SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 13, 1998
MEDCATH INCORPORATED
(Exact name of registrant
as specified in its charter)
North Carolina 0-25176 56-1635096
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
7621 Little Avenue, Suite 106, Charlotte, North Carolina 28226
(Address of principal executive offices)
Registrant's telephone number, including area code (704) 541-3228
Page 1 of 3
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ITEM 5. OTHER EVENTS
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On March 13, 1998, MedCath Incorporated (the Company), announced that Kohlberg
Kravis Roberts & Co. (KKR) and Welsh, Carson, Anderson & Stowe (Welsh, Carson)
have signed a definitive agreement pursuant to which a new company formed by KKR
and Welsh, Carson will acquire the Company in a merger for $19 per share in
cash, or approximately $240 million.
EXHIBITS:
99.1 - Press Release dated March 13, 1998
Page 2 of 3
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MEDCATH INCORPORATED
Date: March 20, 1998 By: /s/ Richard J. Post
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Richard J. Post
Chief Financial Officer,
Secretary and Treasurer
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EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
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Contacts: FOR MEDCATH INCORPORATED: FOR KOHLBERG KRAVIS, ROBERTS FOR WELSH, CARSON, ANDERSON
Stephen R. Puckett & CO.: & STOWE:
President Ruth Pachman Paul Queally
Richard J. Post Josh Pekarsky (212) 893-9500
Chief Financial Officer Kekst and Company
(704) 541-3228 (212) 521-4877
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KKR AND WELSH, CARSON TO ACQUIRE MEDCATH
FOR $19 PER SHARE IN CASH
Charlotte, North Carolina (March 13, 1998) MedCath Incorporated
(Nasdaq/NM:MCTH), a leading provider of cardiology and cardiovascular services,
Kohlberg Kravis Roberts & Co. (KKR) and Welsh, Carson, Anderson & Stowe (Welsh,
Carson) today jointly announced that they have signed a definitive agreement
pursuant to which a new company formed by KKR and Welsh, Carson will acquire
MedCath in a merger for $19 per share in cash, or approximately $240 million.
The merger will be funded by equity investments by KKR, Welsh, Carson and
MedCath's management as well as borrowings under a new $75 million revolving
credit facility. KKR and Welsh, Carson will each invest approximately $105
million of equity. MedCath's management will invest approximately $17 million of
equity.
The transaction was approved by MedCath's Board of Directors after receiving a
recommendation from a special committee of independent directors previously
established to review MedCath's strategic alternatives. The Board and Special
Committee received a fairness opinion with respect to the proposed merger from
Goldman, Sachs & Co., which the Special Committee had engaged to assist the
Committee in its review and evaluation of strategic alternatives.
Stephen R. Puckett, president of MedCath, said, "We believe the Special
Committee has engaged in a careful review of this proposal, and we are pleased
that the Board has determined to proceed with a transaction designed to bring
significant value to our shareholders. We are very pleased to be joining forces
with two of the country's premier investment firms."
Ned Gilhuly, a KKR executive, said, "We believe MedCath has a strong management
team and is well-positioned as a high quality, efficient service provider in a
large and growing market. We further believe MedCath's strategic plan can be
implemented more effectively as a private company, and we are very pleased to be
joining with Welsh, Carson to help the Company execute that strategic plan."
The transaction is subject to a number of customary closing conditions,
including shareholder and regulatory approval. The Company intends to hold a
special meeting of its shareholders to approve the transaction within the next
three months. Given the upcoming meeting, the Company also announced that it
would be postponing its annual meeting, which originally had been scheduled for
April 7th.
As previously announced, the slow ramp-up of the Tucson Heart Hospital led the
Company to believe that it would no longer achieve its earnings projections for
fiscal year 1998. Based on patient census levels and procedure volumes at the
Tucson Heart Hospital that continue to be below projected levels, the Company
currently estimates that earnings for fiscal year 1998 will be substantially
below current analysts' projections.
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MedCath Incorporated is a provider of cardiology and cardiovascular services
through the operation of specialized facilities and the management of physician
practices. The Company operates three specialty heart hospitals and has five
additional heart hospitals under development, manages five medical practices
comprised of over 100 physicians, manages fixed-site cardiac diagnostic and
therapeutic centers, and owns and operates mobile cardiac catheterization
laboratories serving networks of hospitals.
KKR is a private investment firm based in New York and Menlo Park, California.
Welsh, Carson, Anderson & Stowe is a private investment firm with their
principal offices in New York.
Statements contained in this press release which are not historical facts may be
considered forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ
materially from those projected. Such risks and uncertainties include
construction and development risks associated with heart hospitals, including,
without limitation, unanticipated delays in construction and licensing;
increased construction costs; operating losses and negative cash flows during
the initial operation of heart hospitals continuing longer than anticipated;
dependence on physician relationships; increased competition from existing
hospitals in the marketplace; dependence on the availability and terms of
long-term management contracts; fluctuations in quarterly operating results from
seasonality, population shifts and other factors; dependence on key management;
as well as other risks detailed in the Company's filings with the Securities and
Exchange Commission.
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