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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): April 18, 2000
Commission File Number: 0-18942
ILM II SENIOR LIVING, INC.
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(Exact name of registrant as specified in its charter)
Virginia 06-1293758
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(State of organization) (I.R.S. Employer
Identification No.)
1750 Tysons Boulevard, Suite 1200, Tysons Corner, Virginia 22102
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (888) 357-3550
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(Page 1 of 5 pages)
Exhibit Index Appears on Page 5
ITEM 5. OTHER EVENTS
On April 18, 2000, ILM II Senior Living, Inc., a Virginia finite-life
corporation (the "Company")entered into a First Amendment to the Amended and
Restated Agreement and Plan of Merger dated October 19, 1999 (as so amended)
(the "Amended Merger Agreement") with Capital Senior Living Corporation, a
Delaware corporation ("CSLC") and Capital Senior Living Acquisition, LLC, a
Delaware limited liability company and wholly owned subsidiary of CSLC ("Merger
Sub").
The Company was advised by CSLC that, due to deteriorating conditions in
the senior living industry and a decline in the loan value of the Company's
properties, CSLC was informed by its prospective lenders that they would not be
able to raise sufficient financing to fund the $74,982,000 purchase price
contemplated a the time of the original transaction.
Upon the terms and subject to the conditions of the Amended Merger
Agreement, the Company will be merged with and into Merger Sub, and Merger Sub
will be the surviving corporation in the merger (the "Merger"). Pursuant to the
Merger, among other things, each share of the Company's common stock, $.01 par
value ("Company Common Stock"), outstanding immediately prior to the effective
time of the Merger (the "Effective Time"), other than shares of Company Common
Stock owned by the Company, CSLC or Merger Sub (or any other subsidiary of the
Company or CSLC), automatically will be converted into the right to receive
approximately $13.04 in cash. The previous merger consideration announced in
October 1999 was $14.47 per share in cash. Holders of Company Common Stock will
have no dissenters' rights in the Merger. The Merger is intended to be reported
as a fully taxable acquisition by CSLC of the Company and will be recorded by
CSLC as a purchase for accounting purposes.
In connection with entering into the amended Merger Agreement, the Company
required CSLC to agree to pay the Company increased termination fees in
certain circumstances. In addition, the Company required CSLC to agree to reduce
the amount of fees and expenses it would receive upon termination of the Merger
in certain circumstances.
In connection with the merger, CSLC reported to the Company that it has
obtained the signed commitment of GMAC Commercial Mortgage Corporation to
provide CSLC with substantially all of the cash funds necessary to pay the
merger consideration. The GMAC financing commitment contains customary funding
and termination conditions and market "outs," and expires by its terms on July
31, 2000.
The Company has agreed that immediately prior to the Effective Time it
will cause its direct subsidiary and record owner of the Company's senior living
facilities, ILM II Holding, Inc. ("ILM II Holding"), to exercise its right to
terminate the Facilities Lease Agreement (the "Lease Agreement") dated September
1, 1995, between ILM II Holding and ILM II Lease Corporation, an affiliate of
the Company ("ILM II LeaseCo"). The Lease Agreement provides, among other
things, for the lease by ILM II LeaseCo of the senior housing facilities from
ILM II Holding and the payment to ILM II Holding of certain rents and fees in
respect of such lease. The Lease Agreement presently expires by its terms on
December 31, 2000, subject to earlier termination by
(Page 2 of 5 pages)
ILM II Holding in connection with the sale of the senior housing facilities to
an unaffiliated purchaser.
Consummation of the Merger is subject to certain conditions, including,
without limitation, (i) approval and adoption of the Amended Merger Agreement
and the Merger by the holders of not less than 66-2/3% of the outstanding
Company Common Stock, (ii) the receipt of all requisite consents and approvals
by public and governmental authorities, (iii) the transfer to the Company of the
senior housing facilities owned by ILM II Holding (together with cancellation of
the intercompany mortgage indebtedness thereon) and the liquidation of ILM II
Holding pursuant to Section 332 of the Internal Revenue Code of 1986, as
amended, (iv) the absence or nonoccurrence of certain material conditions and
events, and (v) certain other conditions to consummation customary in
transactions such as the Merger.
Simultaneously with entering into the Amended Merger Agreement, ILM Senior
Living, Inc., a Virginia finite-life corporation and an affiliate of the Company
("ILM I"), entered into a first amendment to the amended and restated agreement
and plan of merger with CSLC and Merger Sub providing for the merger of ILM I
with and into Merger Sub, (the "ILM I Merger Agreement") for aggregate cash
consideration of approximately $11.63 per outstanding share of ILM I common
stock, $.01 par value (the "ILM I Merger"). Consummation of the ILM I Merger is
not a condition to consummation of the Merger. If, however, the ILM I Merger is
consummated but the Merger is not consummated, the Company has agreed to cause
ILM II Holding to transfer its 75% fee simple interest in a certain California
senior housing facility to ILM I (or one of its wholly owned subsidiaries) at
the fair market value of such property. ILM I has made the reciprocal agreement
(with respect to its 25% fee simple interest in such property) in the ILM I
Merger Agreement.
There can be no assurance whether the Merger (or any of the transactions
contemplated thereby) will be consummated or, if consummated, as to the timing
thereof.
Item. 7 Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) The following Exhibits are filed as part of this Current Report on
Form 8-K:
2. First Amendment to the Amended and Restated Agreement and
Plan of Merger, dated April 18, 2000, among the Company,
CSLC, and Merger Sub (including all exhibits and schedules
thereto).
99.1. Press Release of the Company dated April 18, 2000.
(Page 3 of 5 pages)
SIGNATURES
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.
ILM II SENIOR LIVING, INC.
By: /s/J. William Sharman, Jr.
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J. William Sharman, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
Dated: April 24, 2000
(Page 4 of 5 pages)
EXHIBIT INDEX
No. Page No.
2. First Amendment to the Amended and Restated Agreement
and Plan of Merger dated April 18, 2000, among
the Company, CSLC and Merger Sub (including
schedules and exhibits thereto).
99.1 Press Release of the Company dated April 18, 2000
(Page 5 of 5 pages)