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): November 16, 2001
Commission File Number: 0-18942
ILM II SENIOR LIVING, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Virginia 06-1293758
------------------------ (I.R.S. Employer
(State of organization) --------------------
Identification No.)
1750 Tysons Boulevard, Suite 1200, Tysons Corner, Virginia 22102
- ---------------------------------------------------------- --------------------
(Address of principal executive office) (Zip Code)
(888) 257-3550
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(Registrant's telephone number, including area code)
(Page 1 of 5)
Exhibit Index Appears on Page 5
ITEM 5. OTHER EVENTS
Pursuant to its obligation to liquidate and distribute its assets on
December 31, 2001 in accordance with its Articles of Incorporation, on November
16, 2001, ILM II Senior Living, Inc., a Virginia finite-life corporation ("ILM
II") and its subsidiary, ILM II Holding, Inc., a Virginia corporation (together
with ILM II, the "Company") entered into a purchase and sale agreement (the
"Agreement") with BRE/Independent Living, LLC, a Delaware limited liability
company ("BRE"), pursuant to which the Company agreed to sell, and BRE agreed to
purchase, all of the Company's right, title and interest in and to its senior
and assisted living facilities and certain other related assets (the
"Facilities"). In consideration for the sale of these Facilities, BRE agreed,
subject to certain conditions and apportionments, to pay the Company a purchase
price of $45.5 million, approximately $2.275 million of which has been paid as a
refundable deposit, into escrow (the "Deposit").
Each of the parties' respective obligations under the Agreement is subject
to customary closing conditions and includes a broad "diligence out" for BRE
through December 31, 2001, which may be extended until March 1, 2002, providing
BRE with the right, in its sole discretion, to terminate the Agreement and
receive a refund of the Deposit if BRE is not satisfied with any aspect of the
Facilities as a result of its review, inspection and study of the Facilities
conducted during the diligence period. In the event BRE fails to terminate the
Agreement on or before January 31, 2002 pursuant to the termination right
mentioned above, unless BRE elects for the Deposit to become non-refundable, the
Company will be permitted to enter into a back-up agreement with a third party
for the sale of the Facilities, which third party agreement will become
effective in the event BRE terminates the Agreement. Further, under certain
circumstances, BRE is entitled to terminate the Agreement and receive up to $2.4
million from the Company as liquidated damages and in certain other
circumstances, the Company would be entitled to terminate the Agreement and
retain the Deposit as liquidated damages.
Prior to entering into the Agreement and in view of the pending
termination of the Company's finite life corporate existence, the Company
thought it was prudent to conduct an auction of the Company and the Facilities
and accordingly authorized management to work expeditiously with the Company's
legal and financial advisors to identify prospective purchasers of the Company's
capital stock or assets (by means of merger, strategic business combination,
tender offer or sale of the Company's senior and assisted living properties) and
to elicit bona fide offers for transactions to be consummated on or prior to
December 31, 2001 which would maximize current shareholder value. As part of a
five week auction process that ended on October 24, 2001, liquidation
announcements for ILM II were published in the Wall Street Journal and The
Washington Post. Through the process, 160 potential purchasers were identified,
comprehensive due diligence packages were distributed, and 126 potential
purchasers expressed interest in reviewing information relating to one or more
of the Company's senior and assisted living facilities. Of those potential
purchasers, 17 provided formal indications of interest, including eight parties
who were interested in acquiring only a single senior or assisted living
facility. Initial indications of interest for the Facilities, in terms of
purchase price, ranged from a low of $34.0 million to a high of $51.0 million,
the highest indication having been withdrawn
(Page 2 of 5)
shortly after it was made. Based upon the non-withdrawn indications of interest
received, the Company's Board of Directors, with the advice of its legal and
financial advisors, concluded that the BRE indication of interest was the
highest in terms of a proposed purchase price and was most likely to maximize
current shareholder value. Accordingly, the Company immediately entered into
negotiations with BRE which culminated in the execution of the Agreement.
Upon consummation of the transactions contemplated by the Agreement or
otherwise upon sale of the Facilities to a third party, the Company intends to
liquidate and distribute its assets in accordance with the Virginia Stock
Corporation Act, which provides for the distribution of the Company's assets
first to the Company's creditors for purposes of discharging all of the
Company's liabilities, and then, to the extent assets are remaining, to the
Company's shareholders in accordance with their respective rights and interests.
There can be no assurance as to whether the transactions contemplated by
the Agreement will be consummated or, if consummated, as to the exact timing
thereof. Similarly, there can be no assurance as to the timing of a liquidation
and distribution of the Company's assets or the amount of assets that will be
distributed to the Company's shareholders, if any.
The foregoing description is qualified in its entirety by the full text of
the Agreement filed as Exhibit 99.2 hereto and incorporated herein by reference.
This report contains "forward-looking statements" based on our current
expectations and projections about future events. These forward-looking
statements are subject to a number of risks and uncertainties which could cause
our actual results to differ materially from historical results or those
anticipated and certain of which are beyond our control. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
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:
99.1 Press Release of ILM II Senior Living, Inc. dated November
28, 2001.
99.2 Sale-Purchase Agreement by and among ILM II Senior Living,
Inc., ILM II Holding, Inc. and BRE/Independent Living, LLC.
(Page 3 of 5)
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.
---------------------------
J. William Sharman, Jr.
Chairman of the Board of Directors,
President and Chief Executive
Officer
Dated: November 28, 2001
(Page 4 of 5)
EXHIBIT INDEX
Page No.
99.1 Press Release of ILM II Senior Living, Inc. 6
dated November 28, 2001.
99.2 Sale-Purchase Agreement by and among ILM II 8
Senior Living, Inc., ILM II Holding, Inc.
and BRE/Independent Living, LLC.
(Page 5 of 5)