Item 2.01.
|
Completion of Acquisition or Disposition of Assets.
|
On July 2, 2018, pursuant to
the terms of the Merger Agreement, Merger Sub merged with and into the Company with the Company continuing as the surviving company in the Merger.
At the effective time of the Merger, each share of common stock, par value $0.25 per share, of Kindred (
Kindred Common
Stock
) issued and outstanding immediately prior to the effective time of the Merger (other than shares held by Parent, HospitalCo Parent, Merger Sub or Kindred or their respective wholly-owned subsidiaries (which were cancelled) and shares
that were owned by stockholders who properly exercised and perfected a demand for appraisal rights under Delaware law), were cancelled and converted into the right to receive $9.00 per share in cash, without interest and subject to any applicable
withholding taxes (the
Merger Consideration
). As of the effective time of the Merger, each outstanding option to purchase Kindred Common Stock (a
Kindred Option
), whether or not then vested or exercisable, was
cancelled and converted into the right to receive an amount in cash equal to the excess, if any, of the Merger Consideration over the exercise price of such option, subject to any applicable withholding taxes. Each outstanding Kindred Option that
had an exercise price that was equal to or greater than the Merger Consideration was cancelled without consideration.
2
At the effective time of the Merger, each outstanding and unvested stock award on Kindred Common
Stock (
Kindred Stock Award
), other than those unvested awards held by certain agreed-upon members of management (
Listed Persons
), were cancelled and converted into the right to receive an amount in cash equal to
the product of (i) the aggregate number of shares of Kindred Common Stock in respect of such Kindred Stock Award multiplied by (ii) the Merger Consideration, subject to any applicable withholding taxes. For purposes of this cancellation
and conversion of unvested Kindred Stock Awards, each such Kindred Stock Award subject to performance-vesting conditions was deemed earned at the target performance level. The aggregate amount of Merger Consideration paid to holders of Kindred
Common Stock, Kindred Options and Kindred Stock Awards was approximately $737.2 million in cash less any applicable withholding taxes.
In addition, at the effective time of the Merger, each outstanding and unvested Kindred Stock Award held by Listed Persons was converted into
a replacement cash award for an amount equal to the product of (x) the Merger Consideration and (y) the number of shares of Kindred Common Stock to which such Kindred Stock Award relates (as determined in accordance herewith)
(
Replacement Cash Award
). Each Replacement Cash Award is subject to the same terms and conditions applicable to the Kindred Stock Award immediately prior to the effective time of the Merger (including payment on the originally
scheduled vesting date of such award), except that (i) any performance-based conditions to which such Kindred Stock Award was subject was deemed earned at the target performance level and (ii) if such Listed Persons employment is
terminated by the Company, HospitalCo Parent, Parent or their respective affiliates, as applicable, without cause or by such Listed Person for good reason during the service-vesting period applicable to such Listed
Persons Replacement Cash Award, such Replacement Cash Award shall vest and become payable in full, subject to any applicable withholding taxes, as of the date of such termination.
Promptly following the effective time of the Merger, the Surviving Entity was converted into a Delaware limited liability company and the name
of the Surviving Entity was changed to Kindred Healthcare, LLC. Subsequently, Kindred Healthcare, LLC separated its Homecare Business (as defined in the Separation Agreement) from its other businesses and distributed such Homecare Business to Parent
pursuant to the terms of the previously announced Separation Agreement (the
Separation Agreement
) entered into by Kindred, Parent, HospitalCo Parent, and Kentucky Hospital Merger Sub, Inc. (
Hospital Merger Sub
)
concurrently with the execution and delivery of the Merger Agreement. Pursuant to the terms of the Separation Agreement, Hospital Merger Sub then merged with and into Kindred Healthcare, LLC (the
Hospital
Merger
), with
Kindred Healthcare, LLC continuing as the surviving company in the Merger as an indirectly wholly-owned subsidiary of HospitalCo Parent, which is controlled by affiliates of each of TPG Global, LLC (
TPG
) and Welsh, Carson,
Anderson & Stowe XII, L.P. (
WCAS
and, together TPG, the
Sponsors
). HospitalCo Parent funded the Hospital Merger through initial borrowings under its senior secured credit facilities with JPMorgan Chase
Bank, N.A., as administrative agent, and the proceeds of equity investments by the Sponsors.
The Separation Agreement relates to, among
other things (i) certain restructuring transactions that took place with respect to Kindred and its subsidiaries, (ii) procedures concerning the transfer of certain assets and employees used or employed in the respective businesses of
Kindred and (iii) the allocation of costs and expenses related to the separation of the Surviving Entity from the Homecare Business (as defined in the Separation Agreement).
The foregoing descriptions of the Merger Agreement and Separation Agreement do not purport to be complete and are qualified in their entirety
by the full text of such agreements, which were included as Exhibit 2.1 and Exhibit 10.1, respectively to Kindreds Current Reports on Form
8-K
filed with the Securities and Exchange Commission (the
SEC
) on December 21, 2017 and which are incorporated herein by reference.