders' funds (xv) 2,398
=======
</TABLE>
44
<PAGE> 45
(4) CONSOLIDATED STATEMENT OF CASH FLOWS
The consolidated statement of cash flows of Omnicare for the year ended 31
December 1996, extracted from Omnicare's published audited accounts, is set out
below:
<TABLE>
<CAPTION>
Note 1996
Pound Sterling
'000
<S> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES (xx) 726
-------
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest received 23
Interest paid (3)
-------
20
-------
TAXATION
UK corporation tax paid (164)
-------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (332)
Receipts from sales of tangible fixed assets 26
-------
306
-------
ACQUISITIONS AND DISPOSALS
Purchase of business (xvii) (5,469)
-------
EQUITY DIVIDENDS PAID (108)
-------
CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (5,301)
FINANCING
Issue of ordinary share capital 5,500
Expenses paid in connection with share issue (224)
-------
5,276
-------
DECREASE IN CASH IN THE YEAR (xxi) (25)
=======
</TABLE>
45
<PAGE> 46
(5) NOTES TO THE FINANCIAL INFORMATION
(i) Accounting policies
The financial statements have been prepared in accordance with applicable
accounting standards. The particular accounting policies adopted are
described below.
Accounting convention
The financial information is prepared under the historical cost
convention.
Basis of consolidated accounts
The accounts incorporate the audited assets and liabilities and results of
subsidiary undertakings. Transactions and balances between group companies
have been eliminated. The combination of Omnicare and The Omnicare Group
Limited has been accounted for under merger accounting rules. Amcare
Limited is consolidated using acquisition accounting.
Goodwill
On the acquisition of a business fair values are attributed to the net
assets acquired. Goodwill, which represents the difference between the
purchase consideration and the fair values of the net assets acquired, is
written off against reserves in the year of acquisition.
Tangible fixed assets
Depreciation is provided on cost in equal annual instalments over the
estimated useful lives of the assets. The rates of depreciation are as
follows:
<TABLE>
<S> <C>
Freehold property 50 years
Leasehold improvements 10 years
Motor vehicles 4 years
Oxygen concentrators 7 years
Oxygen cylinders 20 years
Other plant and machinery 3-7 years
Fixtures, fittings and computer equipment 3-5 years
</TABLE>
Investments
Investments are stated at cost less provision for any permanent diminution
in value.
Stocks
Stocks are valued at the lower of cost and net realisable value, on a
first in first out basis.
Deferred taxation
Deferred taxation is provided on timing differences, arising from the
different treatment of items for accounts and taxation purposes, which are
expected to reverse in the future, calculated at rates at which it is
estimated that tax will arise.
Leases
Assets obtained under finance leases and hire purchase contracts are
capitalised at their fair value on acquisition and depreciated over their
estimated useful lives. The finance charges are charged to the profit and
loss account over the period of the lease in proportion to the capital
element outstanding.
Operating lease rentals are charged to income in equal annual amounts over
the lease term.
Pension costs
The group makes contributions to the personal pension schemes of certain
employees.
The amount charged against profits represents the contributions payable to
these schemes in respect of the accounting period.
Turnover
Turnover represents amounts derived from the provision of goods and
services which fall within the group's ordinary activities after the
deduction of trade discounts and value added tax derived entirely within
the UK.
(ii) Details of acquisition
On 28 June 1996 a subsidiary of Omnicare, Amcare Limited (formerly Oval
1073 Limited, a shell company) purchased the trade and net assets of Rock
Head Developments Limited (formerly Amcare Limited) for a cash
consideration of Pound Sterling 5,011,000. The fair value of net assets
acquired was Pound Sterling 681,781
46
<PAGE> 47
(see note xvii). The goodwill arising of Pound Sterling 4,787,040 has been
written off against reserves in the accounts of Amcare Limited. This was
financed by the issue of share capital by Omnicare on AIM as described in
note (xiv).
(iii) Information regarding directors and employees
<TABLE>
<CAPTION>
1994 1995 1996
Pound Sterling Pound Sterling Pound Sterling
'000 '000 '000
<S> <C> <C> <C>
Directors' emoluments
Fees -- -- 4
Salaries and taxable benefits 4 38 93
Performance related payments -- 4 --
----- ----- -----
4 42 97
Pension scheme contributions 1 4 9
----- ----- -----
5 46 106
===== ===== =====
</TABLE>
The emoluments of the highest paid director were Pound Sterling 46,656
(1995: Pound Sterling 45,842, 1994: Pound Sterling 4,732). The chairman
did not receive emoluments in any of the three years.
The emoluments of other directors (excluding pension contributions) were
within the following ranges:
<TABLE>
<CAPTION>
1994 1995 1996
No. No. No.
<S> <C> <C> <C>
Pound Sterling 0 - Pound Sterling 5,000 1 2 2
Pound Sterling 10,001 - Pound Sterling 15,000 -- -- 1
Pound Sterling 35,001 - Pound Sterling 40,000 -- -- 1
</TABLE>
Related party transactions
During the year ended 31 December 1996, M S Hanley received Pound Sterling
7,813 for consultancy services performed before he became a director and
C L Kernahan received Pound Sterling 257,636 in relation to the
acquisition of the trade and assets of Amcare Limited.
<TABLE>
<CAPTION>
1994 1995 1996
No. No. No.
<S> <C> <C> <C>
Average number of persons employed
Sales and distribution 19 19 40
Administration 5 4 51
----- ----- -----
24 23 91
===== ===== =====
<CAPTION>
1994 1995 1996
Pound Pound Pound
Sterling Sterling Sterling
'000 '000 '000
<S> <C> <C> <C>
Staff costs during the period (including directors)
Wages and salaries 351 372 870
Social security costs 37 37 77
Other pension costs 8 7 22
----- ----- -----
396 416 969
===== ===== =====
</TABLE>
(iv) Operating profit
<TABLE>
<CAPTION>
1994 1995 1996
Pound Pound Pound
Sterling Sterling Sterling
'000 '000 '000
<S> <C> <C> <C>
Operating profit is after charging/(crediting)
Profit on disposal of fixed assets (1) (1) (6)
Depreciation 117 99 172
Operating lease rentals - machinery 106 114 139
- property 34 31 72
Auditors' remuneration - audit services 6 8 21
- other services 2 5 4
===== ===== =====
</TABLE>
47
<PAGE> 48
(v) Interest payable and similar charges
<TABLE>
<CAPTION>
1994 1995 1996
Pound Sterling '000 Pound Sterling '000 Pound Sterling '000
<S> <C> <C> <C>
Bank loans, overdrafts and other loans repayable within
five years 7 1 3
Finance leases and hire purchase contracts 1 -- --
--- --- ---
8 1 3
=== === ===
</TABLE>
(vi) Tax on profit on ordinary activities
<TABLE>
<CAPTION>
1994 1995 1996
Pound Sterling '000 Pound Sterling '000 Pound Sterling '000
<S> <C> <C> <C>
United Kingdom corporation tax at 33 per cent. (1995 --33 per
cent., 1994 -- 33 per cent.) based on the profit for
the period 56 166 345
Deferred tax 29 22 37
Adjustment in respect of prior years -- -- (3)
--- --- ---
85 188 379
=== === ===
</TABLE>
(vii) Dividends
<TABLE>
<CAPTION>
1994 1995 1996
Pound Sterling '000 Pound Sterling '000 Pound Sterling '000
<S> <C> <C> <C>
Interim paid of 0.625p per ordinary share (1995 -- Pound
Sterling nil, 1994 -- Pound Sterling nil) -- -- 74
Final proposed dividend of 1p per ordinary share
(1995 -- 0.5p, 1994 -- Pound Sterling nil) -- 34 118
--- --- ---
-- 34 192
</TABLE>
(viii) Earnings per share
The calculation of earnings per share is based on profits of Pound
Sterling 748,448 (1995 -- 423,524, 1994 -- 334,647) and an average of
9,333,334 (1995 -- 6,361,110, 1994 -- 6,166,666) ordinary shares in issue
during the year.
If all outstanding share options were exercised then earnings would be
7.6p per share (1995 -- 6.6p per share, 1994 -- no material dilution).
(ix) Tangible fixed assets
<TABLE>
<CAPTION>
Oxygen
Leasehold concen-
Freehold improve- Motor trators and
property ments vehicles cylinders
Pound Sterling '000 Pound Sterling '000 Pound Sterling '000 Pound Sterling '000
<S> <C> <C> <C> <C>
Cost
At 1 January 1996 -- 54 42 1,704
Additions -- -- 39 279
Business acquired 92 4 27 --
Disposals -- -- (42) (3)
---- ---- ---- -----
At 31 December 1996 92 58 66 1,980
---- ---- ---- -----
Accumulated depreciation
At 1 January 1996 -- 9 28 847
Charge for the year 1 7 14 105
Disposals -- -- (26) --
---- ---- ---- -----
At 31 December 1996 1 16 16 952
---- ---- ---- -----
Net book value
At 31 December 1996 91 42 50 1,028
==== ==== ==== =====
At 31 December 1995 -- 45 15 857
==== ==== ==== =====
</TABLE>
<TABLE>
<CAPTION>
Plant,
fixtures and
computer
equipment Total
Pound Sterling '000 Pound Sterling '000
<S> <C> <C>
Cost
At 1 January 1996 175 1,975
Additions 14 332
Business acquired 161 283
Disposals -- (45)
---- -----
At 31 December 1996 350 2,545
---- -----
Accumulated depreciation
At 1 January 1996 162 1,045
Charge for the year 45 172
Disposals -- (26)
---- -----
At 31 December 1996 207 1,191
---- -----
Net book value
At 31 December 1996 143 1,354
==== =====
At 31 December 1995 14 931
==== =====
</TABLE>
The group had capital commitments contracted for but not provided at 31 December
1996 of Pound Sterling 319,310.
48
<PAGE> 49
(x) Stocks
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Goods for resale 553
Maintenance materials 14
---
567
===
</TABLE>
(xi) Debtors
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Trade debtors 2,589
Dividends receivable --
Amounts due from subsidiary undertakings --
Other debtors 29
Prepayments and accrued income 123
-----
2,741
=====
</TABLE>
(xii) Creditors amounts falling due within one year
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Trade creditors 1,965
Amounts owed to subsidiary undertakings --
Corporation tax 331
Other taxation and social security 124
Other creditors 37
Accruals and deferred income 152
Proposed dividends 118
-----
2,727
=====
</TABLE>
(xiii) Provisions for liabilities and charges
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Movements on deferred taxation in the year:
Balance at 1 January 1996 95
Charge for the year 37
----
Balance at 31 December 1996 132
====
</TABLE>
<TABLE>
<CAPTION>
Provided
1996
Pound
Sterling
'000
<S> <C>
Depreciation in excess of capital allowances 132
====
</TABLE>
There is Pound Sterling 140,106 of unprovided deferred tax asset within the
group, resulting from capital losses.
(xiv) Called up share capital
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Authorised
20,000,000 ordinary shares of 10p each 2,000
======
Called up, allotted and fully paid
11,833,333 ordinary shares of 10p each 1,183
======
</TABLE>
5,000,000 10p ordinary shares were allotted during the year. The
consideration received was 110p per share. The aggregate nominal value of
shares issued was Pound Sterling 500,000. Standard voting rights at one
vote per ordinary share are attached to the shares allotted which rank pari
passu with the other shares in issue.
49
<PAGE> 50
(xv) Reconciliation of movements in shareholders' funds
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Profit for the financial year 748
Dividends (192)
------
556
Issue of shares 5,276
Goodwill written off (4,787)
------
Net addition to shareholders' funds 1,045
Opening shareholders' funds 1,353
------
Closing shareholders' funds 2,398
======
</TABLE>
(xvi) Operating commitments
At 31 December 1996, the Group was committed to making the following
payments during the next year in respect of operating leases:
<TABLE>
<CAPTION>
Land and
buildings Other Total
Pound Pound Pound
Sterling Sterling Sterling
'000 '000 '000
<S> <C> <C> <C>
Leases which expire:
Within one year 34 12 46
Within two to five years -- 150 150
After five years 80 -- 80
--- --- ---
114 162 276
=== === ===
</TABLE>
(xvii) Purchase of business
<TABLE>
<CAPTION>
Fair value Adjusted
Cost adjustments cost
Pound Pound Pound
Sterling Sterling Sterling
'000 '000 '000
<S> <C> <C> <C>
Amcare Limited
Net assets acquired:
Tangible fixed assets 284 -- 284
Stocks 497 -- 497
Debtors 159 -- 159
Creditors (158) (100) (258)
----- ----- -----
782 (100) 682
----- ----- -----
Goodwill 4,787
-----
Cost of acquisition 5,469
=====
Satisfied by:
Consideration 5,011
Acquisition expenses 458
-----
Total cash 5,469
=====
</TABLE>
The business acquired during the year contributed Pound Sterling 268,423 to
the group's net operating cash flows, received Pound Sterling 3,243 in
respect of net returns on investments and servicing of finance, paid nil in
respect of taxation and used Pound Sterling 7,760 for investing activities.
No cash was acquired on the acquisition of Amcare Limited, therefore the
consideration and expenses represent the net outflow of cash in respect of
the purchase of the business.
The fair value adjustment has been made to reflect the expected cost of
certain onerous contracts purchased with the trade and assets.
50
<PAGE> 51
(xviii) Pension scheme
The Group contributes to the personal pension schemes of certain
employees. The pension cost charge represents contributions payable by
Omnicare to these schemes during the year. No contributions were
outstanding at the year end.
(xix) Contingent liabilities
Certain group companies have entered into cross guarantees in respect of
the bank facilities of group undertakings secured by charges over the
assets of those group undertakings. At 31 December 1996 the amounts drawn
down under the facilities by group undertakings was Pound Sterling nil
(1995 -- Pound Sterling nil).
(xx) Reconciliation of operating profit to operating cash flows
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Operating profit 1,108
Depreciation 172
Profit on sale of fixed assets (6)
Increase in stocks (52)
Increase in debtors (2,182)
Increase in creditors 1,686
------
Net cash inflow from operating activities 726
======
</TABLE>
(xxi) Analysis of changes in cash during the year
<TABLE>
<CAPTION>
1996
Pound
Sterling
'000
<S> <C>
Balance at beginning of year 620
Net cash outflow (25)
----
Balance at end of year 595
====
</TABLE>
<TABLE>
<CAPTION>
Change in
1996 1995 the year
Pound Pound Pound
Sterling Sterling Sterling
'000 '000 '000
<S> <C> <C> <C>
Cash at bank and in hand 595 620 (25)
=== === ===
</TABLE>
2. MATERIAL CHANGES
Save as disclosed in this Appendix IV and the letter from the Deputy
Chairman of Omnicare set out on pages 4 and 5 of this document, there have
been no material changes in the financial or trading position of Omnicare
since 31 December 1996, the date to which the latest published audited
accounts were made up.
3. STATUTORY INFORMATION
The above financial information relating to The Omnicare Group does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985 (the "Act"). Statutory accounts for the three financial
years ended 31 December 1996 have been delivered to the Registrar of
Companies. In respect of the statutory accounts for the three financial
years ended 31 December 1996, the auditors of Omnicare made unqualified
reports under section 235 of the Act and such reports did not contain a
statement under section 237(2) or (3) of the Act.
51
<PAGE> 52
APPENDIX V ADDITIONAL INFORMATION
1. RESPONSIBILITY
The directors of Omnicare, whose names appear in paragraph 2 below, accept
responsibility for the information contained in this document relating to
Omnicare and its subsidiaries, themselves and their immediate families. The
directors of Transworld Inc., whose names appear in paragraph 1 of Appendix II,
and the directors of Transworld, whose names appear in paragraph 2 of Appendix
III, accept responsibility for all the other information contained in this
document. To the best of the knowledge and belief of the directors of Transworld
Inc., the directors of Transworld and the directors of Omnicare (who have taken
all reasonable care to ensure that such is the case) the information contained
herein for which they are respectively responsible is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
2. DIRECTORS
The directors of Omnicare are as follows:
T M Aitken Non-executive Chairman
M G Scorey Deputy Chairman
C L Kernahan Chief Operating Director
M S Hanley Executive Director
S P Gullick Managing Director
R G Green Non-executive Director
3. DISCLOSURE OF INTERESTS AND DEALINGS
In this document "disclosure period" means the period commencing on 24 April
1996, being the date 12 months prior to the commencement of the Offer Period,
and ending on 30 May 1997, being the latest practicable date prior to the
posting of this document.
(a) Shareholdings and dealings in Transworld or Transworld Inc. shares
(i) As at the close of business on 30 May 1997, Mr T M Aitken, a director
of Omnicare, held options to subscribe for 500,000 shares of common
stock of Transworld Inc. at an exercise price of $11.375 per share.
100,000 of these options are exerciseable immediately, and the
remaining options become exerciseable in three equal tranches on 15
January 1998, 15 January 1999 and 15 January 2000; these options expire
on 15 January 2007.
(ii) Save as disclosed in this paragraph 3, neither Omnicare, nor any person
acting in concert with Omnicare, nor any of the directors of Omnicare,
nor any member of their immediate families owns or controls or is
interested in (beneficially or otherwise), nor has any arrangement in
relation to any Transworld or Transworld Inc. shares or in any
securities convertible into, rights to subscribe for or options
(including traded options) or derivatives referenced to such shares,
nor has any such person dealt for value therein during the disclosure
period.
(b) Shareholdings and dealings in Omnicare Shares
(i) As at the close of business on 30 May 1997 (the latest practicable date
prior to the posting of this document), Transworld held 1,765,000
Omnicare Shares.
(ii) As at the close of business on 30 May 1997, Mr T M Aitken, a director
of Transworld Inc., held options to subscribe for 100,000 Omnicare
Shares as detailed in sub-paragraph (vi) below.
(iii) During the disclosure period, dealings for value by Transworld and
persons deemed to be acting in concert with Transworld in Omnicare
Shares were as follows:
<TABLE>
<CAPTION>
Number of
Omnicare Price Per
Date Party Transaction Shares Share
<S> <C> <C> <C> <C>
29 January 1997 Hyperion Partners II L.P. Purchase 1,765,000 $1.458
28 May 1997 Hyperion Partners II L.P. Sale 1,765,000 99p
28 May 1997 Transworld Purchase 1,765,000 99p
</TABLE>
52
<PAGE> 53
(iv) Irrevocable undertakings to accept the Offer have been received as
follows, representing in each case the entire holding of Omnicare
Shares of the relevant person:
<TABLE>
<CAPTION>
Number of Omnicare Shares
Name irrevocably committed
<S> <C>
R G Green 11,250
Stanton Industries Limited 4,238,250
</TABLE>
(v) During the disclosure period the persons referred to in paragraph (iv)
above have dealt for value in Omnicare Shares as follows:
<TABLE>
<CAPTION>
Number of
Omnicare Price Per
Date Party Transaction Shares Share (p)
<S> <C> <C> <C> <C>
29 May 1996 Stanton Industries Limited Sale 71,725 130
27 June 1996 Stanton Industries Limited Sale 45,862 110
27 June 1996 Stanton Industries Limited Purchase 147,504 110
</TABLE>
(vi) The interests, all of which are beneficial unless otherwise stated, of
the directors of Omnicare and their immediate families and connected
persons (within the meaning of section 346 of the Companies Act 1985)
in Omnicare Shares (as shown in the register required to be kept under
Section 325 of the Companies Act 1985 or which have been notified to
Omnicare pursuant to sections 324 or 328 of the Companies Act 1985) at
30 May 1997 were as follows:
<TABLE>
<CAPTION>
Omnicare
Shares under
option Exercise
Director Omnicare Shares Date of Grant Number Price (p)
<S> <C> <C> <C> <C>
T M Aitken -- 19 September 1995 75,000 78
-- 2 April 1997 25,000 131.25
M G Scorey -- 19 September 1995 75,000 78
-- 2 April 1997 25,000 131.25
C L Kernahan -- 2 April 1997 200,000 131.25
M S Hanley -- 2 April 1997 200,000 131.25
S P Gullick -- 12 September 1995 100,000 60
R G Green 11,250 19 September 1995 75,000 78
</TABLE>
All of the options referred to above are exerciseable between 3 and 10
years from the date of grant, save that they may be exercised prior to
3 years from the date of grant in certain limited circumstances,
specified in the rules of the Omnicare Share Option Scheme, including a
change of control of Omnicare.
53
<PAGE> 54
(vii) During the disclosure period, Henry Cooke, Lumsden plc, a company under
the same ownership as Henry Cooke, has dealt for value in Omnicare
Shares on behalf of discretionary clients as follows:
<TABLE>
<CAPTION>
Number of
Omnicare Price Per
Date Transaction Shares Share (p)
<S> <C> <C> <C>
28 June 1996 Purchase 349,234 110
2 July 1996 Sale 15,899 114
11 July 1996 Purchase 3,000 112
16 July 1996 Sale 2,556 108
20 August 1996 Purchase 5,000 113
21 August 1996 Sale 18,076 107
30 August 1996 Purchase 2,500 109
30 August 1996 Sale 11,446 108
13 September 1996 Sale 5,000 107
8 October 1996 Sale 3,725 105
16 October 1996 Purchase 2,500 107
19 November 1996 Sale 3,725 107
29 November 1996 Sale 2,725 106
14 January 1997 Purchase 7,500 111
15 January 1997 Purchase 1,185 109
29 January 1997 Sale 2,500 120
31 January 1997 Purchase 4,500 126
6 February 1997 Sale 10,000 127
11 February 1997 Sale 2,500 128
20 March 1997 Sale 2,373 133
25 March 1997 Sale 5,000 130
4 April 1997 Sale 2,373 128
9 April 1997 Sale 9,164 128
11 April 1997 Sale 7,500 128
16 April 1997 Sale 10,000 127
24 April 1997 Sale 3,000 161
</TABLE>
On 30 May 1997, Henry Cooke, Lumsden plc held 325,324 Omnicare Shares
on behalf of discretionary clients.
(viii) During the disclosure period, English Trust has dealt for value in
Omnicare Shares on behalf of discretionary clients as follows:
<TABLE>
<CAPTION>
Number of
Omnicare Price Per
Date Transaction Shares Share (p)
<S> <C> <C> <C>
4 June 1996 Purchase 39,050 110
25 June 1996 Purchase 10,610 110
28 June 1996 Purchase 20,000 112.5
28 June 1996 Sale 13,543 112.5
20 January 1997 Sale 15,000 112.5
20 January 1997 Sale 16,117 114.5
5 February 1997 Sale 25,000 126
</TABLE>
On 30 May 1997 neither English Trust nor its discretionary clients held
any Omnicare Shares.
54
<PAGE> 55
(ix) During the disclosure period, Astaire & Partners Limited ("Astaire"),
nominated broker to Omnicare, has dealt for value in Omnicare Shares
for their own account as follows:
<TABLE>
<CAPTION>
Number of
Omnicare Price Per
Date Transaction Shares Share (p)
<S> <C> <C> <C>
30 April 1996 Purchase 5,000 128
21 May 1996 Sale 20,000 133
5 June 1996 Sale 5,000 128
28 June 1996 Sale 32,340 110
</TABLE>
During the disclosure period, Astaire dealt for value in Omnicare
Shares on behalf of a discretionary client in subscribing for 1,500
Omnicare Shares at 110p per share under an open offer on 28 June 1996.
On 29 May 1997, Astaire gave notice of exercise to Omnicare in respect
of their option over 75,000 Omnicare Shares as described in paragraph
6(b)(vi) below. As at 30 May 1997, the Omnicare Shares to be issued
pursuant to this exercise had not been issued.
On 30 May 1997, Astaire held 4,500 Omnicare Shares on behalf of
discretionary clients.
(c) General
(i) Save as disclosed in this paragraph 3, neither Transworld nor
Transworld Inc., nor any of the directors of Transworld or Transworld
Inc., nor any members of their immediate families, nor any person
acting in concert with Transworld, nor any person who has irrevocably
undertaken to accept the Offer, nor any person with whom Transworld or
any person acting in concert with Transworld has an arrangement of the
kind referred to in (iii) below owned or controlled or (in the case of
directors of Transworld Inc. and their immediate families) was
interested in any relevant securities on 30 May 1997 (the latest
practicable date prior to the posting of this document) nor has any
such person dealt for value therein during the disclosure period.
(ii) Save as disclosed in this paragraph 3, neither Omnicare, nor any person
acting in concert with Omnicare, nor any of the directors of Omnicare
nor any member of their immediate families was interested in any
relevant securities on 30 May 1997, nor has any such person dealt for
value therein during the disclosure period and no bank, stockbroker,
financial or other professional adviser (other than an exempt
market-maker) to Omnicare (nor any person controlling, controlled by,
or under the same control as such bank, stockbroker, financial or other
professional adviser) nor any subsidiary of Omnicare nor any pension
fund of Omnicare or of any of its subsidiaries, nor any person whose
investments are managed on a discretionary basis by a fund manager
(other than an exempt fund manager) which is controlled by, controls or
is under the same control as Omnicare or any bank, stockbroker,
financial or other professional adviser, to Omnicare, owned or
controlled any relevant securities on 30 May 1997, nor has any such
person dealt for value therein during the period from 24 April 1997 to
30 May 1997 (being the latest practicable date prior to the posting of
this document).
(iii) Neither Transworld, Transworld Inc. nor any of their associates nor any
person acting in concert with Transworld nor Omnicare nor any of its
associates has any arrangement in relation to relevant securities. For
these purposes "arrangement" includes any indemnity or option
arrangements and any agreement or understanding, formal or informal, of
whatever nature, relating to relevant securities which may be an
inducement to deal or refrain from dealing.
(iv) References in this paragraph 3 to:
(a) an "associate" are to:
(1) subsidiaries and associated companies of Transworld
or Transworld Inc. or Omnicare and companies of which
any such subsidiaries or associated companies are
associated companies;
(2) banks, financial and other professional advisers
(including stockbrokers) to Transworld or Transworld
Inc. or Omnicare or a company covered in (1) above,
including persons controlling, controlled by or under
the same control as such banks, financial or other
professional advisers;
(3) the directors of Transworld or Transworld Inc. or
Omnicare and the directors of any company covered in
(1) above (together in each case with their close
relatives and related trusts);
55
<PAGE> 56
(4) the pension funds of Transworld or Transworld Inc. or
Omnicare or a company covered in (1) above; and
(5) (in relation to Transworld or Transworld Inc.) an
investment company, unit trust or other person whose
investments an associate (as otherwise defined in
this paragraph (a)) manages on a discretionary basis,
in respect of the relevant investment accounts;
(b) a "bank" does not apply to a bank whose sole relationship with
Transworld or Transworld Inc. or Omnicare or a company covered
in paragraph (a)(1) above is the provision of normal
commercial banking services or such activities in connection
with the Offer as handling acceptances and other registration
work; and
(c) "relevant securities" means Omnicare Shares and securities
convertible into, rights to subscribe for and options
(including traded options) in respect thereof and derivatives
referenced thereto.
(v) For the purposes of this paragraph 3, ownership or control of 20 per
cent. or more of the equity share capital of a company is regarded as
the test of associated company status and "control" means a holding, or
aggregate holdings, of shares carrying 30 per cent. or more of the
voting rights attributable to the share capital of a company which are
currently exercisable at a general meeting, irrespective of whether the
holding or aggregate holding gives de facto control.
4. MARKET QUOTATIONS
The following table shows the middle market quotations for Omnicare Shares, as
derived from the AIM Appendix to the London Stock Exchange Daily Official List,
on the first dealing day of each month from January 1997 to June 1997 inclusive,
on 23 April 1997 (being the last dealing day prior to the announcement that the
board of Omnicare had received an approach which might lead to an offer) and on
30 May 1997 (being the latest practicable date before the posting of this
document):
<TABLE>
<CAPTION>
Date Middle Market Quotation(p)
<S> <C>
2 January 102.5
3 February 125.5
3 March 132.5
1 April 130.5
23 April 128.5
1 May 159
30 May 161
</TABLE>
5. SERVICE AGREEMENTS
(a) Charles Kernahan has a service agreement with Omnicare dated 25 April
1996 which entitles him to an annual salary of Pound Sterling 80,000.
The service agreement provides for the benefit of a company car,
pension contributions and private medical insurance for himself, life
assurance and permanent health insurance.
The service agreement is terminable by either party giving the other
twelve months' prior written notice expiring at any time on or after 28
June 1998. Mr Kernahan's salary and benefits are subject to annual
review by Omnicare's remuneration committee and are to be adjusted to
compensate him for the loss of any profit related pay where a scheme is
not in place at any time during his employment. Mr Kernahan is entitled
to a bonus for the current financial year ending 31 December 1997 the
amount of which is dependent on the achievement of personal objectives
and financial performance targets for companies in the Omnicare Group.
The maximum bonus receivable is Pound Sterling 25,000.
Michael Scorey has entered into an agreement dated 3 June 1996 with
Omnicare in respect of his engagement as deputy chairman of Omnicare.
Under such arrangement a fee of Pound Sterling 7,500 per annum is
payable for the provision of his services and benefits are to be
provided in line with those received by other executives. The agreement
provides for the payment of a discretionary bonus, the terms of which
to be agreed between him and Omnicare's remuneration committee. The
agreement can be terminated at any time on one year's notice.
(b) Save as disclosed herein:
(i) there are no service agreements in force between any director
of Omnicare and Omnicare or any of its subsidiaries which do
not expire or cannot be terminated by Omnicare or its relevant
subsidiary within the next 12 months without payment of
compensation (other than statutory compensation);
56
<PAGE> 57
(ii) none of the service agreements described above were entered
into during the 6 months preceding the date of this document,
nor have any amendments been made to any of such service
agreements during that period, save for the introduction of a
bonus scheme for Mr Kernahan.
6. MATERIAL CONTRACTS
(a) Material contracts of the Transworld Group
The following contracts, being contracts entered into other than in the
ordinary course of business, have been entered into by Transworld Inc.
or Transworld since 24 April 1995 (being the date two years before the
commencement of the Offer Period) and are, or may be, material:-
(i) a unit purchase agreement dated as of 20 November 1995 and
entered into between Transworld Inc. and Hyperion Partners II
L.P. ("HPLP") pursuant to which HPLP agreed to purchase up to
an aggregate of 4.4 million units, each unit consisting of one
share of Transworld Inc.'s common stock and 0.6818 of a stock
purchase warrant, for a total consideration of $39.6 million;
(ii) a credit agreement dated as of 31 July 1996 entered into
between Transworld Inc. (1), Bankers Trust Company as
underwriter and agent (2) and various lending institutions (3)
pursuant to which Transworld Inc. entered into a $100 million
senior secured revolving credit facility;
(iii) an agreement and plan of merger dated as of 13 November 1996
(as amended) entered into between Transworld Inc. (1), IMH
Acquisition Corp. (2) and Health Management, Inc. ("HMI") (3)
pursuant to which Transworld Inc. agreed to acquire HMI for a
consideration of $11.8 million. At the date of this document
the acquisition was still outstanding. In connection with the
acquisition of HMI, Transworld Inc. entered into the following
agreements:-
(A) two purchase and sale agreements, both dated as of 12
November 1996, with, respectively, European American
Bank and Chase Manhattan Bank, pursuant to which
Transworld Inc. acquired HMI's senior indebtedness
for $21.26 million;
(B) an agreement dated as of 13 November 1996 entered
into between Transworld Inc. (1), HMI (2), Home Care
Management, Inc. (3), HMI Illinois, Inc. (4), HMI
Pennsylvania, Inc. (5), Health Reimbursement
Corporation (6), HMI Retail Corp., Inc. (7), HMI PMA,
Inc. (8), and HMI Maryland Inc. (9), pursuant to
which Transworld Inc. agreed to lend HMI up to $5
million for working capital and to forebear from
exercising any remedies relating to the senior
indebtedness; and
(C) a stock purchase agreement dated as of 13 November
1996 entered into between HMI and Transworld Inc.
pursuant to which on 14 January 1997 Transworld Inc.
acquired 8,964,292 HMI shares for a cash purchase
price of $8,964,292;
(iv) a stock purchase agreement dated 8 January 1997 entered into
between Transworld Inc. and HPLP pursuant to which HPLP
subscribed for 898,877 shares of Transworld Inc.'s common
stock for an aggregate purchase price of $10 million;
(v) a stock purchase agreement dated 26 March 1997 entered into
between Transworld Inc. and Hyperion TW Fund L.P. ("HTW"), an
affiliate of HPLP, pursuant to which HTW subscribed for
4,116,456 shares of Transworld Inc.'s common stock at a
purchase price of $9.875 per share for a total consideration
of $40.6 million;
(vi) a stock purchase agreement dated 26 March 1997 entered into
between HPLP and Transworld Inc. pursuant to which HPLP
conditionally subscribed for 1,234,176 shares of the common
stock of Transworld Inc. at a purchase price of $9.875 per
share in exchange for the assignment to Transworld Inc. of
certain trade payables of HMI previously acquired by HPLP;
(vii) a subscription agreement dated 28 May 1997 entered into
between Transworld Inc. and Transworld pursuant to which
Transworld Inc. has agreed to fund (A) Transworld's
acquisition from HPLP of 1,765,000 Omnicare Shares and (B) the
consideration payable by Transworld pursuant to the Offer; and
(viii) an agreement completed 28 May 1997 entered into between
Transworld and HPLP pursuant to which Transworld acquired
1,765,000 Omnicare Shares for a total consideration of
$2,855,476.
(b) Material contracts of the Omnicare Group
The following contracts, being contracts entered into other than in the
ordinary course of business, have been entered into by members of the
Omnicare Group since 24 April 1995 (being the date two years before the
commencement of the Offer Period) and are, or may be, material:
57
<PAGE> 58
(i) an agreement dated 5 September 1995 between Omnicare and
Stanton relating to the purchase by Omnicare of the entire
issued share capital of The Omnicare Group Limited in
consideration of the allotment to Stanton of 6,166,656
Omnicare Shares;
(ii) an offer agreement dated 12 September 1995 between Omnicare
(1), the directors of Omnicare (2) and Astaire (3) whereby
Astaire procured subscribers for 666,667 Omnicare Shares at 60
pence per share;
(iii) a letter of undertaking dated 5 September 1995 from Stanton to
Omnicare undertaking that Stanton would not, without the prior
written consent of Omnicare, sell or dispose of any of the
Omnicare Shares then held by it for a period of two years from
18 September 1995;
(iv) a deed of covenant between Charles Kernahan and Omnicare
pursuant to which in return for a payment of Pound Sterling
250,000, Charles Kernahan entered into certain restrictive
covenants to apply for five years from 28 June 1996 relating
to competition with the Omnicare Group, enticement of
employees and passing off. The deed also contains restrictions
on the disclosure of confidential information;
(v) an agreement dated 3 June 1996 between Amcare Limited (now
Rock Head Developments Limited) (1), Oval (1073) Limited (now
Amcare Limited) (2), Omnicare (3) and John Barnes and Judith
Barnes (4) pursuant to which Oval (1073) Limited acquired the
business and assets of Amcare Limited for a consideration of
Pound Sterling 5,011,000;
The agreement contains warranties given jointly and severally
by John Barnes, Judith Barnes and Amcare Limited (including a
warranty on Amcare Limited's accounts for the period ended 29
February 1996) and an indemnity from Amcare Limited;
There is a retention of Pound Sterling 750,000 from the
consideration which is held in an escrow account in the names
of Amcare Limited's and Omnicare's solicitors to provide
security should claims arise pursuant to the agreement. The
fund will be released on 28 June 1997, save to the extent that
any claims are outstanding at such time; and
(vi) an agreement dated 3 June 1996 between Omnicare and Astaire
whereby Astaire procured subscribers for 5,000,000 Shares
subject to clawback in respect of shares subscribed for by
shareholders pursuant to an open offer by Omnicare to its
shareholders. Astaire was granted an option to subscribe for
75,000 Omnicare Shares at 110 pence per share at any time
within 30 months from 24 June 1996.
7. FINANCING
The funds required to make payment under the Offer will be provided by
Transworld Inc. from its existing cash resources pursuant, inter alia, to the
subscription agreement referred to at paragraph 6(a)(vii) above. Transworld Inc.
and Transworld do not intend that the payment of interest on, repayment of or
security for any liability (contingent or otherwise) will depend to any
significant extent on the business of the Omnicare Group.
Henry Cooke is satisfied that Transworld has the necessary financial resources
for it to implement the Offer in full. Full acceptance of the Offer would
involve the payment of approximately Pound Sterling 18.4 million in cash by
Transworld (assuming exercise of all outstanding options).
8. OTHER INFORMATION
(a) The expenses of, and incidental to, the preparation and circulation of
the Offer will be paid by Transworld.
(b) Save as disclosed herein, no agreement, arrangement or understanding
exists between Transworld or any party acting in concert with
Transworld and any of the directors or recent directors, shareholders
or recent shareholders of Omnicare having any connection with or
dependence on the Offer.
(c) No proposal exists in connection with the Offer whereby any payment or
other benefit shall be made or given to any director of Omnicare as
compensation for loss of office or as consideration for or in
connection with his loss of office.
(d) There is no agreement, arrangement or understanding whereby the
beneficial ownership of any of the Omnicare Shares acquired by
Transworld in pursuance of the Offer will be transferred to any other
person, save that Transworld reserves the right to transfer any such
shares to any member of the Transworld Group.
58
<PAGE> 59
(e) Each of Henry Cooke and English Trust has given and has not withdrawn
its written consent to the issue of this document with the inclusion
herein of the references to its name in the form and context in which
it appears and, in the case of English Trust, its recommendation in the
form and context in which it appears.
9. SOURCES
Unless otherwise stated, financial information concerning Transworld Inc. and
Omnicare has been derived from the annual report and accounts for the relevant
company for the relevant periods. The financial information concerning
Transworld has been derived from its statutory books and bank records.
10. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection during normal
business hours on any weekday (Saturdays and public holidays excepted) at the
offices of Ashurst Morris Crisp, Broadwalk House, 5 Appold Street, London EC2A
2HA throughout the period during which the Offer remains open for acceptance:
(a) the Memorandum and Articles of Association of Transworld and the
Restated Articles of Organisation (as amended) and By-Laws of
Transworld Inc.;
(b) the Memorandum and Articles of Association of Omnicare;
(c) the audited consolidated accounts of Transworld Inc. for the two years
ended 31 October 1996 and the unaudited quarterly results for the three
months ended 31 January 1997;
(d) the audited consolidated accounts of Omnicare for the two years ended
31 December 1996;
(e) the service agreements of the directors of Omnicare of more than one
year's duration referred to in paragraph 5 above;
(f) the material contracts referred to in paragraph 6 above;
(g) the financing documents referred to in paragraph 7 above;
(h) the letters of consent referred to in paragraph 8(e) above;
(i) the irrevocable undertakings to accept the Offer referred to in
paragraph 3(b)(iv) above;
(j) this document and the Form of Acceptance; and
(k) the rules of the Omnicare Share Option Scheme.
59
