<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 9, 1999
Coram Healthcare Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-11343 33-0615337
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
Incorporation)
Bank One Building
1125 17th Street, Suite 2100
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
(303) 292-4973
Registrant's Telephone Number
<PAGE> 2
Item 5. Other Events.
On April 9, 1999, Coram Healthcare Corporation (the "Company") entered
into Amendment No. 2 (the "Note Amendment")to the Securities Exchange
Agreement(the "Securities Exchange Agreement")dated as of May 6,1998 among the
Company, Coram, Inc., a wholly-owned subsidiary of the Company, Cerberus
Partners, L.P., Goldman Sachs Credit Partners, L.P. and Foothill Capital
Corporation (the "Holders"). The Holders are the holders of the Company's
Series A Senior Subordinated Notes (the "Series A Notes") and Series B Senior
Subordinated Convertible Notes (the "Series B Notes"). Pursuant to the Note
Amendment, the $87.9 million in outstanding principal amount of Series B Notes
will be convertible into shares of the Company's common stock, par value $.001
per share (the "Common Stock"), at a price of $2.00 per share (subject to
customary anti-dilution adjustments). Prior to entering into the Note
Amendment, the Series B Notes were convertible into Common Stock at a price of
$3.00, which price was subject to downward (but not upward) adjustment based on
prevailing market prices for the Common Stock on each of April 13, 1999 and
October 13, 1999. Based on reported closing prices for trading in the Common
Stock prior to April 13, 1999, this conversion price would have been adjusted
to below $2.00 on such date had the Company not entered into the Note
Amendment. Pursuant to the Note Amendment, the parties also increased the
interest rate applicable to the Series A Notes from 9.875% to 11.5% per annum.
As of April 15, 1999, the principal amount outstanding under the Series A Notes
was approximately $157.6 million. An inadvertent scrivener's error in the
original agreement was also corrected.
In connection with the Note Amendment, on April 9, 1999 the Company
also entered into an amendment (the "Rights Plan Amendment") to its Stockholder
Rights Agreement, dated as of June 25, 1997 between the Company and BankBoston,
N.A., as Rights Agent (the "Rights Plan"). The Rights Plan Amendment provides
an exemption from the triggering provisions of the plan for the "beneficial
ownership" (as defined under the Rights Plan) of each of the Holders (and their
respective affiliates and associates) arising as a result of such parties'
holdings (1) of the Series B Notes, (2) of Warrants to purchase Common Stock
issued in connection with the Company's current and former senior credit
facilities and (3) in certain proprietary and customer accounts. Under the
terms of the Rights Plan Amendment, this exemption ceases to apply if any of
such parties acquires beneficial ownership of additional shares of Common
Stock, in which case such person could be or become an "acquiring person"
(within the meaning of the Rights Plan) as a result of any and all of its
holdings if otherwise meeting the criteria set forth in the Rights Plan.
-2-
<PAGE> 3
The descriptions of the Note Amendment and the Rights Plan Amendment
are qualified in their entirety by reference to the Note Amendment and the
Rights Plan Amendment which are filed herewith as Exhibits 1 and 2,
respectively.
Item 7. Exhibits.
1. Amendment No. 2, dated as of April 9, 1999 to the Securities
Exchange Agreement, dated May 6, 1998 and amended as of June
30, 1998, among Coram, Inc., Coram Healthcare Corporation,
Cerberus Partners L.P., Goldman Sachs Credit Partners L.P.
and Foothill Capital Corporation.
2. Amendment No. 1, dated as of April 9, 1999 to Stockholder
Rights Agreement, dated as of June 25, 1997, between Coram
Healthcare Corporation and BankBoston, N.A., as Rights Agent.
3. Form of press release dated April 12, 1999.
-3-
<PAGE> 4
SIGNATURE
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.
CORAM HEALTHCARE CORPORATION
By /s/ WENDY L. SIMPSON
----------------------------------
Wendy L. Simpson,
Executive Vice President
and Chief Financial Officer
Dated: April 16, 1999
<PAGE> 5
EXHIBIT LIST
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------ -------------------
Page No.
- ------------ ----------------------------------------------------------------------------------- -------------------
<S> <C> <C>
1. Amendment No. 2, dated April 9, 1999, to the Securities Exchange Agreement, dated
as of May 6, 1998, among Coram Healthcare Corporation; Coram, Inc.; Cerberus
Partners, L.P.; Goldman Sachs Credit Partners, L.P. and Foothill Capital
Corporation.
- ------------ ----------------------------------------------------------------------------------- -------------------
2. Amendment No. 1, dated April 1, 1999, to the Stockholder Rights
Agreement, dated as of June 25, 1997, between Coram Healthcare
Corporation and BankBoston, N.A.
- ------------ ----------------------------------------------------------------------------------- -------------------
3. Form of press release dated April 12, 1999.
- ------------ ----------------------------------------------------------------------------------- -------------------
</TABLE>
<PAGE> 1
EXHIBIT 1
AMENDMENT NO. 2
TO
SECURITIES EXCHANGE AGREEMENT
AMONG
CORAM, INC.
CORAM HEALTHCARE CORPORATION
AND
CERBERUS PARTNERS, L.P.
GOLDMAN SACHS CREDIT PARTNERS L.P.
FOOTHILL CAPITAL CORPORATION
AS NOTEHOLDERS
DATED: APRIL 9, 1999
<PAGE> 2
Amendment No. 2 (this "Amendment"), dated as of April 9, 1999,
to the Securities Exchange Agreement dated as of May 6, 1998, as heretofore
amended (said Securities Exchange Agreement, as so amended, being the
"Securities Exchange Agreement", and the terms defined therein being used herein
as therein defined unless otherwise defined herein) among CORAM, INC., a
Delaware corporation (the "Company"), CORAM HEALTHCARE CORPORATION, a Delaware
corporation ("Holdings"), CERBERUS PARTNERS, L.P. ("Cerberus"), GOLDMAN SACHS
CREDIT PARTNERS L.P. ("GSCP") and FOOTHILL CAPITAL CORPORATION ("Foothill")
(each a "Noteholder" and, together with any other holders from time to time of
interests in the Series A Notes or Series B Notes, collectively, the
"Noteholders).
W I T N E S S E T H :
WHEREAS, the Original Noteholders, the Company and Holdings
entered into the Securities Exchange Agreement, pursuant to which the Original
Noteholders received, among other things, Series A Notes and Series B Notes, as
the case may be, in exchange for the Original Noteholders' interests in the
Subordinated Rollover Notes and the Warrants; and
WHEREAS, as of the date hereof, the Original Noteholders own
in the aggregate 100% of the outstanding principal amount of the Series A Notes
and Series B Notes; and
WHEREAS, the Series B Notes are convertible into shares of
Common Stock at the option of the Noteholders; and
WHEREAS, the Noteholders have proposed and the Company and
Holdings have agreed to amend certain provisions in the Securities Exchange
Agreement relating to the calculation of the Conversion Price of the Series B
Notes; and
WHEREAS, as consideration for agreeing to such amendment, the
Company and Holdings have agreed to increase the Applicable Series A Rate on the
Series A Notes to 11 1/2% per annum with effect from the Amendment Date (as
hereinafter defined); and
WHEREAS, the Company, Holdings and the Noteholders have agreed
to amend the Securities Exchange Agreement and to enter into this Amendment upon
the terms and subject to the conditions contained herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments to the Securities Exchange Agreement.
Upon the satisfaction of the conditions in Section 4 of this Amendment relating
to the effectiveness of Section 1, the Securities Exchange Agreement is hereby
amended as follows:
(a) Section 1 is hereby amended by deleting the existing
definitions of "First Adjustment Date" and "Second Adjustment Date".
<PAGE> 3
(b) Section 1 is hereby amended by adding the definitions of
"Amendment Date" and "Amendment No. 2" as follows:
"Amendment Date" shall have the meaning ascribed to
it in Amendment No. 2.
"Amendment No. 2" shall mean Amendment No. 2 to the
Securities Exchange Agreement, dated April 9, 1999.
(c) The definition of "Applicable Series A Rate" set forth in
Section 1 of the Securities Exchange Agreement is hereby deleted in its entirety
and replaced with the following:
"Applicable Series A Rate" shall mean from the
Effective Date to the Amendment Date 9-7/8% per annum and
thereafter 11-1/2% per annum.
(d) Section 2.4(b) of the Securities Exchange Agreement is
hereby deleted in its entirety and replaced with the following:
(b) The Company will pay interest, accruing from and
after the Effective Date, on the Series A Notes to each
Noteholder quarterly in arrears on January 15, April 15, July
15 and October 15 of each year, commencing July 15, 1998 (each
an "Interest Payment Date") at the Applicable Series A Rate.
(e) Section 2 is hereby amended by deleting Section 2.13(a) in
its entirety and replacing it with the following:
2.13 Conversion of Series B Notes. (a) Subject to the
provisions for adjustment hereinafter set forth, the Series B
Notes shall be convertible, in whole or in part, at any time
and from time to time, at the option of the holder thereof (a
"Conversion"), up to the outstanding principal amount of
Series B Notes held by such holder thereof at the time of such
conversion into a number of fully paid and nonassessable
shares of Common Stock equal to the quotient obtained by
dividing (A) the principal amount of the Series B Notes to be
converted by (B) the Conversion Price (as hereinafter
defined). The Conversion Price shall be $2.00 per share of
Common Stock. The Conversion Price shall be subject to
adjustments from time to time pursuant to Section 2.13(f)
below.
No fractional shares shall be issued upon the
conversion of any Series B Notes. All shares of Common Stock
(including fractions thereof) issuable upon conversion of
Series B Notes by a holder thereof shall be aggregated for
purposes of determining whether conversion would result in the
issuance of any fractional share. If, after the aforementioned
aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, Holdings shall, in lieu
of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash
2
<PAGE> 4
equal to the Current Market Price of such fraction on the date
of conversion.
(f) Section 2 is hereby amended by deleting Section
2.13(f)(iv) in its entirety and replacing it with the following:
(iv) In case Holdings shall at any time or from time
to time after the Closing Date declare, order, pay or make a
dividend or other distribution (including, without limitation,
any distribution of stock or other securities or property or
rights or warrants to subscribe for securities of Holdings or
any of its Subsidiaries by way of dividend or spinoff), on its
Common Stock, other than dividends or distributions of shares
of Common Stock which are referred to in clause (i) above and
cash dividends paid out of retained earnings, then the
Conversion Price shall be adjusted so that it shall equal the
price determined by multiplying (A) the applicable Conversion
Price on the day immediately prior to the record date fixed
for the determination of stockholders entitled to receive such
dividend or distribution by (B) a fraction, the numerator of
which shall be the Current Market Price per share of Common
Stock at such record date less the Fair Market Value of such
dividend or distribution per share of Common Stock, and the
denominator of which shall be such Current Market Price per
share of Common Stock. No adjustment shall be made pursuant to
this clause (iv) in connection with any transaction to which
Section 2.13(g) applies.
SECTION 2. Representations and Warranties of the Company and
Holdings. Each of the Company and Holdings hereby represents and warrants as to
itself and the Coram Parties that (a) the execution, delivery and performance of
this Amendment have been duly authorized by all necessary corporate action on
the part of such Coram Party and this Amendment and the Securities Exchange
Agreement amended hereby each constitutes a legal, valid and binding obligation
of such Coram Party, enforceable against it in accordance with its terms, (b) no
event has occurred and is continuing on the date hereof that constitutes a
Default or Event of Default or would constitute a Default or Event of Default
after giving effect to this Amendment, and (c) the representations and
warranties of Holdings and the Company contained in Section 4 of the Securities
Exchange Agreement are true and correct both before and after giving effect to
this Amendment, except to the extent such representations and warranties are
stated to be true only as of a particular date, in which case such
representations and warranties were correct on and as of such date.
SECTION 3. Representations and Warranties of the Noteholders.
Each of the Noteholders hereby represents and warrants as to itself that the
execution, delivery and performance of this Amendment have been duly authorized
by all necessary corporate or partnership action on the part of such Noteholder.
SECTION 4. Conditions to Effectiveness. The amendments in
Section 1 of this Amendment shall become effective on the date (the "Amendment
Date") no later than April 9, 1999 when (a) counterparts hereof shall have been
executed by each of the Noteholders, Holdings and the Company, (b) Holdings
shall have amended its
3
<PAGE> 5
Stockholder Rights Agreement, dated as of June 25, 1997 with BankBoston, N.A.,
in substantially the form attached hereto as Exhibit A, and (c) Holdings and
each Subsidiary Guarantor shall have executed a consent and confirmation of
guaranty in the form attached hereto as Exhibit B.
SECTION 5. Effect on the Securities Exchange Agreement. Except
as amended hereby, the Securities Exchange Agreement and the other Note
Documents shall remain in full force and effect. Nothing in this Amendment shall
be deemed to (i) except as set forth herein, constitute a waiver of compliance
by any of the Coram Parties of any term, provision or condition of the
Securities Exchange Agreement or any other instrument or agreement referred to
therein or under the Note Documents or (ii) prejudice any right or remedy that
any Noteholder may now have or may have in the future under or in connection
with the Securities Exchange Agreement or any other Note Document.
SECTION 6. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together constitute one and the same agreement.
SECTION 7. Governing Law. The validity, interpretation and
enforcement of this Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to the conflict of laws
principles thereof.
SECTION 8. Headings. Section headings in this Amendment are
included herein for the convenience of reference only and shall not constitute
part of this Amendment for any other purpose.
SECTION 9. References. References herein and in the other Note
Documents to the "Securities Exchange Agreement", "this Agreement", "hereunder",
"hereof", or words of like import referring to the Securities Exchange
Agreement, shall mean and be a reference to the Securities Exchange Agreement as
amended hereby.
[Signatures on following page]
4
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.
CORAM, INC.
By: /s/ Donald J. Amaral
------------------------------------------
Name: Donald J. Amaral
Title: Chairman and Chief
Executive Officer
CORAM HEALTHCARE CORPORATION
By: /s/ Donald J. Amaral
------------------------------------------
Name: Donald J. Amaral
Title: Chairman and Chief
Executive Officer
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, LLC
Its General Partner
By: /s/ STEPHEN A. FEINBERG
------------------------------------------
Name: Stephen A. Feinberg
Title: Managing Partner
GOLDMAN SACHS CREDIT PARTNERS L.P.
By: /s/ EDWARD A. MULE
------------------------------------------
Name: Edward A. Mule
Title: Managing Director
FOOTHILL CAPITAL CORPORATION
By: /s/ M.E. STEARNS
------------------------------------------
Name: M.E. Stearns
Title: Senior Vice President
5
<PAGE> 7
EXHIBIT B
CONSENT
Dated as of April 9, 1999
Each of the undersigned, in its capacity as a Guarantor under
the Securities Exchange Agreement referred to in the foregoing Amendment, hereby
consents to the said Amendment and hereby confirms and agrees that its guaranty
of the Guaranteed Obligations (as such term is defined in the Guarantee
Agreements) is, and shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects except that, upon the effectiveness of,
and on and after the date of, the said Amendment, each reference in each
Guarantee Agreement to "this Agreement", "hereunder", "thereunder", "thereof" or
words of like import shall mean and be a reference to the Securities Exchange
Agreement as amended by said Amendment.
This Consent may be executed in any number of counterparts
each of which, when executed and delivered, shall constitute an original, but
all executed counterparts together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Consent by
telecopier shall be effective as delivery of a manually executed counterpart of
this Consent.
CORAM HEALTHCARE CORPORATION
By:
------------------------------------
Name:
Title:
FOR EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON ANNEX A HERETO
By:
------------------------------------
Name:
Title:
c/o Coram Healthcare Corporation
1125 Seventeenth Street, Suite 1500
Denver, CO 80202
<PAGE> 8
ANNEX A
Subsidiaries
Coram International Holdings Ltd.
Coram Healthcare Limited
Coram, Inc.
Coram Independent Practice Association
Coram Physician Services, Inc.
Fairfax Hematology Oncology Associates, Inc.
Coram Resource Network, Inc.
Healthinfusion, Inc.
H.M.S.S., Inc.
Coram Homecare of Texas, Inc.
Infusion Affiliates of Dallas, Inc.
Medisys, Inc.
Coram Homecare of Illinois, Inc.
T2 Medical, Inc.
Columbia Home Therapeutics, Inc.
Coram Healthcare Corporation of Alabama
Coram Healthcare Corporation of Colorado
Coram Healthcare Corporation of Connecticut
Coram Healthcare Corporation of Delaware
Coram Healthcare Corporation of Florida
Coram Healthcare Corporation of Greater D.C.
Coram Healthcare Corporation of Greater New York
Coram Healthcare Corporation of Illinois
Coram Healthcare Corporation of Indiana
Coram Healthcare Corporation of Iowa
Coram Healthcare Corporation of Kansas
Coram Healthcare Corporation of Kentucky
Coram Healthcare Corporation of Louisiana
Coram Healthcare Corporation of Michigan
Coram Healthcare Corporation of Minnesota
Coram Healthcare Corporation of Missouri
Coram Healthcare Corporation of Mississippi
Coram Healthcare Corporation of Nebraska
Coram Healthcare Corporation of Nevada
Coram Healthcare Corporation of New Hampshire
Coram Healthcare Corporation of New Jersey
Coram Healthcare Corporation of New Mexico
Coram Healthcare Corporation of North Carolina
<PAGE> 9
Coram Healthcare Corporation of Northern California
Coram Healthcare Corporation of Ohio
Coram Healthcare Corporation of Oklahoma
Coram Healthcare Corporation of Oregon
Coram Healthcare Corporation of Pennsylvania
Coram Healthcare Corporation of Rhode Island
Coram Healthcare Corporation of South Carolina
Coram Healthcare Corporation of Southern California
Coram Healthcare Corporation of Southern Florida
Coram Healthcare Corporation of Tennessee
Coram Healthcare Corporation of Texas
Coram Healthcare Corporation of Virginia
Coram Healthcare Corporation of Washington
Coram Healthcare Corporation of West Virginia
Coram Healthcare Corporation of Wisconsin
Coram Homecare of Arizona, Inc.
Coram Homecare of Kansas, Inc.
Coram Homecare of Michigan, Inc.
Coram Homecare of Minnesota, Inc.
Coram Homecare of Nebraska, Inc.
Coram Homecare of Northern California, Inc.
Coram Homecare of Ohio, Inc.
Coram Homecare of South Carolina, Inc.
Coram Homecare of South Carolina, L.L.C.
Coram Homecare of Virginia, Inc.
Coram Homecare of Wisconsin, Inc.
Coram Management of Hawaii, Inc.
Coram Service Corporation
Curaflex Health Services, Inc.
Caremark Pharmacy Services, Inc.
Comprehensive Pharmacy Home IV Services, Inc.
Coram Alternative Site Services, Inc.
Coram Healthcare Corporation of Massachusetts
Clinical Homecare Corporation Coram
Healthcare Corporation of New York Coram Healthcare
Corporation of North Texas Coram Healthcare
Corporation of Utah Coram Healthcare of Wyoming,
L.L.C.
Stratogen of Rhode Island, Inc.
Dallas Home Therapeutics, Inc.
Extendacare Health Systems, Inc.
Intracare Holdings Corporation
2
<PAGE> 1
EXHIBIT 2
AMENDMENT NO. 1 TO STOCKHOLDER RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO STOCKHOLDER RIGHTS AGREEMENT
("Amendment"), is made as of the 9th day of April, 1999, by and between CORAM
HEALTHCARE CORPORATION, a Delaware corporation (the "Company"), and BANKBOSTON,
N.A., a national banking association, as Rights Agent (the "Rights Agent"),
which term shall include any successor Rights Agent hereunder. All initially
capitalized terms used herein which are not otherwise defined herein shall have
the meanings ascribed to them in the Rights Agreement (as such term is defined
below).
RECITALS
A. The Company and the Rights Agent entered into that certain
Stockholder Rights Agreement dated as of June 25, 1997 (the "Rights Agreement").
B. At a meeting of the Board of Directors of the Company (the
"Company Board") held on April 7, 1999, the Company Board approved an amendment
to certain provisions of the Agreement as set forth herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Rights Agent
hereby agree as follows:
1. Definition of Bridgenote Investors. Section 1.1(e) of the
Rights Agreement is hereby amended and restated to read in its entirety as
follows:
(e) "Subordinated Debtholders" shall mean Goldman Sachs
Credit Partners L.P., Cerberus Partners, L.P. and
Foothill Capital Corporation (together with such
person's Affiliates and Associates).
2. Definition of Exempted Person. Section 1.1(i) of the Rights
Agreement is hereby amended and restated to read in its entirety as follows:
"Exempted Person" shall mean any Institutional Investor, any Minority
Investor and any Subordinated Debtholder. Notwithstanding the
foregoing,
<PAGE> 2
(1) if any Institutional Investor or Minority
Investor acquires Beneficial Ownership of the outstanding
Common Stock in excess of that percentage expressly approved
in writing by the Board of Directors (y) by reason of share
purchases of the Company reducing the number of shares of
Common Stock outstanding (provided such Exempted Person does
not acquire additional shares of Common Stock) or (z)
inadvertently, if such Exempted Person notifies the Board of
Directors of such inadvertent purchase within five (5)
business days and within two (2) business days after such
notice divests itself of enough shares of Common Stock so as
to no longer have the Beneficial Ownership of the outstanding
Common Stock in excess of the specified percentage, such
Institutional Investor or Minority Investor will not cease to
be an Exempted Person.
(2)(x) in the event that any Subordinated Debtholder
acquires Beneficial Ownership of shares of Common Stock other
than (A) as a holder or other beneficial owner of or upon the
conversion of the Company's Series B Senior Subordinated
Convertible Notes, (B) as a holder of or upon exercise of
warrants to purchase Common Stock issued pursuant to that
certain Credit Agreement, dated as of August 20, 1998 among
the Company, Coram, Inc. and the Subordinated Debtholders; (C)
as a holder of or upon exercise of warrants to purchase Common
Stock issued pursuant to the Credit Agreement, dated as of
April 6, 1995 among the Company, Coram, Inc., the lenders
named therein and Chemical Bank as Administrative Agent,
Collateral Agent and Fronting Bank, as amended, (D) shares of
Common Stock representing up to 1% of the amount outstanding
from time to time held by such Subordinated Debtholder or its
Affiliates or Associates in accounts for the benefit of
clients of such entity or (E) shares representing up to 1% of
the amount outstanding from time to time held by such
Subordinated Debtholder or its Affiliates or Associates for
proprietary accounts, then such Subordinated Debtholder shall
cease to be an "Exempted Person" for all purposes hereunder
effective immediately prior to the time of such acquisition
unless such acquisition shall have been inadvertent and such
Exempted Person notifies the Board of Directors of such
inadvertent purchase within five (5) business days after
obtaining knowledge thereof and within two (2) business days
after such notice divests itself of the Beneficial Ownership
so acquired; and (y) the designation of the Subordinated
Debtholders set forth herein shall apply only to the Persons
expressly named herein as Subordinated Debtholders and their
respective Affiliates and Associates and shall not extend to
provide the designation of "Exempted Person" or any rights or
privileges deriving therefrom to any other party, including
without limitation any assignee or transferee of any
Subordinated Debtholder.
2
<PAGE> 3
3. Except as expressly amended and modified under this
Amendment, the terms and provisions of the Rights Agreement are hereby ratified
and affirmed in their entirety.
4. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
5. This Amendment may be signed in any number of counterparts
each of which shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.
6. This Amendment constitutes the entire agreement of the
parties with respect to the amendment of the Rights Agreement and all prior or
contemporaneous agreements or understandings, verbal or written, with respect
thereto are hereby superseded by this Amendment.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above set forth.
CORAM HEALTHCARE CORPORATION
By: /s/ DONALD J. AMARAL
-----------------------------------------
Donald J. Amaral
Chairman and Chief Executive Officer
BANKBOSTON, N.A.
By: /s/ TYLER HAYNES
-----------------------------------------
Name: Tyler Haynes
------------------------------------
Title: Director, Client Services
-----------------------------------
Signature page of the Amendment No. 1 to
Stockholder Rights Agreement, dated as of
April 9, 1999, between CORAM HEALTHCARE
CORPORATION and BANKBOSTON, N.A., as Rights
Agent
4
<PAGE> 1
EXHIBIT 3
[CORAM HEALTHCARE LOGO]
FOR IMMEDIATE RELEASE
APRIL 12, 1999
Contact: Don Amaral, Chairman/Chief Executive Officer
303-672-8756
Richard M. Smith, President
303-672-8717
Wendy Simpson, Chief Financial Officer
303-672-8722
CORAM HEALTHCARE ANNOUNCES CHANGES TO THE TERMS OF ITS SERIES A
SENIOR SUBORDINATED NOTES, SERIES B SENIOR SUBORDINATED
CONVERTIBLE NOTES AND ITS STOCKHOLDER RIGHTS PLAN
DENVER, April 12, 1999 ... Coram Healthcare Corporation (NYSE: CRH) announced
today that it entered into an agreement with the holders of its Series A Senior
Subordinated and Series B Senior Subordinated Convertible Notes to amend certain
provisions of these instruments. In addition, the Company has agreed to amend
certain provisions of its Stockholder Rights Agreement, dated June 25, 1997 with
BankBoston, N.A., as Rights Agent.
Pursuant to an amendment to the Securities Exchange Agreement under which the
Series A and Series B Notes were issued, Coram and its debt holders, Cerberus
Partners, L.P.; Goldman Sachs Credit Partners L.P.; and Foothill Capital
Corporation, have agreed to increase the annual interest rate applicable to the
Series A Notes from its current rate of 9.875% to 11.5% until maturity. In
addition, the parties have fixed the conversion price applicable to the Series B
Notes at $2.00 per share (subject to customary anti-dilution adjustments). No
other provisions of either the Series A Notes or the Series B Notes were
changed.
As of March 31, 1999, the principal amount outstanding under the Series A
Notes totaled approximately $153.8 million. The increase in the interest rate on
the Series A Notes will result in an increase in Coram's interest expense for
the Series A Notes of approximately $2.5 million per year.
As of March 31, 1999, the principal amount outstanding under the Series B
Notes totaled approximately $87.9 million and the interest rate, which was not
changed under the amendment, was 8% per annum. Before the amendment, the initial
conversion price applicable to the Series B Notes was $3.00 per share subject to
downward (but not upward) adjustments based on prevailing market prices on each
of April 13, 1999 and October 13, 1999. The Company believes that the
implementation of the first downward reset would have established a conversion
price of less than $2.00 per share given the closing prices of Coram common
stock during the applicable measurement period prior to the amendment.
-more -
<PAGE> 2
Coram Healthcare
Debt Amendment - Page 2
After giving effect to the amendment, the number of shares of Coram common
stock that would be issuable upon full conversion of the Series B Notes would be
approximately 44 million shares as of March 31, 1999. Coram had, as of March 31,
1999, 49.5 million shares of its common stock outstanding. If the debt holders
and their affiliates were to convert all of their Series B Notes and other stock
warrants held by them into shares of Coram common stock, they would collectively
own approximately 48.3% of the outstanding shares of Coram common stock.
Coram has also agreed to amend its Stockholder Rights Agreement to provide
that the current holders of the Series A and Series B Notes, Cerberus Partners,
L.P.; Goldman Sachs Credit Partners L.P.; and Foothill Capital Corporation shall
be designated as "exempted persons" for purposes of the Stockholder Rights
Agreement with respect to the shares of Coram common stock that may be issued to
them in connection with any conversion by any of them of the Series B Notes or
any exercise by any of them of the stock purchase warrants currently held by
them that were issued by Coram under its current or former credit facilities so
long as they do not acquire beneficial ownership of additional shares of the
Company's common stock. The "exempted person" designation shall apply only to
these debt holders and not to their assignees or transferees.
"Coram has just recently announced its results for fiscal 1998, and we are
very pleased to have reported a 20.6% improvement from 1998 over 1997 in net
revenue and an increase over the same period of $31.6 million in EBITDA results,
excluding both the results of the Lithotripsy Division's operations and other
non-recurring items. These changes in the Company's debt instruments remove the
uncertainty of the amount of potential dilution from the conversion of the
Series B Notes. We believe these changes better position the Company to move
forward and continue growing the business for the benefit of all of our
stakeholders," said Donald J. Amaral, Chairman and Chief Executive Officer.
Denver-based Coram Healthcare is a leading provider of high quality home
infusion therapy services operating from over 90 locations in 44 states and
Ontario, Canada. Through its Resource Network division, the Company also manages
networks of home health providers on behalf of managed care plans and other
payers. Coram Prescription Services provides pharmacy benefit management
services and mail order prescription services for chronically ill patients. The
Clinical Research and Medical Informatics division provides home care and
product development services for pharmaceutical, biotechnology and medical
device companies sponsoring clinical trials. These include specialized alternate
site services such as drug administration, education, patient assessments, and
centralized study coordination and data collection. Coram serves approximately
260,000 patients per month through its operating subsidiaries.
For more information, please visit Coram's web site at
www.coramhealthcare.com.
Note: Except for historical information, all other statements provided
in this press release, including information as to anticipated interest
rate expense and the number of shares into which the Series B Notes are
convertible, are "forward looking" within the meaning of the Private
Securities Litigation Reform Act of 1995. The Company's actual results
may vary materially from the forward-looking statements made above due
to important factors such as: the Company's history of operating losses
and the uncertainties associated with its future operating results; its
significant outstanding indebtedness; the equity conversion rights of
its existing debt holders; its dependence on relationships with third
parties; the timing of or ability to complete acquisitions; and
government regulation of the home health care industry. These and other
risk factors that could materially affect the Company's financial
results are further described in the Company's Form 10-K Annual Report
and Form 10-Q Quarterly Reports on file with the Securities and
Exchange Commission.
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