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) June 3, 1998
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GENTLE DENTAL SERVICE CORPORATION
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(Exact name of registrant as specified in its charter)
Washington 000-23673 91-1577891
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
222 North Sepulveda Boulevard, Suite 740, El Segundo, California 90245
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(Address of principal executive offices) (Zip Code)
(310) 765-2400
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(Registrants telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Item 5. Other Events.
On June 3, 1998, Gentle Dental Service Corporation (the "Company")
completed a $45 million private placement (the "Private Placement"), consisting
of $30 million of 7% convertible subordinated debt (the "Convertible Debt") and
$15 million of shares of preferred stock (the "Preferred Stock") of the Company.
The Private Placement was consummated in a two-step transaction involving a
small group of institutional investors (the "Investors"), including Chase
Capital Partners, The Sprout Group, Accel Partners, Bessemer Venture Partners
and St. Paul Venture Capital. The Investors purchased $13,500,204 of Preferred
Stock and $25,500,000 of Convertible Debt on May 18, 1998 and the remaining
$1,499,796 of Preferred Stock and $4,500,000 of Convertible Debt on June 3,
1998.
The Convertible Debt has an eight year term and is convertible into shares
of the Company's common stock, no par value ("Common Stock"), at 102.5% of the
average bid and asked prices over the 21-day period ending one day prior to the
announcement of the financing, which conversion rate equals $9.21 for each share
of Common Stock issuable upon conversion of outstanding principal and accrued
but unpaid interest on such Convertible Debt. If certain events of default
occur, the Convertible Debt then outstanding will automatically convert into
shares of Series B Preferred Stock at a rate of one share of Series B Preferred
Stock for each $1,000 in principal and accrued but unpaid interest on the
Convertible Debt, subject to adjustment for stock splits, reverse splits, stock
dividends, reorganizations and the like.
The Preferred Stock includes the following series: 100 shares of Series A
Preferred Stock, all of which is issued and outstanding; 70,000 shares of Series
B Preferred Stock, none of which is presently outstanding but which will be
issued automatically upon conversion of the then outstanding Convertible Debt,
as described above; 100 shares of Series C Preferred Stock, all of which is
issued and outstanding; and 2,000,000 shares of Series D Preferred Stock, of
which 1,628,663 shares are issued and outstanding. The shares of Series B
Preferred Stock are convertible into shares of the Company's Common Stock at the
rate of 108.58 shares of Common Stock for each share of Series B Preferred
Stock, and the shares of Series D Preferred Stock are convertible into shares of
the Company's Common Stock on a share for share basis, in each case subject to
adjustment for stock splits, reverse splits, stock dividends, reorganizations
and the like. The shares of Series A and Series C Preferred are not convertible
and have limited voting rights, but the holders of outstanding shares of Series
A Preferred Stock have, and upon the occurrence of certain events the holders of
outstanding shares of Series C Preferred Stock will have, the right to elect one
member of Company's Board of Directors.
The Company plans to use the proceeds from the financing for (i) repayment
of existing indebtedness, (ii) the payment of fees and expenses incurred in
connection with the consummation of the financing, (iii) working capital needs
and (iv) acquisitions of assets of dental practices that become affiliated with
the Company.
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Item 7. Financial Statements and Exhibits.
Exhibit Name Description
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4.1 Securities Purchase Agreement, dated May 12, 1998, by and
between the Company and the Purchasers named therein.
99.1 Press Release, dated June 12, 1998.
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.
Dated: June 30, 1998
GENTLE DENTAL SERVICE CORPORATION,
a Washington corporation
By: /s/ NORMAN R. HUFFAKER
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Norman R. Huffaker,
Chief Financial Officer
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