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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
(AMENDMENT NO. 7)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
ARV ASSISTED LIVING, INC.
(NAME OF SUBJECT COMPANY)
ARV ASSISTED LIVING, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, NO PAR VALUE
(INCLUDING THE ASSOCIATED SERIES C JUNIOR PARTICIPATING
PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
00204C107
(CUSIP NUMBER OF CLASS OF SECURITIES)
SHEILA M. MULDOON, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ARV ASSISTED LIVING, INC.
245 FISCHER AVENUE, SUITE D-1
COSTA MESA, CA 92626
(714) 751-7400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S)
FILING STATEMENT)
WITH COPIES TO:
WILLIAM J. CERNIUS, ESQ. ALEXANDER F. WILES, ESQ.
LATHAM & WATKINS IRELL & MANELLA LLP
650 TOWN CENTER DRIVE, 1800 AVENUE OF THE STARS,
20TH FLOOR SUITE 900
COSTA MESA, CA 92626 LOS ANGELES, CA 90067
(714) 540-1235 (310) 203-7659
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INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (as amended
through the date hereof, the "Statement"), originally filed on January 5, 1998,
by ARV Assisted Living, Inc., a California corporation (the "Company"), relates
to an offer by EMAC Corp., a Delaware corporation ("EMAC") and a wholly-owned
subsidiary of Emeritus Corporation, a Washington corporation ("Emeritus"), to
purchase all outstanding shares of the Company's common stock, no par value
(including the associated Series C Junior Participating Preferred Stock Purchase
Rights issued pursuant to the Rights Agreement, dated as of July 14, 1997,
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent). All capitalized terms used herein without definition have the respective
meanings set forth in the Statement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The response to Item 4 is hereby amended by adding the following after
the final paragraph of Item 4:
On January 23, 1998, the Company sent a letter to its shareholders
discussing Emeritus' tender offer and proxy contest, particularly with reference
to modifications to Emeritus' stated price due to the conditional nature of its
offer. A copy of such letter is filed as Exhibit 23 hereto and is incorporated
herein by reference.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
On January 22, 1998, the Circuit Court issued a Memorandum which
vacated the district Federal Court's order staying proceedings in an action for
injunctive relief. The Memorandum also remanded the matter to the Federal
Court. The Memorandum is filed as Exhibit 24 hereto and is incorporated herein
by reference.
On January 22, 1998, the Federal Court issued a Civil Minute Order
which, pursuant to the Circuit Court's Memorandum, vacates the Federal Court's
prior order staying proceedings and orders ARV to file its Reply Brief by
January 26, 1998. Such Minute Order is filed as Exhibit 25 hereto and is
incorporated herein by reference.
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ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
The response to Item 9 is hereby amended by adding the following new
exhibit:
23 Text of Company's Letter to Shareholders, dated
January 23, 1998.
24 Circuit Court Memorandum in ARV Assisted Living, Inc. v.
Emeritus Corporation, case no. 98-55118, issued January 22,
1998.
25 Minute Order Re Remand in ARV Assisted Living, Inc. v. Emeritus
Corporation, case no. SA-CV-98-9-LHM (EEx), entered January 22,
1998.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
ARV ASSISTED LIVING, INC.
By: /s/ SHEILA M. MULDOON
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Sheila M. Muldoon, Esq.
Vice President, General
Counsel and Secretary
Dated January 23, 1998
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
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23 Text of Company's Letter to Shareholders, dated January 23,
1998
24 Circuit Court Memorandum in ARV Assisted Living, Inc. v.
Emeritus Corporation, case no. 98-55118, issued January 22,
1998
25 Minute Order Re Remand in ARV Assisted Living, Inc. v. Emeritus
Corporation, case no. SA-CV-98-9-LHM (EEx), entered January 22,
1998
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EXHIBIT 23
ARV LETTERHEAD
January 23, 1998
TO OUR SHAREHOLDERS:
We are now in the final week before ARV's Annual Meeting of Shareholders,
and I am writing to you to ask that you vote for Management's slate of
directors. I have already told you the reasons why your Board views Emeritus's
offer as nothing more than a ploy to get you to vote for its slate of nominees.
Now, I want to explore with you the mathematics of Emeritus's "offer." I also
want to give you information we have discovered that demonstrates just how
Emeritus treats its potential merger partners when it is doing a friendly deal.
After you have read this letter, I hope you will conclude that voting for
Emeritus's slate poses far too many dangers for your investment. PROTECT YOUR
INVESTMENT. DON'T VOTE FOR EMERITUS'S NOMINEES. PLEASE MARK, SIGN, DATE AND MAIL
ARV'S WHITE PROXY CARD.
EMERITUS IS REALLY OFFERING YOU AROUND $15.50 A SHARE
WHEN YOU TAKE INTO ACCOUNT ITS CONDITIONS
In my last letter to you, I discussed all of the conditions to the Emeritus
offer. Emeritus wants you to focus on its announced price -- not the conditions
to its offer. But, as all investors know, price and conditions are related. I
decided that it was important to our shareholders that we take a careful look at
Emeritus's conditions and communicate to you what price we think Emeritus is
really offering you. When we did that, we concluded that Emeritus is really
offering you somewhere around $15.50 per share. Here is how we did our
calculation:
<TABLE>
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Emeritus's Stated Price......................................... $17.50
Price Modifications due to Conditions:
Emeritus has conditioned its offer on rescission of the
redemption of the Prometheus note; Emeritus has admitted
that it may reduce the price it pays you by $14 million,
equivalent to $.85 per share, if it is obligated to buy all
of Prometheus's shares..................................... (.85)
Emeritus's offer has both a material adverse change
condition and a condition that Emeritus receive consents to
the change of control from each of ARV's landlords; ARV
estimates that if the landlords simply insist on marking
the leases to market, the cost to ARV will be at least $4
million a year and $25 million over the life of the leases;
Emeritus is free to reduce its price to you by the present
value of this $25 million, which we calculate to be $1.05
per share.................................................. (1.05)
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Revised Potential Emeritus Offer Price.......................... $15.60
======
</TABLE>
YESTERDAY, OUR STOCK CLOSED AT $14 7/8 SO WE THINK EMERITUS IS REALLY
OFFERING YOU ALMOST NO PREMIUM FOR TAKING CONTROL OF YOUR COMPANY. AND,
REMEMBER, EMERITUS ALSO HAS 13 OTHER "OUTS" OR CONDITIONS THAT COULD GIVE IT THE
RIGHT TO FURTHER REDUCE THE PRICE OR WALK AWAY FROM ANY TRANSACTION. DON'T BE
FOOLED BY EMERITUS'S ILLUSORY $17.50 OFFER. PROTECT YOUR INVESTMENT BY VOTING
FOR YOUR BOARD.
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EMERITUS HAS A HISTORY OF REDUCING ACQUISITION PRICES
Don't be misled into thinking that Emeritus actually will follow through on
its $17.50 cash "offer" price. Not only does the preceding calculation based on
Emeritus's conditions and Dan Baty's testimony foreshadow, in our opinion, a
significant price decrease, but also Emeritus has used similar tactics in prior
acquisitions.
In March 1996, Emeritus announced that it had signed an agreement in
principle to merge with Standish Care Company in a stock for stock acquisition.
An exchange ratio roughly equivalent to $4.00 for each Standish share was
announced.
What happened next? According to the former Standish officers and investors
whom ARV's representatives have interviewed, the answer is dragged out
negotiations and a reduced offer. Standish was experiencing liquidity problems
and was under pressure. Emeritus then stretched out its due diligence as
Standish's pressures grew. Finally, after nearly two months, according to one of
our sources, Emeritus used its due diligence as an excuse to reduce its offer
price by about 40%. Fortunately for Standish, its management suspected this
tactic was occurring and located a backup bidder. Standish rejected Emeritus's
attempt to use due diligence as an excuse to reduce the price and closed a deal
on much better terms with someone else.
We believe Emeritus now wants you to elect their handpicked slate of
directors before Emeritus removes any of its conditions and before it commits to
a firm price. Then, Mr. Baty wants to "negotiate" with his own designees who
will control ARV if he gets your vote. LEARN FROM STANDISH. VOTE FOR YOUR BOARD
TO MAKE CERTAIN THAT ARV HAS INDEPENDENT DIRECTORS WHO WILL EXERCISE THEIR
FIDUCIARY DUTIES TO PROTECT YOU FROM THE EMERITUS TACTICS.
Emeritus will tell you ARV is overblowing this danger. But, just this week
two large ARV shareholders, Gary Davidson, my predecessor and former ARV
Chairman, and a well known arbitrageur, appear to have figured out that Emeritus
is not really offering $17.50 per share in cash. Both sold their positions for
$15.50 per share. PROTECT YOUR INVESTMENT. DON'T VOTE FOR EMERITUS'S NOMINEES.
IMPORTANT
DO NOT VOTE ANY BLUE PROXY CARDS YOU MAY RECEIVE FROM EMERITUS CORPORATION --
NOT EVEN TO WITHHOLD ON THE EMERITUS NOMINEES. DOING SO MAY HAVE THE EFFECT OF
CANCELING YOUR VOTE FOR ARV'S NOMINEES. ALSO, DO NOT VOTE ANY GOLD PROXY CARDS.
TO BE CERTAIN YOUR VOTE WILL COUNT FOR ARV'S NOMINEES, PLEASE MARK, SIGN, DATE
AND PROMPTLY MAIL ARV'S WHITE PROXY CARD THAT YOU RECEIVED PREVIOUSLY OR IN THE
ENCLOSED ENVELOPE.
On Behalf of your Board of Directors,
Sincerely,
/s/ HOWARD G. PHANSTIEL
Howard G. Phanstiel
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ADDITIONAL INFORMATION OR
ASSISTANCE, PLEASE CALL OUR PROXY SOLICITOR, MACKENZIE PARTNERS, AT 1-800-
322-2885.
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EXHIBIT 24
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ARV ASSISTED LIVING, INC., a ) No. 98-55118
California corporation, )
) D.C. No. CV-98-9-LHM
Plaintiff-Appellant, )
)
vs. )
)
EMERITUS CORPORATION, a Washington )
corporation; EMAC CORPORATION, a ) MEMORANDUM*
Delaware corporation, )
)
Defendants-Appellees. )
)
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Appeal from the United States District Court
for the Central District of California
Linda Hodge McLaughlin, District Judge, Presiding
Submitted January 22, 1998**
Before: BROWNING, KLEINFELD, and THOMAS, Circuit Judges.
Petitioner seeks review of the district court's January 12, 1998 order
staying proceedings in the district court pursuant to Colorado River Water
Conservation District v. United States, 424 U.S. 800 (1976). We review the
district court's order for an abuse of discretion. See MacKillop v. Lowe's
Mkt., Inc.,
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* This disposition is not appropriate for publication and may not be cited
to or by the courts of this circuit except as provided by Ninth Circuit Rule
36-3.
** The panel finds this case suitable for decision without oral argument. See
Fed. R. App. P. 34(a); 9th Cir. R. 34-4.
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58 F.3d 1441, 1446 (9th Cir. 1995). We hold the district court abused its
discretion by staying the district court proceedings, in part because
appellant's complaint alleges violations of federal securities laws as to which
federal courts have exclusive jurisdiction to give affirmative relief. See
generally Moses H. Cone Memorial Hospital v. Mercury Construction Co., 460 U.S.
1, 19-26 (1983) (among other things, existence of federal question weighs
heavily against abstention).
Accordingly, the district court's January 12, 1998 stay order is
VACATED and this matter is REMANDED to the district court for further
proceedings on appellant's claims, including appellant's pending request for
injunctive relief. Appellant's request for remand to a different district judge
is denied.
VACATED and REMANDED.
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EXHIBIT 25
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
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Case No. SA CV - 98 - 9 - LHM (EEx) Date January 22, 1998
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Title ARV Assisted Living, Inc. v. Emeritus Corporation, et al.
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DOCKET ENTRY
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PRESENT:
HON. Linda H. McLaughlin, JUDGE
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Debra Beard None Present
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Deputy Clerk Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:
None Present None Present
PROCEEDINGS: ORDER RE REMAND
IN CHAMBERS:
(1) The Court has received the Memorandum issued by the Ninth
Circuit Court of Appeals on 1/22/98, vacating the Court's
1/12/98 stay order and remanding this matter to the Court for
further proceedings on ARV Assisted Living, Inc.'s ("ARV")
claims, including ARV's pending request for injunctive relief.
(2) Pursuant to the Ninth Circuit's Memorandum, the Court vacates
its prior order rejecting Defendants' Opposition to ARV's Motion
for Preliminary Injunction and supporting papers, and deems said
papers filed.
(3) The Court orders ARV to file its Reply Brief in Support of its
Motion for Preliminary Injunction by Monday, 1/26/98, at 9:00
a.m.
THE DATES ORDERED BY THE COURT COURTESY COPIES OF ALL DOCUMENTS
HAVE BEEN SET ON THE COURT'S MUST BE DELIVERED OR SENT BY
CALENDAR AND ARE FIRM DATES FACSIMILE TO CHAMBERS OF JUDGE
MCLAUGHLIN BY 12:00 NOON ON THE
DATE DUE.
Initials of Deputy Clerk____
D - M
