SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) August 5, 2002
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UCI Medical Affiliates, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-13265 59-2225346
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(State or Other Jurisdiction
of Incorporation) (Commission File Number)(I.R.S. Employer Identification)
4416 Forest Drive, Columbia, South Carolina 29206
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(Address, Including Zip Code of Principal Executive Offices)
(803) 782-4278
(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Item 3 - Bankruptcy or Receivership.
On May 3, 2002, UCI Medical Affiliates, Inc. ("UCI"), its wholly-owned
subsidiaries, UCI Medical Affiliates of South Carolina, Inc. ("UCI-SC") and UCI
Medical Affiliates of Georgia, Inc. ("UCI-GA"), each a South Carolina
corporation, and UCI's affiliates, Doctor's Care, P.A., a South Carolina
corporation ("DC-SC"), Doctor's Care of Tennessee, P.C., a Tennessee corporation
("DC-TN"), and Doctor's Care of Georgia, P.C., a Georgia corporation ("DC-GA"),
each filed plans of reorganization (collectively the "Plans") with the United
States Bankruptcy Court for the District of South Carolina (the "Court"). UCI,
UCI-SC, UCI-GA, DC-SC, DC-TN, and DC-GA are hereafter collectively referred to
as the "Debtors." The Debtors filed an Addendum to the Plans with the Court on
June 14, 2002 and a Second Addendum to the Plans with the Court on July 29, 2002
(collectively the "Addendums").
The Court issued orders (collectively the "Confirmation Orders")
confirming each of the Plans as listed below:
Company Name Date Confirmation Order Entered by Court
UCI August 7, 2002
UCI-SC August 5, 2002
UCI-GA August 7, 2002
DC-SC August 8, 2002
DC-TN August 6, 2002
DC-GA August 7, 2002
On August 15, 2002, the Company issued a press release related to the
foregoing (the "Press Release"). Copies of the Confirmation Orders, the Plans,
as confirmed, the related Joint Disclosure Statement, the Addendums, and the
Press Release are attached as Exhibits to this Form 8-K and are incorporated by
reference herein. The Plans shall become effective eleven days following the
date the Court issued the respective Confirmation Order (the "Effective Date").
Set forth below is a summary of the material terms of the Plans, the
Company's equity interests outstanding as of the Effective Date, and information
regarding the assets and liabilities of the Debtors as of June 30, 2002. This
information is qualified in its entirety by reference to the Confirmation
Orders, the Plans, the Disclosure Statement, and the Addendums.
Under the Plans, the Debtors have separated their creditors into 20
different classes. For those creditors who have separable claims, such claims
have been broken down within the designated class.
1. CLASS 1: Internal Revenue Service ("IRS").
(a) UCI Medical Affiliates, Inc. - No claim filed.
(b) UCI Medical Affiliates of South Carolina, Inc. - The IRS has filed a secured
claim against this Debtor in the amount of $505,956.72, and a priority claim in
the amount of $650,625.85. The allowed amount of the IRS secured and priority
claims will be paid over 72 months, at 8% interest, for a monthly payment of
$21,000.00. The first payment will occur on the 20th day of September, 2002, and
will continue on the 20th day of each month thereafter until the allowed secured
and priority claims plus interest are paid in full. All currently due
post-petition taxes shall be paid in full on or before the Effective Date of the
Plan, unless Debtor disputes such amount in which event Debtor shall file an
objection to claim within fourteen days after the Effective Date of the Plan,
and in that case, Debtor will immediately pay any administrative claim the Court
determines is due. Debtor reserves the right to direct how the payments shall be
applied. Debtor may pre-pay this creditor without penalty. This creditor shall
retain all outstanding liens against the Debtors.
(c) UCI Medical Affiliates of Georgia, Inc. - No claim filed.
(d) Doctor's Care, P.A. - The IRS has filed a secured claim against this Debtor
in the amount of $548,761.00, and a priority claim in the amount of
$1,128,452.38. The allowed amount of the IRS secured and priority claims will be
paid over 72 months, at 8% interest, for a monthly payment of $29,408.00. The
first payment will occur on the 20th day of September, 2002, and will continue
on the 20th day of each month thereafter until the allowed secured and priority
claims plus interest are paid in full. All currently due post-petition taxes
shall be paid in full on or before the Effective Date of the Plan, unless Debtor
disputes such amount in which event Debtor shall file an objection to claim
within fourteen days after the Effective Date of the Plan, and in that case,
Debtor will immediately pay any administrative claim the Court determines is
due. Debtor may pre-pay this creditor without penalty. This creditor shall
retain all outstanding liens against the Debtors.
(e) Doctor's Care of Tennessee, P.C. - The IRS has filed an unsecured priority
claim against this Debtor in the amount of $206,894.04. The allowed amount of
the IRS priority claim will be paid over 72 months, at 8% interest, for a
monthly payment of $3,630.00. The first payment will occur on the 20th day of
September, 2002, and will continue on the 20th day of each month thereafter
until the allowed secured and priority claims plus interest are paid in full.
Debtor may pre-pay this creditor without penalty.
(f) Doctor's Care of Georgia, P.C. - The IRS has filed an unsecured priority
claim against this Debtor in the amount of $61,531.98. The allowed amount of the
IRS priority claim will be paid over 72 months, at 8% interest, for a monthly
payment of $1,080.00. The first payment will occur on the 20th day of September,
2002, and will continue on the 20th day of each month thereafter until the
allowed secured and priority claims plus interest are paid in full. Debtor may
pre-pay this creditor without penalty.
2. CLASS 2: Heller Healthcare Finance, Inc. ("Heller"). This creditor has
entered into various loan documents, which include security agreements, with all
six Debtors. Heller holds a validity perfected lien on virtually all of the
assets of the Debtors and is a fully secured creditor. Heller has filed a proof
of claim in the amount of $2,460,416.21. Debtors began making monthly adequate
protection payments of $48,000.00 to Heller in December 2001 and will continue
doing so on the 28th day of each month until Debtors began making payments under
the Plans. In no event will the Debtor make both an adequate protection payment
and a Plan payment in the same month.
Heller shall retain all existing liens against the assets of the
Debtors. Heller's allowed claim will be $2,460,416.21, plus post-petition
interest at the contract rate, plus Heller's reasonable attorneys' fees and
out-of-pocket expenses as provided in the original loan documents, less the
adequate protection payments made by the Debtors during this proceeding ("New
Loan"). As of May 1, 2002, the balance of the New Loan was $2,454,990.43 and
will not exceed that amount on the Effective Date of the Plans so long as
Debtors continue the monthly adequate protection payments and the Effective Date
of the Plans is not later than September 1, 2002.
The New Loan as determined as of the Effective Date of the Plans will
be amortized over 60 months, payable monthly at a floating rate of Wall Street
Journal prime rate of interest, plus 2%, with a fixed monthly payment of
$48,000.00. The New Loan will mature on the third anniversary of the Effective
Date of the confirmed Plans. The first payment will occur on the 28th day of
September, 2002 and will continue on the 28th day of each month thereafter until
the New Loan matures.
Debtors will execute amended and restated loan documents as of
the Effective Date implementing the terms herein and including the same loan
covenants as found in the original loan documents, modified (i) to reflect the
change of the Debtors' financial condition since the original documents were
executed, and (ii) the continuation during the term of the loan of the existing
cash collateral lockbox arrangement for the deposit and disbursement of
collections from Debtor's accounts receivable and operations.
3. CLASS 3: South Carolina Department of Revenue ("SCDOR")
(a) UCI Medical Affiliates, Inc. - No claim filed.
(b) UCI Medical Affiliates of South Carolina, Inc. - SCDOR has filed a secured
claim in the amount of $43,553.49 and an unsecured priority claim in the amount
of $582,832.62 against this Debtor. The allowed amount of this creditor's
secured and priority claims will be paid over 72 months, at 8% interest, for a
monthly payment of $10,982.58. The first payment will occur on the 28th day of
September, 2002, and will continue on the 28th day of each month thereafter
until the allowed secured and priority claims plus interest are paid in full.
Debtor may pre-pay this creditor without penalty. This creditor shall retain all
outstanding liens against the Debtors.
All currently due post petition taxes, interest, and penalty shall be
paid in full on or before the Effective Date of the Plans. In the event that any
payment due is not received within 30 days of its due date, the entire balance
owed SCDOR shall become immediately due and payable. All payments shall be
mailed to the following address:
South Carolina Department of Revenue
Office of General Counsel
Revenue Litigation Section
Post Office Box 125
Columbia, South Carolina 29214
(c) UCI Medical Affiliates of Georgia, Inc.- No claim filed.
(d) Doctor's Care, P.A. - SCDOR has filed a secured claim in the amount of
$26,982.91 and an unsecured priority claim in the amount of $476,077.54 against
this Debtor. The allowed amount of this creditor's secured and priority claims
will be paid over 72 months, at 8% interest, for a monthly payment of
$15,004.18. The first payment will occur on the 28th day of September, 2002, and
will continue on the 28th day of each month thereafter until the allowed secured
and priority claims plus interest are paid in full. Debtor may pre-pay this
creditor without penalty. This creditor shall retain all outstanding liens
against Debtor.
All currently due post petition taxes, interest, and penalty shall be
paid in full on or before the Effective Date of the Plans. In the event that any
payment due is not received within 30 days of its due date, the entire balance
owed SCDOR shall become immediately due and payable. All payments shall be
mailed to the following address:
South Carolina Department of Revenue
Office of General Counsel
Revenue Litigation Section
Post Office Box 125
Columbia, South Carolina 29214
(e) Doctor's Care of Tennessee, P.C. - No claim filed.
(f) Doctor's Care of Georgia, P.C. - No claim filed.
4. CLASS 4: Companion Technologies Corporation ("Companion Technologies"). This
creditor is an affiliate or subsidiary of Blue Cross/Blue Shield, which owns a
plurality of the Company's stock. The Debtors and this creditor are parties to a
lease agreement ("Agreement") wherein Debtors lease certain computer equipment
and software licenses. Incident to that lease is a service agreement, and by
separate agreement ("EPS Agreement"), CTC provides electronic patient statements
to Debtors. CTC asserts a lien on Debtors' receivables, machinery and equipment,
and other assets of the Debtors. Pursuant to a notice of settlement pending
before the Court, Debtors will assume the Agreement. The total amount owing
under the Agreement, $667,119.22, will be repaid over a 48-month period at 8%
interest, for a monthly payment of $16,286.33. Upon court approval of the notice
of settlement, Debtors will make the April 20, 2002 payment, which is currently
held by Debtors' counsel in escrow, and any other payment due under the
Agreement, and will continue making payments on the 20th of each month
thereafter until the total amount owed plus interest is paid in full. At the end
of the 48-month term, Debtors will own the equipment with no additional payment
required.
Debtors assume the service agreement, which is incident to the
Agreement, and the EPS Agreement, and will continue paying regular monthly
payments owed under those agreements.
5. CLASS 5: William O. Kirker. This creditor has a claim against UCI Medical
Affiliates of South Carolina, Inc. in the approximate amount of $808,555.00,
which is secured by an assignment of the Companion HealthCare Corporation lease
agreement. The allowed amount of this claim shall be repaid over 78 months, at
the fixed interest rate of 8%, for a monthly payment of $13,328.03. The first
payment will occur on or before the 21st day of September, 2002, and will
continue on the 21st day of each month thereafter until the allowed secured
claim plus interest is paid in full. Debtor may pre-pay this creditor without
penalty. This creditor shall retain all existing liens.
6. CLASS 6: Branch Banking & Trust ("BB&T"). BB&T is a creditor of UCI
Medical Affiliates of South Carolina, Inc., and has filed a proof of claim in
the amount of $217,047.00, which is secured by a mortgage on the real property
of such Debtor in Greenville, South Carolina. Debtor does not propose to modify
the existing loan documents and shall continue making the regular monthly
payment of $3,100.00. This creditor shall retain all existing liens.
7. CLASS 7: Carolina First Bank. The Company owes this creditor
approximately $267,000.00, which is secured by 300,000 shares of the Company's
stock. Debtor does not propose to modify the existing loan documents and shall
continue making the regular monthly payment of approximately $8,500.00. This
creditor shall retain all existing liens.
8. CLASS 8: Georgia Department of Revenue. This creditor has filed a unsecured
priority claim in the amount of $74,096.08 against Doctor's Care of Georgia,
P.C. Debtor believes this amount should be reduced to $8,675.65 to reflect the
Debtor's payment of 2001 withholding taxes. The allowed amount of the this claim
will be paid over 12 months, at 8% interest, for a monthly payment of $758.54.
In the event the allowed claim is greater than $8,675.65, the amount of the plan
payment will not be increased, but the term of repayment will be increased, not
to exceed 72 months total. The first payment will occur on the 28th day of
September, 2002, and will continue on the 28th day of each month thereafter
until the allowed priority claim plus interest is paid in full. Debtor may
pre-pay this creditor without penalty.
9. CLASS 9: Richland County Treasurer. This creditor has a claim in the amount
of $34,754.49 against UCI Medical Affiliates of South Carolina, Inc. The allowed
amount of the this claim will be paid over 12 months, at 8% interest, for a
monthly payment of $3,027.09. The first payment will occur on the 28th day of
September, 2002, and will continue on the 28th day of each month thereafter
until the allowed priority claim plus interest is paid in full. Debtor may
pre-pay this creditor without penalty.
10. CLASS 10: South Carolina Employment Security Commission. This creditor has
filed a proof of claim in the amount of $28,703.17 against UCI Medical
Affiliates of South Carolina, Inc. The allowed amount of the this claim will be
paid over 12 months, at 8% interest, for a monthly payment of $2,500.00. The
first payment will occur on the 28th day of September, 2002, and will continue
on the 28th day of each month thereafter until the allowed priority claim plus
interest is paid in full. Debtor may pre-pay this creditor without penalty.
11. CLASS 11: DeKalb County Tax Commission. This creditor has filed a proof
of claim in the amount of $676.26 against UCI Medical Affiliates of Georgia,
Inc. The allowed amount of the this claim will be paid in full within 30 days
after August 7, 2002.
12. CLASS 12: Assumed Leases of Non-Residential Real Property. This class
includes the following creditors: NE Partnership; Carol Cox; Indigo Associates;
Bob Dinkins; Frances Burris; Joy Carpenter; William Funderburk; Statewide
Partners (Charles J. Craig); Wateree Properties; Will-O-Cola; Jeff Smith;
Anthony Harrigan; Chris Borst; Michael Shanah; Strand Properties; James Vaught;
Four C's; Medical Development Corporation; and Companion HealthCare. Pursuant to
court order, Debtors have assumed the leases with these creditors and shall
continue making the lease payments and cure payments as set forth in previous
orders of the court.
13. CLASS 13: Assumed Leases of Personalty. This class consists of the
following creditors: AT&T Capital Leasing Services, Inc.; AT&T Credit Corp.;
BB&T Leasing; Carolina First Bank; First State Bank; Hi-Tec Financial; and IKON
Capital. As will be set forth in separate court order, Debtors will assume the
leases with these creditors and shall continue making the lease payments and
cure payments as set forth in previous orders of the court.
14. CLASS 14: Lease Rejection Claims. This class consists of all creditors who
assert a claim against the Debtors for termination damages as the result of the
Debtors' rejection of any lease or executory contract. The allowed claims of the
members of this class will participate with unsecured creditors in Class 16, and
such members will receive their pro rata share of the distribution to Class 16.
15. CLASS 15: Unsecured Creditors With Claims Less Than $1,000.00. This class
consists of approximately 80 creditors who hold claims against the Debtors in an
amount less than $1,000.00. The aggregate amount owed to this class is
approximately $25,000.00. The allowed amount of the claims of this class will be
paid over 6 months, at 0% interest, for a monthly payment of $4,166.67 to be
distributed on a pro rata basis. The first payment will be made on February 21,
2003, and on the 21st of each month thereafter until the allowed amount owed to
these class members is paid in full.
16. CLASS 16: Unsecured Creditors With Claims Greater Than $1,000.00. The
aggregate amount owed to this class of creditors is approximately $3,700,000.00.
The allowed amount of the claims of this class will be paid over 72 months, at
0% interest, for a monthly payment of $51,388.89 to be distributed to the
creditors of this class on a pro rata basis. In the event the aggregate amount
owed to this class is greater than $3,700,000.00, the proposed monthly payment
will remain the same, but the term of repayment will increase. The first payment
will be made on February 21, 2003, and on the 21st of each month thereafter
until the allowed amount owed to these class members is paid in full.
17. CLASS 17: Pending Litigation This class is comprised of any claims against
the Debtors as a result of resolution of any pending litigation. Members of this
class will share pro rata with the distribution to Class 16 creditors.
18. CLASS 18: FPA Medical Management, Inc. The debt owed to this creditor
is $1.5 million, which is secured by a convertible subordinated debenture. This
creditor previously filed a Chapter 7 bankruptcy and is no longer in existence.
Debtor proposes to pay this creditor $0.00.
19. CLASS 19: Equity Interests. This class consists of all entities or
individuals that have an ownership interest in any of the Debtors. Members of
this class shall retain their ownership interests. No new stock will be issued
pursuant to the Plans.
20. CLASS 20: Debtors' Professionals and the United States Trustee. This class
consists of the fees and expenses of the Debtors' professionals incurred during
the administration of this case, and includes payments due on a quarterly basis
to the United States Trustee. Debtors' professionals include Robinson, Barton,
McCarthy & Calloway, P.A., bankruptcy counsel; Ouzts, Ouzts & Varn, accountant
for bankruptcy purposes; Scott McElveen, general accountants; and Nexsen Pruet
Jacobs & Pollard, LLC, corporate counsel for the Debtors. Prior to August 8,
2002, these fees were paid only after fee application and approval by the Court.
United States Trustee fees will be paid on a regular basis until the case is
closed.
As of August 13, 2002, the number of shares of the company issued and
outstanding is 9,650,515, and the number of shares of the Company reserved for
future issuance in respect of claims and interests filed and allowed under the
Plans is zero. The aggregate total of the aforementioned numbers is 9,650,515.
The consolidated financial statements of the Company include the
accounts of the Debtors. Such consolidation is required under Emerging Issues
Task Force (EITF) 97-2 as a consequence of the nominee shareholder arrangement
that exists with respect to each of the Affiliates and as a consequence of the
Administrative Service Agreements between the Subsidiaries and the Affiliates,
all as more specifically described in the Company's 10-K filed with the
Securities and Exchange Commission as of February 6, 2002. Due to the nominee
shareholder arrangements and the Administrative Service Agreements, the Company
has a long-term financial interest in the practices of the Affiliates. According
to EITF 97-2, the application of FASB Statement No. 94 (Consolidation of All
Majority-Owned Subsidiaries), and AFB No. 16 (Business Combinations), the
Company must consolidate the results of the Debtors with those of the Company.
A statement of the assets and liabilities of the Debtors is contained
in the Company's Quarterly Report on Form 10-Q filed with the United States
Securities and Exchange Commission on August 8, 2002, which is incorporated by
reference herein.
Certain of the statements contained in this report on Form 8-K, the
Plans, the Disclosure Statement, and the Addendums that are not historical facts
are forward-looking statements subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. We caution readers of this report, the
Plans, and the Disclosure Statement that such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of us to be materially different
from those expressed or implied by such forward-looking statements. Although we
believe that our expectations of future performance is based on reasonable
assumptions within the bounds of our knowledge of our business and operations,
there can be no assurance that actual results will not differ materially from
our expectations.
Factors which could cause actual results to differ from expectations
include, among other things: (1) the challenges, costs and complications
associated with the continued maintenance of our facilities; (2) our dependence
on senior management; (3) competition from existing medical facilities operating
in our market areas as well as the entry into such areas of new competitors with
greater resources, broader facility networks and more comprehensive services;
(4) adverse conditions in the stock market, the public debt market, and other
capital markets (including changes in interest rate conditions); (5) the
strength of the United States economy in general and the strength of the local
economies in which we conduct operations may be different than expected
resulting in, among other things, a reduced demand for practice management
services; (6) the demand for our products and services; (7) technological
changes; (8) the ability to increase market share; (9) the adequacy of expense
projections and estimates of impairment loss; (10) the impact of changes in
accounting policies by the Securities and Exchange Commission; (11)
unanticipated regulatory or judicial proceedings; (12) the potential negative
effects of future legislation affecting medical facilities or medical practice
management institutions (including without limitation laws concerning taxes,
medicine, securities, and insurance); (13) the impact on our business, as well
as on the risks set forth above, of various domestic or international military
or terrorist activities or conflicts; (21) other factors described in this
report and in other reports filed by the company with the Securities and
Exchange Commission; and (22) our success at managing the risks involved in the
foregoing.
Item 7 - Financial Statements and Exhibits
(a) Not Applicable
(b) Not Applicable
(c) Exhibits
2.1 Order of Confirmation of UCI Medical Affiliates, Inc. Dated August 7,
2002
2.2 Order of Confirmation of UCI Medical Affiliates of South Carolina, Inc.
Dated August 5, 2002.
2.3 Order of Confirmation of UCI Medical Affiliates of Georgia, Inc. Dated
August 7, 2002.
2.4 Order of Confirmation of Doctor's Care, P.A. Dated August 8, 2002.
2.5 Order of Confirmation of Doctor's Care of Tennessee, P.C. Dated August
6, 2002.
2.6 Order of Confirmation of Doctor's Care of Georgia, P.C. Dated August 7,
2002.
2.7 Plan of Reorganization for UCI Medical Affiliates, Inc.
2.8 Plan of Reorganization for UCI Medical Affiliates of South Carolina,
Inc.
2.9 Plan of Reorganization for UCI Medical Affiliates of Georgia, Inc.
2.10 Plan of Reorganization for Doctor's Care, P.A.
2.11 Plan of Reorganization for Doctor's Care of Tennessee, P.C.
2.12 Plan of Reorganization for Doctor's Care of Georgia, P.C.
2.13 Joint Disclosure Statement Filed as of May 3, 2002.
2.14 Addendum to Joint Disclosure Statement and Plans of Reorganization
Filed as of June 14, 2002.
2.15 Second Addendum to Plans of Reorganization Filed as of July 29, 2002.
99.1 Press Release Issued by Company on August 15, 2002.
SIGNATURES
Pursuant to 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 hereto duly authorized.
UCI MEDICAL AFFILIATES, INC.
(Registrant)
_/s/ Jerry F. Wells, Jr.
Jerry F. Wells, Jr.
Executive Vice President of Finance,
Chief Financial Officer, and Secretary
Date: August 16, 2002