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Filed pursuant to Rule 424(b)(3)
Registration No. 333-54192
PROSPECTUS
$150,000,000
[PROVINCE HEALTHCARE LOGO]
4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2005
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We issued the notes at an issue price of $1,000.00 per note in a private
placement in November 2000. This prospectus will be used by selling
securityholders to resell their notes and our common stock into which the notes
are convertible.
The notes have the following terms:
- Holders may convert their notes at any time prior to maturity into shares
of our common stock at a conversion price of $39.67, which is equal to a
conversion rate of 25.2096 shares per $1,000 principal amount of notes,
subject to adjustment.
- We will pay interest on the notes on May 20 and November 20 of each year,
beginning May 20, 2001. The notes will mature on November 20, 2005.
- We may redeem some or all of the notes at any time on or after November
20, 2003 at the redemption prices described in this prospectus.
- The notes are unsecured and subordinated to our existing and future
senior indebtedness and senior subordinated indebtedness. In addition,
the notes effectively will rank junior to our subsidiaries' liabilities.
- The selling securityholders will receive all of the net proceeds from the
sale of the notes or the underlying common stock.
Our common stock is quoted on the Nasdaq National Market under the symbol
"PRHC."
INVESTING IN THE NOTES INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
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The date of this prospectus is March 27, 2001.
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[MAP OF THE UNITED STATES IDENTIFYING 14 OWNED/LEASED
HOSPITALS IN NINE STATES AND 40 MANAGED HOSPITALS IN 16 STATES.]
TABLE OF CONTENTS
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Summary........................................ 3
Risk Factors................................... 8
Forward-Looking Statements..................... 15
Selected Consolidated Financial Data........... 16
2000 Consolidated Financial Results............ 18
Use of Proceeds................................ 18
Dividend Policy................................ 18
Description of the Notes....................... 19
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Federal Income Tax Considerations.............. 32
Description of Capital Stock................... 40
Selling Securityholders........................ 42
Plan of Distribution........................... 45
Legal Matters.................................. 47
Experts........................................ 47
Where You Can Find Additional Information...... 48
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You should rely only on the information contained or incorporated by
reference in this prospectus. We have not, and the initial purchasers have not,
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not, and the initial purchasers are not, making an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is accurate
only as of the date on the front cover of this prospectus. Our business,
financial condition, results of operations and prospects may have changed since
that date.
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SUMMARY
The following summary is qualified by the more detailed information
appearing elsewhere in this prospectus or incorporated by reference and may not
contain all the information that is important to you. When used in this
prospectus, the terms "we," "our," and "us" refer to Province Healthcare Company
and not to the selling securityholders.
THE COMPANY
WHO WE ARE
We own and operate acute care hospitals located in non-urban markets in
nine states. We currently own or lease 14 general acute care hospitals with a
total of 1,358 licensed beds. Our objective is to be the primary provider of
quality health care services in the selected non-urban markets that we serve. We
offer a wide range of inpatient and outpatient medical services as well as
specialty services, including rehabilitation and home health care. We target
hospitals for acquisition that are the sole or a primary provider of health care
in non-urban communities. After acquiring a hospital, we implement a number of
strategies designed to improve financial performance. These strategies include
improving hospital operations, expanding the breadth of services and recruiting
physicians to increase market share. We also provide management services to 40
primarily non-urban hospitals in 16 states with a total of 3,166 licensed beds.
For the year ended December 31, 1999 and the nine months ended September 30,
2000, we had, on a pro forma basis to reflect full-year results for hospitals we
acquired during such periods, net operating revenue of $415.3 million and $357.0
million, respectively, and EBITDA, the sum of income before income taxes,
interest, depreciation and amortization and minority interest, of $68.9 million
and $61.9 million, respectively. During these periods, our owned and leased
hospitals accounted for 94.2% and 95.8% of net operating revenue, respectively.
THE NON-URBAN HEALTH CARE MARKET
We believe that non-urban areas are attractive markets. Because non-urban
service areas have smaller populations, there are generally only one or two
hospitals in each market. We believe the size and demographic characteristics of
non-urban markets and the relative strength of many rural hospitals also make
non-urban markets less attractive to health maintenance organizations, other
forms of managed care, and alternate site providers, such as outpatient surgery,
rehabilitation or diagnostic imaging centers.
Despite these attractive characteristics for health care service
providers, many not-for-profit and governmental operators of non-urban hospitals
are under increasing pressure arising from capital constraints, limited
management resources and the challenges of managing in a complex health care
regulatory environment. This combination of factors may result in a limited
range of services being available locally in any non-urban market. As a result,
patients by choice or physician direction may obtain care outside of their
community. This outmigration often leads to the non-urban hospital's
deteriorating operating performance, further limiting its ability to address the
issues that initially led to these pressures. Ultimately, these pressures can
force owners to sell or lease their hospitals to companies, like us, that have
greater financial and management resources coupled with proven operating
strategies to address these issues and thereby serve the community better.
BUSINESS STRATEGY
The key elements of our business strategy are to:
ACQUIRE HOSPITALS IN ATTRACTIVE NON-URBAN MARKETS. We seek to acquire
hospitals that are the sole or a primary provider of health care services in
their markets and that present us the opportunity to increase profitability and
market share. We believe there are approximately 1,500 non-urban hospitals in
the United States that meet our acquisition criteria, and our goal is to acquire
two to four of these hospitals each year.
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IMPROVE HOSPITAL OPERATIONS. Following the acquisition of a hospital, we
augment local management with appropriate operational and financial managers and
install our standardized information system. The local management team
implements appropriate expense controls, manages staffing levels according to
patient volumes, reduces supply costs by requiring strict compliance with our
supply arrangements, and renegotiates some of the vendor contracts. By
implementing this strategy, we seek to improve operating performance at each of
the hospitals we acquire.
EXPAND BREADTH OF SERVICES TO INCREASE LOCAL MARKET SHARE AND REDUCE
PATIENT OUTMIGRATION. We seek to provide additional health care services and
programs in response to community needs. These services may include specialty
inpatient, outpatient and rehabilitation. We also may make capital investments
in technology and the physical plant to improve both the quality of health care
and the reputation of the hospital in the community. By providing a broader
range of services in a more attractive setting, we enable residents in our
markets to seek care in our hospitals, thereby stemming patient outmigration and
increasing hospital revenues.
RECRUIT PHYSICIANS. We believe that recruiting physicians to local
communities is key to increasing the quality of health care and breadth of
available services. We work with the local hospital board, management and
medical staff to determine the number and type of additional physicians needed
in the community. Our corporate physician recruiting staff then assists the
local management team in identifying and recruiting specific physicians to the
community to meet those needs. During 1998, we recruited 54 new physicians, and
during 1999, we recruited 49 additional physicians. In 2000, we recruited 60 new
physicians.
Approximately 50% of the physicians recruited in 1998, 1999 and 2000 were
primary care physicians and approximately 50% were specialty care physicians. We
believe that expansion of services in our hospitals also should assist in future
physician recruiting efforts.
OUR FORMATION
We were founded in February 1996 by Golder, Thoma, Cressey, Rauner Fund
IV, L.P. and Martin S. Rash to acquire and operate hospitals in non-urban
markets. We acquired our first hospital, Memorial Mother Frances Hospital in
Palestine, Texas, in July 1996. In December 1996, we acquired Brim, Inc., an
owner and operator of non-urban hospitals, in a transaction accounted for as a
reverse acquisition. Because we had been in existence for less than a year at
December 31, 1996, and because Brim, Inc. had been in existence for several
years, we are considered the successor to Brim, Inc.'s operations. We completed
an initial public offering on February 10, 1998 and follow-on equity offerings
on July 8, 1998 and April 6, 2000. Our common stock is quoted on the Nasdaq
National Market under the symbol "PRHC."
RECENT DEVELOPMENTS
The following is a brief summary of certain developments since January 1,
2000:
On February 15, 2000, we entered into a long-term capital lease agreement
for the City of Ennis Hospital, a 45-bed general acute care facility, located in
Ennis, Texas, approximately 35 miles southeast of Dallas. The total service
area, consisting of Ennis and surrounding Ellis County, has a population of
approximately 85,000. The long-term lease requires aggregate rental payments of
$3.0 million over a thirty-year period. The hospital previously was operated by
Baylor Healthcare System, which had closed inpatient services at the time of the
commencement of the lease. The hospital is operating now as a full service acute
care facility.
On April 15, 2000, we entered into a long-term capital lease agreement
for Bolivar Medical Center, a general acute care facility with 141 acute care
beds, 24 skilled nursing beds and 35 long-term care beds located in Cleveland,
Mississippi, approximately 100 miles south of Memphis, Tennessee. The total
service area population of Bolivar Medical Center is 55,000. Aggregate payments
under the forty-year lease total $26.4 million, and were prepaid at the time of
acquisition.
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In April 2000, we completed our public offering of 6,333,756 shares of
common stock. Net proceeds from the offering were approximately $94.8 million.
On September 28, 2000, we completed a three-for-two stock split in the
form of a 50% common stock dividend to shareholders of record on September 15,
2000.
Effective October 1, 2000, we sold substantially all of the assets of
Ojai Valley Community Hospital, a 110-bed general acute care facility located in
Ojai, California, to the Ojai Community Hospital Foundation. The sale price for
the hospital was approximately $2.0 million, including working capital. After
application of tax benefits, we recorded a loss on the sale of approximately
$6.0 million in the fourth quarter of 2000.
On November 20, 2000, we sold $125.0 million of notes being registered
pursuant to this registration statement, and on December 5, 2000, we sold an
additional $25.0 million overallotment which are also being registered pursuant
to this registration statement.
Effective December 22, 2000, we completed the sale of substantially all
of the assets of General Hospital, a 75-bed acute care hospital, located in
Eureka, California to St. Joseph Health System. The sale price for the hospital
was $26.5 million, plus approximately $5.0 million for working capital, subject
to settlement after 90 days.
On February 21, 2001, we announced our consolidated financial results for
the fourth quarter and year ended December 31, 2000. On a pro forma basis,
diluted earnings per share was $0.23 for the fourth quarter and $0.79 for the
year.
PRINCIPAL EXECUTIVE OFFICES
Our principal executive offices are located at 105 Westwood Place, Suite
400, Brentwood, Tennessee 37027, and our telephone number is (615) 370-1377. You
may obtain additional information about the company from our website
(www.provincehealthcare.com). Information contained on our website is not
incorporated by reference into this prospectus and should not be considered to
be part of this prospectus. Our website address is included in this prospectus
as an inactive textual reference only.
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THE OFFERING
Notes offered................. The resale by selling securityholders of
$150,000,000 aggregate principal amount of
4 1/2% Convertible Subordinated Notes due
November 20, 2005.
Maturity...................... November 20, 2005.
Interest...................... 4 1/2% per year on the principal amount,
payable semiannually on May 20 and November 20,
beginning on May 20, 2001.
Conversion rights............. The notes are convertible at the option of the
holder at any time on or prior to maturity into
shares of our common stock at a conversion
price of $39.67 per share, which is equal to a
conversion rate of 25.2096 shares per $1,000
principal amount of notes. The conversion price
is subject to adjustment. See "Description of
the Notes -- Conversion Rights."
Optional redemption........... We may redeem all or a portion of the notes on
or after November 20, 2003 at the redemption
prices described in this prospectus, plus
accrued and unpaid interest.
Change of Control............. Upon a change of control event, each holder of
the notes may require us to repurchase all of
that holder's notes not previously called for
redemption, or any portion of those notes that
is equal to $1,000 or a whole multiple of
$1,000 at a repurchase price equal to 100% of
the principal amount of the notes plus accrued
and unpaid interest. We may, at our option,
instead of paying the change of control
purchase price in cash, pay it in shares equal
to the purchase price divided by 95% of the
average of the closing sales prices of our
common stock for the five trading days
immediately preceding and including the third
trading day prior to the repurchase date. We
cannot pay the change of control purchase price
in common stock unless we satisfy the
conditions described in the indenture under
which the notes were issued. The term "change
of control" is defined in the indenture and is
summarized in the "Description of
Notes -- Repurchase at Option of Holders Upon a
Change of Control" section of this prospectus.
Ranking....................... The notes are our unsecured subordinated
obligations. They rank junior in right of
payment to all of our existing and future
senior indebtedness. We had approximately $36.5
million of senior indebtedness outstanding as
of March 1, 2001. The term "senior
indebtedness" is defined in the indenture and
is summarized in the "Description of
Notes -- Subordination" section of this
prospectus.
In addition, we are structured as a holding
company and we conduct most of our business
operations through our subsidiaries. The notes
will be effectively subordinated to all
existing and future indebtedness and other
liabilities and commitments of our
subsidiaries.
Our subsidiaries had aggregate liabilities of
approximately $9.1 million as of March 1, 2001.
See "Description of the
Notes -- Subordination."
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Use of proceeds............... The selling securityholders will receive all of
the proceeds from the sale of the notes and
common stock under this prospectus. We will not
receive any of the proceeds from the sales by
any selling securityholders of notes or the
underlying common stock.
Trading....................... The notes will no longer be eligible for
trading in The PORTAL Market.
Risk factors.................. See "Risk Factors" and other information in
this prospectus for a discussion of factors you
should consider carefully before deciding to
invest in the notes.
Common stock.................. As of March 1, 2001, there were 31,099,081
shares of our common stock issued and
outstanding (excluding shares available for
issuance under our stock option plan and our
employee stock purchase plan). All historical
references in this prospectus to transactions
in our common stock and per share data have
been restated to reflect the 3-for-2 stock
split that we effected as a stock dividend on
September 28, 2000. Our common stock is quoted
on the Nasdaq National Market under the symbol
"PRHC." See "Description of Capital Stock."
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RISK FACTORS
An investment in the securities offered by this prospectus involves a
high degree of risk. You should consider carefully the following factors and
other information in and incorporated by reference in this prospectus before
deciding to purchase the notes.
IF GOVERNMENT PROGRAMS REDUCE THE PAYMENTS WE RECEIVE AS REIMBURSEMENT FOR OUR
SERVICES, OUR REVENUES MAY DECLINE.
In 1998, 68.9%, in 1999, 68.6% and for the nine-month period ended
September 30, 2000, 73.7% of our hospital patient days were derived from the
Medicare and Medicaid programs, which are highly regulated and subject to
frequent and substantial changes. The Federal Balanced Budget Act of 1997, which
established a plan to balance the federal budget by fiscal year 2002, includes
significant reductions in spending levels for the Medicare and Medicaid
programs, including:
- payment reductions for inpatient and outpatient hospital services;
- establishment of a prospective payment system for hospital outpatient
services, skilled nursing facilities and home health agencies under
Medicare; and
- repeal of the federal payment standard often referred to as the "Boren
Amendment" for hospitals and nursing facilities, which could result in
lower Medicaid reimbursement rates.
The financial impact of the Federal Balanced Budget Act of 1997, however,
has been lessened somewhat by the Medicare, Medicaid, and SCHIP Benefits
Improvement, and Protection Act of 2000.
In the future, Congress and state legislatures could introduce proposals
to make major changes in the health care system. If these proposals are enacted,
we may see a decline in the Medicare and Medicaid reimbursements we receive for
our services; however, at this time, we do not know what health care reform
legislation will be enacted or whether changes in health care programs will
occur.
HEALTH CARE COST CONTAINMENT INITIATIVES BY PURCHASERS OF HEALTH CARE SERVICES
MAY LIMIT OUR REVENUE AND PROFITABILITY.
During the past several years, major purchasers of health care, such as
federal and state governments, insurance companies and employers, have
undertaken initiatives to revise payment methodologies and monitor health care
costs. As part of their efforts for continuing health care costs, purchasers
increasingly are demanding discounted fee structures or the assumption by
healthcare providers of all or a portion of the financial risk through prepaid
capitation arrangements. We expect efforts to impose reduced allowances, greater
discounts and more stringent cost controls by government and other payors to
continue. In addition, we anticipate that organizations offering principal and
discounted medical services packages may represent an increasing portion of our
patient admissions. We believe that reductions in the payments we receive for
our services, coupled with the increased percentage of patient admissions from
organizations offering prepaid and discounted medical services, could reduce our
overall revenue.
IF WE FAIL TO COMPLY WITH REGULATIONS REGARDING LICENSES, OWNERSHIP AND
OPERATION, WE COULD IMPAIR OUR ABILITY TO OPERATE OR EXPAND OUR OPERATIONS IN
ANY STATE.
All of the states in which we operate require hospitals and most health
care facilities to maintain a license. In addition, some states require prior
approval for the purchase, construction and expansion of health care facilities,
based upon a state's determination of need for additional or expanded health
care facilities or services. Such determinations, embodied in certificates of
need issued by governmental agencies with jurisdiction over health care
facilities, may be required for capital expenditures exceeding a prescribed
amount, changes in bed capacity or services and other matters. Three states in
which we currently own hospitals, Mississippi, Florida and Nevada, have
certificate of need laws. The failure to
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obtain any required certificate of need or the failure to maintain a required
license could impair our ability to operate or expand operations in any state.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION REGARDING OUR CONDUCT OF
OPERATIONS AND RELATIONSHIPS WITH PHYSICIANS. IF WE FAIL TO COMPLY WITH THESE
REGULATIONS, WE COULD SUFFER PENALTIES OR BE REQUIRED TO MAKE SIGNIFICANT
CHANGES TO OUR OPERATIONS.
The health care industry must comply with many laws and regulations at
the federal, state and local governmental levels. These laws and regulations are
extremely complex and, in many instances, the industry does not have the benefit
of significant regulatory or judicial interpretation. In particular, Medicare
and Medicaid antifraud and abuse provisions, known as the "anti-kickback
statute," prohibit some business practices and relationships related to items or
services reimbursable under Medicare, Medicaid and other federal health care
programs. For instance, the anti-kickback statute prohibits health care service
providers from paying or receiving remuneration to induce or arrange for the
referral of patients or items or services covered by a federal or state health
care program.
If regulatory authorities determine that any of our hospitals'
arrangements violate the anti-kickback statute, we could be subject to
liabilities under the Social Security Act, including:
- criminal penalties;
- civil monetary penalties; and/or
- exclusion from participation in Medicare, Medicaid or other federal
health care programs, any of which could impair our ability to operate
one or more of our hospitals or to operate profitably.
The Health Insurance Portability and Accountability Act of 1996, which
became effective January 1, 1997, added new anti-fraud and abuse laws that
include all health care services, whether or not they are reimbursed under a
federal or state program. In addition, this statute requires hospitals and other
providers to implement measures to ensure the privacy of patients' medical
records. We may incur additional expenses in order to comply with the standards.
We cannot predict the extent of our costs for implementing the requirements at
this stage.
In addition, the portion of the Social Security Act commonly known as the
"Stark law" prohibits physicians from referring Medicare or Medicaid patients to
particular providers of designated health services if the physician or a member
of his immediate family has an ownership interest or compensation arrangement
with that provider. In January 2001, the Healthcare Financing Administration
released the first phase of the final Stark regulations and Phase II of the
final Stark regulations are forthcoming. Sanctions for violating the Stark law
include civil money penalties and possible exclusion from the Medicare program.
Many states have adopted or are considering similar anti-kickback and physician
self-referral legislation.
THERE ARE HEIGHTENED COORDINATED CIVIL AND CRIMINAL ENFORCEMENT EFFORTS BY
FEDERAL AND STATE GOVERNMENT AGENCIES RELATING TO THE HEALTH CARE INDUSTRY. WE
MAY BECOME THE SUBJECT OF AN INVESTIGATION IN THE FUTURE.
In recent years, the media and public attention have focused on the
hospital industry due to ongoing investigations related to:
- referral, cost reporting and billing practices;
- laboratory and home health care services; and
- physician ownership and joint ventures involving hospitals.
Both federal and state government agencies have announced heightened and
coordinated civil and criminal enforcement efforts. In addition, the Office of
the Inspector General of the U.S. Department of
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Health and Human Services and the Department of Justice have established
enforcement initiatives that focus on specific billing practices or other
suspected areas of abuse. Recent initiatives include a focus on hospital billing
for outpatient charges associated with inpatient services, as well as hospital
laboratory billing practices.
We cannot predict whether we or other hospital operators will be the
subject of future investigations or inquiries. In the event that we become the
subject of an investigation, we will be required to devote management and
financial resources to defending our company in the investigation. In addition,
any negative publicity surrounding the investigation could affect adversely the
price of our common stock and the notes. If we incur significant fines or
penalties as a result of the investigation, our profitability may decline.
WE MAY NEED TO OBTAIN ADDITIONAL FINANCING IN ORDER TO FUND OUR ACQUISITION
PROGRAM AND CAPITAL EXPENDITURES, AND ADDITIONAL FINANCING MAY NOT BE AVAILABLE
WHEN NEEDED.
Our acquisition program requires substantial capital resources. Likewise,
the operations of our existing hospitals require ongoing capital expenditures
for renovation, expansion and the addition of medical equipment and technology
utilized in the hospitals.
For example, we are undertaking an expansion of Havasu Regional Medical
Center that we anticipate will cost approximately $26.0 million, of which $4.0
million has been expended. Also, we have committed to build a replacement
facility for Elko General Hospital that we estimate will cost approximately
$30.0 million, of which $4.4 million has been expended. Further, if specified
operating targets are achieved, we have agreed to build replacement facilities
for Eunice Community Medical Center and Glades General Hospital. These two
facilities are expected to cost approximately $20.0 million and $25.0 million,
respectively.
We may need to incur additional indebtedness and may issue, from time to
time, debt or equity securities to fund these expenditures. We may not receive
financing on satisfactory terms. In addition, our existing level of indebtedness
may restrict our ability to borrow additional funds. If we are not able to
obtain financing, then we may not be in a position to consummate acquisitions or
undertake capital expenditures.
OUR GROWTH STRATEGY DEPENDS ON ACQUISITIONS, AND WE MAY NOT BE ABLE TO MANAGE
OUR GROWTH EFFECTIVELY OR ACQUIRE HOSPITALS THAT MEET OUR TARGET CRITERIA. WE
ALSO MAY HAVE DIFFICULTIES ACQUIRING HOSPITALS FROM NON-PROFIT ENTITIES DUE TO
REGULATORY SCRUTINY.
A key element of our growth strategy is expansion through the acquisition
of acute care hospitals in attractive non-urban markets. We face competition for
acquisitions primarily from other for-profit health care companies as well as
not-for-profit entities. Some of our competitors have greater financial and
other resources than we do. Even though we may acquire additional hospitals, we
may not be able to acquire a sufficient number of hospitals that meet our target
criteria in order to implement successfully our growth strategy.
Hospital acquisitions generally require a longer period to complete than
acquisitions in many other businesses and are subject to additional regulatory
uncertainty. In recent years, the legislatures and attorneys general of some
states have shown a heightened level of interest in transactions involving the
sale of hospitals by not-for-profit entities. Although the level of interest
varies from state to state, the trend is to provide for increased governmental
review, and in some cases approval, of transactions in which not-for-profit
entities sell a health care facility. Attorneys general in some states,
including California, where we own or lease two hospitals, have been especially
active in evaluating these transactions. Although we have not yet been adversely
affected as a result of these trends, such increased scrutiny may increase the
difficulty or prevent the completion of transactions with not-for-profit
organizations in some states in the future, and may affect our ability to
exercise existing purchase options for hospitals, including Palo Verde Hospital
in Blythe, California, where our lease expires in December 2002.
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WE HAVE A CONCENTRATION OF REVENUE IN TEXAS AND ARIZONA, WHICH MAKES US
PARTICULARLY SENSITIVE TO REGULATORY AND ECONOMIC CHANGES IN THOSE STATES.
Three of our 14 owned or leased hospitals are located in Texas. As a
result of our acquisition of Trinity Valley Medical Center in Palestine, Texas,
in October 1999, the percentage of our net operating revenue originating from
our Texas facilities increased to an aggregate of 21.0% for the nine-month
period ended September 30, 2000. Furthermore, Trinity Valley Medical Center
merged with Memorial Mother Frances Hospital to form Palestine Regional Medical
Center, which accounted for 14.7% of our net operating revenue for the same
period. This concentration makes us particularly sensitive to economic,
competitive and regulatory conditions in Texas. Any adverse change in these
conditions could reduce significantly our revenues.
We also own Havasu Regional Medical Center in Lake Havasu City, Arizona,
which accounted for approximately 15.8%, 17.6% and 15.5% of our net operating
revenue for the years ended December 31, 1998 and 1999 and the nine-month period
ended September 30, 2000, respectively. Similarly, this concentration of revenue
in Arizona makes us particularly sensitive to economic, competitive and
regulatory conditions in Arizona. Any adverse change in these conditions could
reduce significantly our revenues.
OUR CALIFORNIA HOSPITALS MUST COMPLY WITH CALIFORNIA SEISMIC STANDARDS WHICH MAY
REQUIRE US TO MAKE SIGNIFICANT CAPITAL EXPENDITURES.
California has a statute and regulations that require hospitals to meet
seismic performance standards. Regulated hospitals that do not meet the
standards may be required to retrofit facilities. California law requires that
owners of regulated hospitals evaluate their facilities and develop a plan and
schedule for complying with the standards. We are required to conduct
engineering studies of our California facilities to determine whether and to
what extent modifications to our facilities will be required. Compliance plans,
if necessary, must be filed with the State of California by 2002. Any facilities
not currently in compliance with the seismic regulations and standards must be
brought into compliance by 2008, or 2013 if the facility obtains an extension.
We may be required to make significant capital expenditures to comply with the
seismic standards, which could impact our earnings.
OUR PERFORMANCE DEPENDS ON OUR ABILITY TO RECRUIT AND RETAIN QUALITY PHYSICIANS,
NURSES AND OTHER HEALTH CARE PROFESSIONALS AT OUR HOSPITALS.
The success of our owned or leased hospitals depends on the following
factors:
- the number and quality of the physicians on the medical staff of, or
who admit patients to, our hospitals;
- the admissions practices of those physicians; and
- the maintenance of good relations between our company and such
physicians.
We generally do not employ physicians, and most of our staff physicians
have admitting privileges at other hospitals. Only a portion of physicians are
interested in practicing in the non-urban communities in which our hospitals are
located, and the loss of physicians in these communities, or inability to
recruit physicians to these communities, could make it more difficult to attract
patients to our hospitals and could affect our profitability.
Nationwide, hospitals are experiencing a shortage of nursing
professionals, a trend which many industry observers expect to continue over the
next decade. If the supply of qualified nurses or other healthcare professionals
declines in the markets in which our hospitals operate, it may result in
increased labor expenses and lower operating margins at those hospitals.
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WE DEPEND HEAVILY ON KEY PERSONNEL, AND LOSS OF THE SERVICES OF ONE OR MORE OF
OUR KEY SENIOR OR A SIGNIFICANT PORTION OF OUR LOCAL MANAGEMENT PERSONNEL COULD
WEAKEN OUR MANAGEMENT TEAM AND OUR ABILITY TO DELIVER HEALTH CARE SERVICES
EFFICIENTLY.
Our success largely depends on the skills, experience and efforts of our
senior management. Our operations also are dependent on the efforts, ability and
experience of key members of our local management staff. The loss of services of
one or more members of our senior management or of a significant portion of any
of our local management staff could weaken significantly our management
expertise and our ability to deliver health care services efficiently. We do not
maintain key man life insurance policies on any of our officers.
OTHER HOSPITALS PROVIDE SIMILAR SERVICES, WHICH MAY RAISE THE LEVEL OF
COMPETITION FACED BY OUR HOSPITALS.
In all geographical areas in which we operate, there are other hospitals
that provide comparable services to those offered by our hospitals, some of
which are owned by governmental agencies and supported by tax revenues, and
others of which are owned by not-for-profit corporations and may be supported to
a large extent by endowments and charitable contributions. Some of these
competitors are larger, may be more established and may have more capital and
other resources than we do. Many of our hospitals attempt to attract patients
from surrounding counties and communities, including communities in which a
competing hospital exists. If our competitors are able to finance capital
improvements and expand services at their facilities, we may be unable to
attract patients away from these hospitals.
WE MAY BE SUBJECT TO LIABILITIES BECAUSE OF CLAIMS BROUGHT AGAINST OUR OWNED AND
LEASED HOSPITALS. IN ADDITION, IF WE ACQUIRE HOSPITALS WITH UNKNOWN OR
CONTINGENT LIABILITIES, WE COULD BECOME LIABLE FOR MATERIAL OBLIGATIONS.
In recent years, plaintiffs have brought actions against hospitals and
other health care providers, alleging malpractice, product liability or other
legal theories. Many of these actions involved large claims and significant
defense costs. We maintain professional malpractice liability insurance and
general liability insurance in amounts that management believes are sufficient
for its operations to cover claims arising out of the operations of its owned
and leased hospitals. Some of the claims, however, could exceed the scope of the
coverage in effect or coverage of particular claims could be denied. While our
professional and other liability insurance has been adequate in the past to
provide for liability claims, such insurance may not be available for us to
maintain adequate levels of insurance.
In addition, hospitals that we acquire may have unknown or contingent
liabilities, including liabilities for failure to comply with health care laws
and regulations. Although we obtain contractual indemnification from sellers
covering these matters, such indemnification may be insufficient to cover
material claims or liabilities for past activities of acquired hospitals.
WE MAY BE SUBJECT TO LIABILITIES BECAUSE OF CLAIMS ARISING FROM OUR HOSPITAL
MANAGEMENT ACTIVITIES.
We may be subject to liabilities from the acts, omissions and liabilities
of the employees of hospitals we manage or from the actions of our employees in
connection with the management of such hospitals. Our hospital management
contracts generally require the hospitals we manage to indemnify us against
certain claims and to maintain specified amounts of insurance. The hospitals,
however, may not maintain such insurance and indemnification may not be
available to us. Recently, other hospital management companies have been subject
to complaints alleging that these companies violated laws on behalf of hospitals
they managed. In some cases, plaintiffs brought actions against the managing
company instead of, or in addition to, their individually managed hospital
clients for these violations. Our managed hospitals or other third parties may
not hold us harmless for any losses we incur arising out of the acts, omissions
and liabilities of the employees of the hospitals we manage. If the courts
determine that we are liable for amounts exceeding the limits of any insurance
coverage or for claims outside the scope of that coverage or any indemnity, or
if any indemnity agreement is determined to be unenforceable, then the resulting
liability could affect adversely our business, results of operations and
financial condition.
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THE NOTES ARE SUBORDINATED TO ANY EXISTING AND FUTURE SENIOR INDEBTEDNESS, WHICH
MAY RESTRICT OR PROHIBIT US FROM MAKING PAYMENTS ON THE NOTES.
The notes are contractually subordinated in right of payment to our
existing and future senior indebtedness. As of March 1, 2001, we had
approximately $36.5 million of senior indebtedness. This liability ranks prior
in right of payment to the notes. The indenture does not limit the creation of
additional indebtedness. Any significant additional indebtedness incurred may
impact adversely our ability to service our debt, including the notes. Due to
the subordination provisions, in the event of our insolvency, funds which we
would otherwise use to pay the holders of the notes will be used to pay the
holders of senior indebtedness to the extent necessary to pay the senior
indebtedness in full. As a result of these payments, our general creditors may
recover more, ratably, than the holders of the notes. In addition, under some
circumstances described in our senior indebtedness agreements, the holders of
our senior indebtedness may restrict or prohibit us from making payments on the
notes.
OUR LEVERAGE COULD AFFECT ADVERSELY OUR ABILITY TO RUN OUR BUSINESS.
We have now and will continue to have a significant amount of
indebtedness. As of March 1, 2001, we had $161.9 million of long-term
obligations outstanding, net of current maturities and excluding $24.6 million
in financings under the end-loaded lease facility portion of our credit
facility, and had additional availability under our credit facility of $264.3
million. This indebtedness could affect our business in the following ways:
- limit our ability to obtain additional financing for working capital,
capital expenditures, acquisitions and general corporate purposes;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the funds
available to us for working capital, capital expenditures, acquisitions
and general corporate purposes;
- make us more vulnerable to economic downturns and reduce our
flexibility in responding to changing business and economic conditions;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit our ability to borrow additional funds.
RESTRICTIVE DEBT COVENANTS IN OUR CREDIT FACILITY LIMIT OUR OPERATIONAL AND
CAPITAL FLEXIBILITY, WHICH COULD AFFECT OUR ABILITY TO FINANCE FUTURE OPERATIONS
OR CAPITAL NEEDS.
Our credit facility contains significant covenants that, among other
things, restrict our ability to:
- dispose of assets;
- incur additional indebtedness;
- pay dividends on or repurchase our common stock;
- merge or consolidate; and
- engage in transactions with affiliates.
These restrictions could affect adversely our ability to finance our
future operations or capital needs or engage in other business activities that
may be in the best interests of our stockholders.
Also, our credit facility requires us to maintain compliance with the
financial ratios included in that facility. Our ability to comply with these
ratios may be affected by events beyond our control. A breach of any of these
covenants or our inability to comply with the required financial ratios could
result in a default under our credit facility. If a default were to occur, the
lenders could require us to repay all
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borrowings outstanding under our credit facility or require us to apply all of
our available cash to repay these borrowings. If the indebtedness under our
credit facility were accelerated, our assets may not be sufficient to repay this
indebtedness.
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE. FLUCTUATIONS IN THE
MARKET PRICE FOR OUR COMMON STOCK MAY AFFECT THE PRICE OF THE NOTES.
The trading price of our common stock has been and may continue to be
subject to large fluctuations. Our stock price may increase or decrease in
response to a number of events and factors, including:
- quarterly variations in operating results;
- changes in financial estimates and recommendations by securities
analysts;
- the operating and stock price performance of other companies that
investors may deem comparable;
- news reports relating to trends in our industry and the markets in
which we operate;
- acquisitions and financings; and
- sales of blocks of stock by insiders.
The majority of this volatility, however, is attributable to the current
state of the stock market, in which wide price swings are common. This
volatility may adversely affect the price of our common stock, regardless of our
operating performance. Because the notes are convertible into common stock,
fluctuations in the trading price of our common stock may affect the price of
the notes.
WE MAY NOT BE ABLE TO REPURCHASE THE NOTES, IF REQUIRED.
In some circumstances involving a change of control, the holders of the
notes may require us to repurchase some or all of the notes. We may not have
sufficient financial resources at such time, or the ability to arrange financing
to pay the repurchase price of the notes. Our ability to repurchase the notes in
such event may be limited by law, the indenture, by the terms of other
agreements relating to our existing indebtedness ranking senior to the notes and
as such indebtedness and agreements may be entered into, replaced, supplemented
or amended from time to time. We may be required to refinance our senior
indebtedness in order to make such payments.
ABSENCE OF AN EXISTING ACTIVE PUBLIC MARKET MAY NEGATIVELY AFFECT THE LIQUIDITY
OF THE NOTES.
Upon their original issuance, the notes became eligible for trading on
The PORTAL Market. The notes sold pursuant to this prospectus, however, will no
longer be eligible for trading on The PORTAL Market, and we do not intend to
apply for listing of the notes on any securities exchange or quotation system.
An active trading market for the notes may not develop. Moreover, even though a
market may develop, the demand for the notes may not be sufficient to allow
holders to sell their notes or sell the notes at an acceptable price. Future
trading prices of the notes will depend on many factors, including, among other
things, prevailing interest rates, our operating results, the price of our
common stock and the market for similar securities.
ANY RATING OF THE NOTES MAY CAUSE THEIR TRADING PRICE TO FALL.
If the rating agencies rate the notes, they may assign a lower rating
than expected by investors. Rating agencies also may lower ratings on the notes
in the future. If the rating agencies assign a lower than expected rating or
reduce their ratings in the future, the trading price of the notes could
decline.
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FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this prospectus contain some
forward-looking statements. Forward-looking statements give our current
expectations or forecasts of future events. You can identify these statements by
the fact that they do not relate strictly to historical or current facts. Such
statements may include words such as "anticipate," "estimate," "expect,"
"project," "intend," "plan," "believe" and other words and terms of similar
meaning in connection with any discussion of future operating or financial
performance. Any or all of our forward-looking statements in this prospectus may
turn out to be wrong. They can be affected by inaccurate assumptions we might
make or by known or unknown risks and uncertainties. Many factors mentioned in
our discussion in this prospectus will be important in determining future
results. Consequently, no forward-looking statement can be guaranteed. Actual
future results may vary materially. Factors that may cause our plans,
expectations, future financial condition and results to change include, but are
not limited to:
- the highly competitive nature of the health care business;
- the efforts of insurers, health care providers and others to contain
health care costs;
- possible changes in the levels and terms of reimbursement for our
charges by government programs, including Medicare and Medicaid or
other third-party payors;
- changes in or failure to comply with federal, state or local laws and
regulations affecting the health care industry;
- the possible enactment of federal or state health care reform;
- the departure of key members of our management;
- claims and legal actions relating to professional liability;
- our ability to implement successfully our acquisition and development
strategy;
- our ability to attract and retain qualified personnel and recruit
physicians;
- potential federal or state investigations;
- fluctuations in the market value of our common stock or the notes;
- changes in accounting principles generally accepted in the United
States;
- use of proceeds;
- changes in demographic, general economic and business conditions, both
nationally and in the regions in which we operate; and
- other risk factors described in this prospectus.
Except as required by law, we undertake no obligation to publicly update
any forward-looking statements, whether as a result of new information, future
events or otherwise. You are advised, however, to consult any additional
disclosures we make in our Form 10-Q, 8-K and 10-K reports to the Securities and
Exchange Commission. Also note that we provide a cautionary discussion of risks
and uncertainties under "Risk Factors" beginning on page 8 of this prospectus.
These are factors that we think could cause our actual results to differ
materially from expected results. Other factors besides those listed here also
could affect us adversely. This discussion is provided as permitted by the
Private Securities Litigation Reform Act of 1995.
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SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of:
- Our predecessor, Brim, Inc. as of and for the year ended December 31,
1995, and as of December 18, 1996 and for the period January 1, 1996 to
December 18, 1996, and
- Our company as of December 31, 1996, 1997, 1998 and 1999 and for the
period February 2, 1996 to December 31, 1996 and the years ended
December 31, 1997, 1998 and 1999, and as of September 30, 1999 and 2000
and for the nine months ended September 30, 1999 and 2000. Our
operating results for the nine months ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the
entire year. The selected consolidated financial data for the
predecessor and our company for 1995 through 1999 has been derived from
the audited consolidated financial statements of the predecessor and
our company.
The following selected consolidated financial data should be read in
conjunction with our consolidated financial statements, related notes and
audited financial information incorporated in this prospectus by reference. In
addition, on September 28, 2000, we effected a 3-for-2 stock split of our common
stock in the form of a stock dividend, pursuant to which shareholders received
one additional share of our common stock for every two shares of common stock
they owned. With the exception of our unaudited consolidated financial
statements contained in our quarterly report on Form 10-Q for the fiscal quarter
ended September 30, 2000, the consolidated financial statements incorporated by
reference into this prospectus do not reflect the stock split. We, however, have
adjusted the share and per share data for all periods presented in the selected
consolidated financial data in the table set forth below to give retroactive
effect to the stock split.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
BRIM PROVINCE (SUCCESSOR)(1)(2)
(PREDECESSOR)(1)(2) ---------------------------------------------------------------
----------------------- PERIOD
YEAR PERIOD FEB. 2, NINE MONTHS
ENDED JAN. 1, 1996 1996 TO YEAR ENDED DECEMBER 31, ENDED SEPT. 30,
DEC. 31, TO DEC. 18, DEC. 31, ------------------------------ -------------------
1995 1996 1996 1997 1998 1999 1999 2000
-------- ------------ -------- -------- -------- -------- -------- --------
INCOME STATEMENT DATA:
Net operating revenue............... $101,214 $112,600 $ 17,255 $170,527 $238,855 $346,692 $240,153 $346,614
Income (loss) from continuing
operations........................ 3,369 (5,307) (1,316) 4,075 10,007 14,501 10,396 16,185
Net income (loss)................... 3,105 708 (1,578) 4,075 10,007 14,501 10,396 16,185
Net income (loss) to common
shareholders...................... (1,750) (1,002) 9,311 14,501 10,396 16,185
Net income (loss) per share to
common shareholders -- diluted.... (0.41) (0.12) 0.45 0.60 0.43 0.56
Cash dividends declared per common
share............................. -- -- -- -- -- --
Ratio of earnings to fixed
charges(3)........................ 1.77x 2.42x 2.55x 2.71x 2.78x
Pro forma ratio of earnings to fixed
charges(4)........................ 2.95x 3.03x
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets........................ $ 50,888 $ 76,998 $160,521 $176,461 $339,377 $502,213 $472,841 $563,032
Long-term obligations, less current
maturities........................ 7,161 75,995 77,789 83,043 134,301 259,992 251,432 195,064
Mandatory redeemable preferred
stock............................. 8,816 31,824 46,227 50,162 -- -- -- --
Common stockholders' equity
(deficit)......................... 15,366 (56,308) (490) (1,056) 169,191 184,359 180,000 309,566
(see accompanying footnotes on the following page)
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- ------------
(1) Our company was formed on February 2, 1996. On December 18, 1996, Brim, Inc.
completed a leveraged recapitalization. Immediately thereafter on December
18, 1996, we acquired Brim, Inc. in a transaction accounted for as a reverse
acquisition. Therefore, the assets and liabilities of Brim, Inc. were
recorded at fair value as required by the purchase method of accounting, and
the operations of Brim, Inc. were reflected in the operations of the
combined enterprise from the date of acquisition. Because our company had
been in existence for less than a year at December 31, 1996, and because
Brim, Inc. had been in existence for several years, we were considered the
successor to Brim, Inc.'s operations. The balance sheet data of Brim, Inc.
as of December 18, 1996 represents the historical cost basis of Brim, Inc.'s
assets and liabilities after the leveraged recapitalization but prior to the
reverse acquisition.
(2) The financial data of the predecessor and successor for the periods
presented are not strictly comparable due to the significant effect that
acquisitions, divestitures and the recapitalization of Brim, Inc. have had
on such data.
(3) The ratio of earnings to fixed charges is calculated by dividing earnings by
fixed charges. For this purpose, "earnings" means income (loss) from
continuing operations before provision for income taxes and extraordinary
items plus fixed charges (other than capitalized interest). "Fixed charges"
means total interest whether capitalized or expensed (including the portion
of rent expense representative of interest costs) on outstanding debt plus
debt related fees and amortization of deferred financing costs. The ratio of
earnings to fixed charges for the year ended December 31, 1995 and the
period January 1 to December 18, 1996 is not presented because of a lack of
comparability between the capital structure of our company and that of its
predecessor. Earnings were inadequate to cover fixed charges by $2,017,000
for the period February 2, 1996 to December 31, 1996.
(4) The pro forma ratio of earnings to fixed charges gives effect to the net
decrease in the interest expense resulting from the sale of the notes in
November 2000 and the application of the net proceeds thereof to the
repayment of existing debt, as if such transactions had occurred at the
beginning of the periods presented; such ratio does not give effect to any
other pro forma events. The ratio has been computed using an assumed
interest rate of 4 1/2%.
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2000 CONSOLIDATED FINANCIAL RESULTS
On February 21, 2001, we announced our consolidated financial results for
the fourth quarter and year ended December 31, 2000. The following table
summarizes these results, compared with the results for the same periods in
1999:
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
Net operating revenue........................... $123,244 $106,539 $469,858 $346,692
Net income...................................... 3,753 4,105 19,938 14,501
Earnings per share -- basic..................... 0.12 0.17 0.70 0.61
Earnings per share -- diluted................... 0.11 0.17 0.67 0.60
Total assets.................................... 530,852 497,616 530,852 497,616
On a pro forma basis, after adjusting the actual net income to exclude
the effect of the sales of two hospitals and an office building, diluted
earnings per share was $0.23 for the quarter and $0.79 for the year.
In the opinion of management, the summarized financial information above
contains all material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly our consolidated summarized financial
position and results of operations as of and for the periods stated.
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sale of the notes and common stock under this prospectus. We will not receive
any of the proceeds from the sales by any selling securityholders of notes or
the underlying common stock.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock.
We currently intend to retain our earnings for use in our business and therefore
do not anticipate declaring or paying any cash dividends in the foreseeable
future. Our credit facility prohibits us from paying dividends other than
dividends paid in our common stock. Any future determination to declare or pay
cash dividends will be made by our board of directors in light of our earnings,
financial position, capital requirements, credit agreements and such other
factors as our board of directors deems relevant at such time.
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DESCRIPTION OF THE NOTES
The notes were issued under an indenture between us and National City
Bank, as trustee, dated November 20, 2000. The terms of the notes include those
provided in the indenture and those provided in the registration rights
agreement. We will make copies of the indenture, notes and registration rights
agreement available to prospective investors in the notes upon request to us. A
copy of the indenture is filed with the Securities and Exchange Commission as an
exhibit to the registration statement of which this prospectus forms a part.
The following description of provisions of the notes is not complete and
is subject to, and qualified in its entirety by reference to, the notes, the
indenture and the registration rights agreement. We urge you to read the
indenture because it defines your rights as a holder of the notes. Terms not
defined in this description have the meaning given them in the indenture. As
used in this description, the words "we," "us," "our" or "Province" do not
include any current or future subsidiary of Province Healthcare Company.
GENERAL
The notes are general unsecured obligations of Province and rank junior
in right of payment to all of our existing and future senior debt and are
convertible into our common stock as described under "-- Conversion Rights"
below. The notes were issued in an aggregate principal amount of $150,000,000,
and mature on November 20, 2005, unless earlier redeemed by us or repurchased by
us at the option of the holder upon the occurrence of a change of control (as
defined below).
The notes bear interest from November 20, 2000 at the rate of 4 1/2% per
year. Interest is payable semi-annually on May 20 and November 20 of each year
to holders of record at the close of business on the preceding May 5 and
November 5, respectively, beginning May 20, 2001. We may pay interest on notes
represented by certificated notes by check mailed to such holders. However, a
holder of notes with an aggregate principal amount in excess of $5,000,000 will
be paid by wire transfer in immediately available funds at the election of such
holder. Interest is computed on the basis of a 360-day year comprised of twelve
30-day months.
Principal is payable, and the notes may be presented for conversion,
registration of transfer and exchange, without service charge, at our office or
agency in New York City, which shall initially be the office or agency of the
trustee in New York, New York.
The indenture does not contain any financial covenants or any
restrictions on the payment of dividends, the repurchase of our securities or
the incurrence of Senior Indebtedness or any other indebtedness. The indenture
also does not contain any covenants or other provisions that afford protection
to holders of notes in the event of a highly leveraged transaction or a change
of control of Province except to the extent described under "-- Repurchase at
Option of Holders Upon a Change of Control" below.
BOOK-ENTRY FORM
The notes were offered only to qualified institutional buyers as defined
in Rule 144A under the Securities Act. The notes were issued in the form of a
global security held in book-entry form. The Depository Trust Company, New York,
New York ("DTC") or its nominee is the sole registered holder of the notes for
all purposes under the indenture. Owners of beneficial interests in the notes
represented by the global security will hold such interests pursuant to the
procedures and practices of DTC. As a result, owners of beneficial interests
must exercise any rights in respect of their interests, including any right to
convert or require repurchase of their interests, in accordance with the
procedures and practices of DTC. Beneficial owners will not be holders and will
not be entitled to any rights under the global security or the indenture
provided to the holder of the notes. Province and the trustee, and any of their
respective agents, may treat DTC as the sole holder and registered owner of the
global security.
Certificated notes may be issued in exchange for beneficial interests in
notes represented by the global security only in the limited circumstances set
forth in the indenture.
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CONVERSION RIGHTS
The holders of notes may, at any time prior to the close of business on
the final maturity date of the notes, convert any outstanding notes (or portions
thereof) into our common stock, initially at the conversion price set forth on
the cover page of this prospectus, subject to adjustment as described below.
Holders may convert notes only in denominations of $1,000 and whole multiples of
$1,000. Except as described below, no adjustment will be made on conversion of
any notes for interest accrued thereon or dividends paid on any common stock.
If notes are converted after a record date for an interest payment but
prior to the next interest payment date, those notes, other than notes called
for redemption, must be accompanied by funds equal to the interest payable on
the next interest payment date on the principal amount so converted. No payment
will be required from a holder if we exercise our right to redeem such notes. We
are not required to issue fractional shares of common stock upon conversion of
notes and instead will pay a cash adjustment based upon the market price of our
common stock on the last business day before the date of the conversion. In the
case of notes called for redemption, conversion rights will expire at the close
of business on the business day preceding the date fixed for redemption, unless
we default in payment of the redemption price.
A holder may exercise the right of conversion by delivering the note to
be converted to the specified office of a conversion agent, with a completed
notice of conversion, together with any funds that may be required as described
in the preceding paragraph. The conversion date will be the date on which the
note, the notice of conversion and any required funds have been so delivered. A
holder delivering a note for conversion will not be required to pay any taxes or
duties relating to the issuance or delivery of the common stock for such
conversion, but will be required to pay any tax or duty which may be payable
relating to any transfer involved in the issuance or delivery of the common
stock in a name other than the holder of the note. Certificates representing
shares of common stock will be issued or delivered only after all applicable
taxes and duties, if any, payable by the holder have been paid. If any note is
converted within two years after its original issuance, the common stock
issuable upon conversion will not be issued or delivered in a name other than
that of the holder of the note unless the applicable restrictions on transfer
have been satisfied.
The initial conversion price will be adjusted for certain events,
including:
(1) the issuance of our common stock as a dividend or
distribution on our common stock;
(2) certain subdivisions and combinations of our common stock;
(3) the issuance to all holders of our common stock of certain
rights or warrants to purchase our common stock (or
securities convertible into our common stock) at less than
(or having a conversion price per share less than) the
current market price of our common stock;
(4) the dividend or other distribution to all holders of our
common stock of shares of our capital stock (other than
common stock) or evidences of our indebtedness or our assets
(including securities, but excluding: (A) those rights and
warrants referred to above and dividends, (B) distributions
in connection with a reclassification, change,
consolidation, merger, combination, sale or conveyance
resulting in a change in the conversion consideration
pursuant to the second succeeding paragraph or dividends, or
(C) distributions paid exclusively in cash);
(5) dividends or other distributions consisting exclusively of
cash to all holders of our common stock to the extent that
such distributions, combined together with (A) all other
such all-cash distributions made within the preceding 12
months for which no adjustment has been made plus (B) any
cash and the fair market value of other consideration paid
for any tender offers by us or any of our subsidiaries for
our
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common stock concluded within the preceding 12 months for which
no adjustment has been made, exceeds 10% of our market
capitalization on the record date for such distribution; market
capitalization is the product of the then current market price
of our common stock and the number of shares of our common
stock then outstanding; and
(6) the purchase of our common stock pursuant to a tender offer
made by us or any of our subsidiaries which involves an
aggregate consideration that, together with (A) any cash and
the fair market value of any other consideration paid in any
other tender offer by us or any of our subsidiaries for our
common stock expiring within the 12 months preceding such
tender offer for which no adjustment has been made plus (B)
the aggregate amount of any all-cash distributions referred
to in clause (5) above to all holders of our common stock
within 12 months preceding the expiration of that tender
offer for which no adjustments have been made, exceeds 10%
of our market capitalization on the expiration of such
tender offer.
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then in
effect at such time. Any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion price will not be adjusted for the
issuance of our common stock or any securities convertible into or exchangeable
for our common stock or carrying the right to purchase any of the foregoing.
In the case of:
- any reclassification or change of our common stock (other than changes
resulting from a subdivision or combination) or
- a consolidation, merger or combination involving us or a sale or
conveyance to another corporation of all or substantially all of our
property and assets,
in each case as a result of which holders of our common stock are entitled to
receive stock, other securities, other property or assets (including cash or any
combination thereof) with respect to or in exchange for our common stock, the
holders of the notes then outstanding will be entitled thereafter to convert
those notes into the kind and amount of shares of stock, other securities or
other property or assets (including cash or any combination thereof) which they
would have owned or been entitled to receive upon such reclassification, change,
consolidation, merger, combination, sale or conveyance had such notes been
converted into our common stock immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance. We may not
become a party to any such transaction unless its terms are consistent with the
foregoing.
If a taxable distribution to holders of our common stock or other
transaction occurs that results in any adjustment of the conversion price, the
holders of notes may, in certain circumstances, be deemed to have received a
distribution subject to U.S. income tax as a dividend. In certain other
circumstances, the absence of an adjustment may result in a taxable dividend to
the holders of common stock. See "Federal Income Tax Considerations."
We may from time to time, to the extent permitted by law, reduce the
conversion price of the notes by any amount for any period of at least 20 days.
In that case we will give at least 15 days' notice of such decrease. We may make
such reductions in the conversion price, in addition to those set forth above,
as our board of directors deems advisable to avoid or diminish any income tax to
holders of our common stock resulting from any dividend or distribution of stock
(or rights to acquire stock) or from any event treated as such for income tax
purposes.
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OPTIONAL REDEMPTION BY PROVINCE
At any time on or after November 20, 2003, we may redeem some or all of
the notes on at least 30 but not more than 60 days' notice, at the following
prices (expressed in percentages of the principal amount), together with accrued
and unpaid interest to, but excluding, the date fixed for redemption.
REDEMPTION
DURING THE TWELVE MONTHS COMMENCING PRICE
----------------------------------- ----------
November 20, 2003........................................... 101.80%
November 20, 2004........................................... 100.90%
If we do not redeem all of the notes, the trustee will select the notes
to be redeemed in principal amounts of $1,000 or whole multiples of $1,000 by
lot or on a pro rata basis. If any notes are to be redeemed in part only, a new
note or notes in principal amount equal to the unredeemed principal portion
thereof will be issued. If a portion of a holder's notes is selected for partial
redemption and the holder converts a portion of its notes, the converted portion
will be deemed to be taken from the portion selected for redemption.
No sinking fund is provided for the notes.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL
If a change of control (as defined below) occurs, each holder of notes
will have the right to require us to repurchase all of that holder's notes not
previously called for redemption, or any portion of those notes that is equal to
$1,000 or a whole multiple of $1,000, on the date that is 45 days after the date
we give notice at a repurchase price equal to 100% of the principal amount of
the notes to be repurchased, together with interest accrued and unpaid to, but
excluding, the repurchase date.
Instead of paying the repurchase price in cash, we may pay the repurchase
price in common stock if we so elect in the notice referred to below. The number
of shares of common stock a holder will receive will equal the repurchase price
divided by 95% of the average of the closing sales prices of our common stock
for the five trading days immediately preceding and including the third trading
day prior to the repurchase date. However, we may not pay in common stock unless
we satisfy certain conditions prior to the repurchase date as provided in the
indenture.
Within 30 days after the occurrence of a change of control, we are
required to give notice to all holders of notes, as provided in the indenture,
of the occurrence of the change of control and of their resulting repurchase
right. We also must deliver a copy of our notice to the trustee. In order to
exercise the repurchase right, a holder of notes must deliver prior to or on the
30th day after the date of our notice written notice to the trustee of the
holder's exercise of its repurchase right, together with the notes with respect
to which the right is being exercised.
Under the indenture, a "change of control" of Province will be deemed to
have occurred at such time after the original issuance of the notes when the
following has occurred:
- the acquisition by any person, including any syndicate or group deemed
to be a "person" under Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions of shares of our capital stock
entitling that person to exercise 50% or more of the total voting power
of all shares of our capital stock entitled to vote generally in
elections of directors, other than any acquisition by us, any of our
subsidiaries or any of our employee benefit plans; or
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- our consolidation or merger with or into any other person, any merger
of another person into us, or any conveyance, transfer, sale, lease or
other disposition of all or substantially all of our properties and
assets to another person, other than:
(1) any transaction (A) that does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of our capital stock and (B) pursuant to
which holders of our capital stock immediately prior to the
transaction have the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power of all
shares of our capital stock entitled to vote generally in
the election of directors of the continuing or surviving
person immediately after the transaction; and
(2) any merger solely for the purpose of changing our
jurisdiction of incorporation and resulting in a
reclassification, conversion or exchange of outstanding
shares of common stock solely into shares of common stock of
the surviving entity.
The beneficial owner shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act. The term "person" includes any
syndicate or group which would be deemed to be a "person" under Section 13(d)(3)
of the Exchange Act.
Rule 13e-4 under the Exchange Act, as amended, requires the dissemination
of information to security holders if an issuer tender offer occurs and may
apply if the repurchase option becomes available to holders of the notes. We
will comply with this rule to the extent applicable at that time.
The foregoing provisions would not necessarily protect holders of the
notes if highly leveraged or other transactions involving us occur that may
adversely affect holders.
Our ability to repurchase notes upon the occurrence of a change of
control is subject to important limitations. The occurrence of a change in
control could cause an event of default under, or be prohibited or limited by,
the terms of existing or future senior debt. As a result, any repurchase of the
notes would, absent a waiver, be prohibited under the subordination provisions
of the indenture until the senior debt is paid in full. Further, we cannot
assure you that we would have the financial resources, or would be able to
arrange financing, to pay the repurchase price for all the notes that might be
delivered by holders of notes seeking to exercise the repurchase right. Any
failure by us to repurchase the notes when required following a change of
control would result in an event of default under the indenture, whether or not
such repurchase is permitted by the subordination provisions of the indenture.
Any such default may, in turn, cause a default under existing or future senior
debt. See "-- Subordination" below.
SUBORDINATION
The payment of principal of, premium, if any, and interest on the notes
will be subordinated in right of payment, as set forth in the indenture, to the
prior payment in full in cash or cash equivalents of all Senior Indebtedness
whether outstanding on the date of the indenture or thereafter incurred.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relating to Province or to its assets, or any liquidation,
dissolution or other winding-up of Province, whether voluntary or involuntary,
or any assignment for the benefit of creditors or other marshaling of assets or
liabilities of Province (except in connection with the consolidation or merger
of Province or its liquidation or dissolution following the conveyance, transfer
or lease of its properties and assets substantially as an entirety upon the
terms and conditions described under "-- Merger and Sales of Assets" below), the
holders of Senior Indebtedness will be entitled to receive payment in full in
cash or cash equivalents of all Senior Indebtedness, or provision shall be made
for such payment in full, before the holders of notes will be entitled to
receive any payment or distribution of any kind or character (other than any
payment or distribution in the form of equity securities or subordinated
securities of Province or any successor obligor that, in the case of any such
subordinated securities, are subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding to at least the same extent as
the notes are so subordinated (such equity securities or subordinated securities
hereinafter being "Permitted Junior Securities")) on account of principal of, or
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premium, if any, or interest on the notes; and any payment or distribution of
assets of Province of any kind or character, whether in cash, property or
securities (other than a payment or distribution in the form of Permitted Junior
Securities), by set-off or otherwise, to which the holders of the notes or the
trustee would be entitled but for the provisions of the indenture relating to
subordination shall be paid by the liquidating trustee or agent or other person
making such payment or distribution directly to the holders of Senior
Indebtedness or their representatives ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness to the extent necessary
to make payment in full of all Senior Indebtedness remaining unpaid, after
giving effect to any current payment or distribution to the holders of such
Senior Indebtedness.
No payment or distribution of any assets of Province of any kind or
character, whether in cash, property or securities (other than Permitted Junior
Securities), may be made by or on behalf of Province on account of principal of,
premium, if any, or interest on the notes or on account of the purchase,
redemption or other acquisition of notes upon the occurrence of any default in
payment (whether at scheduled maturity, upon scheduled installment, by
acceleration or otherwise) of principal of, premium, if any, or interest on
Designated Senior Indebtedness (as defined below) beyond any applicable grace
period (a "Payment Default") until such Payment Default shall have been cured or
waived in writing or shall have ceased to exist or such Designated Senior
Indebtedness shall have been discharged or paid in full in cash or cash
equivalents.
No payment or distribution of any assets of Province of any kind or
character, whether in cash, property or securities (other than Permitted Junior
Securities), may be made by or on behalf of Province on account of principal of,
premium, if any, or interest on the notes or on account of the purchase,
redemption or other acquisition of notes for the period specified below (a
"Payment Blockage Period") upon the occurrence of any default or event of
default with respect to any Designated Senior Indebtedness other than any
Payment Default pursuant to which the maturity thereof may be accelerated (a
"Non-Payment Default") and receipt by the trustee of written notice thereof from
the trustee or other representative of holders of Designated Senior
Indebtedness.
The Payment Blockage Period will commence upon the date of receipt by the
trustee of written notice from the trustee or such other representative of the
holders of the Designated Senior Indebtedness in respect of which the
Non-Payment Default exists and shall end on the earliest of:
(1) 179 days thereafter (provided that any Designated Senior
Indebtedness as to which notice was given shall not theretofore have been
accelerated);
(2) the date on which such Non-Payment Default is cured, waived
or ceases to exist;
(3) the date on which such Designated Senior Indebtedness is
discharged or paid in full; or
(4) the date on which such Payment Blockage Period shall have
been terminated by written notice to the trustee or Province from the
trustee or such other representative initiating such Payment Blockage
Period,
after which Province will resume making any and all required payments in respect
of the notes, including any missed payments. In any event, not more than one
Payment Blockage Period may be commenced during any period of 365 consecutive
days. No Non-Payment Default that existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be made, the basis
for the commencement of a subsequent Payment Blockage Period, unless such
Non-Payment Default has been cured or waived for a period of not less than 90
consecutive days subsequent to the commencement of such initial Payment Blockage
Period.
In the event that, notwithstanding the provisions of the preceding four
paragraphs, any payment or distribution shall be received by the trustee or any
holder of the notes which is prohibited by such provisions, then and in such
event such payment shall be paid over and delivered by such trustee or holder to
the trustee or any other representative of holders of Senior Indebtedness, as
their interest may appear,
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for application to Senior Indebtedness. After all Senior Indebtedness is paid in
full and until the notes are paid in full, holders of the notes shall be
subrogated (equally and ratably with all other indebtedness that is equal in
right of payment to the notes) to the rights of holders of Senior Indebtedness
to receive distributions applicable to Senior Indebtedness to the extent that
distributions otherwise payable to the holders of the notes have been applied to
the payment of Senior Indebtedness.
Failure by Province to make any required payment in respect of the notes
when due or within any applicable grace period, whether or not occurring during
a Payment Blockage Period, will result in an Event of Default and, thereafter,
holders of the notes will have the right to accelerate the maturity thereof. See
"-- Events of Default."
By reason of such subordination, in the event of liquidation,
receivership, reorganization or insolvency of Province, our general creditors
may recover less, ratably, than holders of senior debt and such general
creditors may recover more, ratably, than holders of notes. Moreover, the notes
will be structurally subordinated to the liabilities of subsidiaries of
Province.
At March 1, 2001:
- outstanding Senior Indebtedness of Province was approximately $36.5
million; and
- Province had no subordinated indebtedness other than the notes.
"Designated Senior Indebtedness" means:
- all Senior Indebtedness under the Senior Credit Agreement; and
- any other Senior Indebtedness which, at the time of determination, has
an aggregate principal amount outstanding of at least $25.0 million and
that has been specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness" of Province.
"indebtedness" means, with respect to any person, without duplication:
- all liabilities of such person for borrowed money (including
overdrafts) or for the deferred purchase price of property or services,
excluding any trade payables and other accrued current liabilities
incurred in the ordinary course of business, but including, without
limitation, all obligations, contingent or otherwise, of such person in
connection with any letters of credit and acceptances issued under
letter of credit facilities, acceptance facilities or other similar
facilities;
- all obligations of such person evidenced by bonds, notes, debentures or
other similar instruments;
- indebtedness of such person created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such person (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables
arising in the ordinary course of business;
- all capitalized lease obligations of such person;
- all obligations of such person under or in respect of interest rate
agreements or currency agreements;
- all indebtedness referred to in (but not excluded from) the preceding
clauses of other persons and all dividends of other persons, the
payment of which is secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be
secured by) any lien or with respect to property (including, without
limitation, accounts and contract rights) owned by such person, even
though such person has not assumed or become liable for the payment of
such indebtedness (the amount of such obligation being deemed to be the
lesser of the value of such property or asset or the amount of the
obligation so secured);
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- all guarantees by such person of indebtedness referred to in this
definition or of any other person;
- all Redeemable Capital Stock of such person valued at the greater of
its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends; and
- the present value of the obligation of such person as lessee for net
rental payments (excluding all amounts required to be paid on account
of maintenance and repairs, insurance, taxes, assessments, water,
utilities and similar charges to the extent included in such rental
payments) during the remaining term of the lease included in such sale
and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such
present value shall be calculated using a discount rate equal to the
rate of interest implicit in such transaction, determined in accordance
with accounting principles generally accepted in the United States.
"Redeemable Capital Stock" means any class of our capital stock that,
either by its terms, by the terms of any securities into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed (whether by sinking
fund or otherwise) prior to the date that is 91 days after the final scheduled
maturity of the notes or is redeemable at the option of the holder thereof at
any time prior to such date, or is convertible into or exchangeable for debt
securities at any time prior to such date (unless it is convertible or
exchangeable solely at our option).
"Senior Credit Agreement" means collectively, (i) the Second Amended and
Restated Credit Agreement dated as of September 10, 1999, among Province, the
lenders party thereto and First Union National Bank, as agent, providing for a
revolving credit facility and (ii) the Participation Agreement dated as of March
30, 1998, as amended by Amendment No. 1 dated as of September 10, 1999, among
Province, certain guarantors, First Security Bank, National Association, as
Owner Trustee and First Union National Bank as agent for the lenders and holders
providing for an end-loaded lease facility, as such agreements may be amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or otherwise modified from time to time, including, without limitation, any
increase in the principal amount of debt thereunder.
"Senior Indebtedness" means:
- all obligations of Province, now or hereafter existing, under or in
respect of the Senior Credit Agreement and the documents and
instruments executed in connection therewith, whether for principal,
premium, if any, interest (including interest accruing after the filing
of, or which would have accrued but for the filing of, a petition by or
against Province under bankruptcy law, whether or not such interest is
allowed as a claim after such filing in any proceeding under such law)
and other amounts due in connection therewith (including, without
limitation, any fees, premiums, expenses, reimbursement obligations
with respect to letters of credit and indemnities), whether outstanding
on the date of the indenture or thereafter created, incurred or
assumed; and
- the principal of, premium, if any, and interest on all other
indebtedness of Province (other than the notes), whether outstanding on
the date of the indenture or thereafter created, incurred or assumed,
unless, in the case of any particular indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such indebtedness shall not be
senior in right of payment to the notes.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include:
- indebtedness evidenced by the notes;
- indebtedness of Province that is expressly subordinated in right of
payment to any other indebtedness of Province;
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- indebtedness of Province that by operation of law is subordinate to any
general unsecured obligations of Province;
- any liability for federal, state or local taxes or other taxes, owed or
owing by Province;
- accounts payable or other liabilities owed or owing by Province to
trade creditors (including guarantees thereof or instruments evidencing
such liabilities);
- amounts owed by Province for compensation to employees or for services
rendered to Province;
- indebtedness of Province to any subsidiary or any other affiliate of
Province or any of such affiliate's subsidiaries;
- capital stock of Province;
- indebtedness evidenced by any guarantee of any indebtedness ranking
equal or junior in right of payment to the notes; and
- indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11 of the United States Code, is without
recourse to Province.
EVENTS OF DEFAULT
Each of the following constitutes an event of default under the
indenture:
(1) our failure to pay when due the principal of or premium, if any, on
any of the notes at maturity, upon redemption or exercise of a
repurchase right or otherwise, whether or not such payment is
prohibited by the subordination provisions of the indenture;
(2) our failure to pay an installment of interest (including liquidated
damages, if any) on any of the notes that continues for 30 days after
the date when due, whether or not such payment is prohibited by the
subordination provisions of the indenture;
(3) our failure to deliver shares of common stock, together with cash in
lieu of fractional shares, when such common stock or cash in lieu of
fractional shares is required to be delivered upon conversion of a
note that continues for ten days after such delivery date;
(4) our failure to perform or observe any other term, covenant or
agreement contained in the notes or the indenture for a period of 60
days after written notice of such failure, requiring us to remedy the
same, shall have been given to us by the trustee or to us and the
trustee by the holders of at least 25% in aggregate principal amount
of the notes then outstanding;
(5) (A) one or more defaults in the payment of principal of or premium,
if any, on any of our indebtedness aggregating $5.0 million or more,
when the same becomes due and payable at the scheduled maturity
thereof, and such default or defaults shall have continued after any
applicable grace period and shall not have been cured or waived
within a thirty day period after the date of such default or (B) any
of our indebtedness aggregating $5.0 million or more shall have been
accelerated or otherwise declared due and payable, or required to be
prepaid or repurchased (other than by regularly scheduled required
prepayment) prior to the scheduled maturity thereof and such
acceleration is not rescinded or annulled within a thirty day period
after the date of such acceleration;
(6) certain events of our bankruptcy, insolvency or reorganization or
that of any significant subsidiaries; and
(7) our filing of a voluntary petition seeking liquidation,
reorganization arrangement, readjustment of debts or for any other
relief under the federal bankruptcy code.
The indenture provides that the trustee shall, within 90 days of the
occurrence of a default, give to the registered holders of the notes notice of
all uncured defaults known to it, but the trustee shall be protected in
withholding such notice if it, in good faith, determines that the withholding of
such notice is
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in the best interest of such registered holders, except in the case of a default
in the payment of the principal of, or premium, if any, or interest on, any of
the notes when due or in the payment of any redemption or repurchase obligation.
If an event of default specified in clause (6) or clause (7) above occurs
and is continuing, then automatically the principal of all the notes and the
interest thereon shall become immediately due and payable. If an event of
default shall occur and be continuing, other than with respect to clause (6) or
clause (7) above (the default not having been cured or waived as provided under
"-- Modifications and Waiver" below), the trustee or the holders of at least 25%
in aggregate principal amount of the notes then outstanding may declare the
notes due and payable at their principal amount together with accrued interest,
and thereupon the trustee may, at its discretion, proceed to protect and enforce
the rights of the holders of notes by appropriate judicial proceedings. Such
declaration may be rescinded or annulled with the written consent of the holders
of a majority in aggregate principal amount of the notes then outstanding upon
the conditions provided in the indenture.
The indenture contains a provision entitling the trustee, subject to the
duty of the trustee during default to act with the required standard of care, to
be indemnified by the holders of notes before proceeding to exercise any right
or power under the indenture at the request of such holders. The indenture
provides that the holders of a majority in aggregate principal amount of the
notes then outstanding through their written consent may direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred upon the trustee.
We will be required to furnish annually to the trustee a statement as to
the fulfillment of our obligations under the indenture.
MERGERS AND SALES OF ASSETS
We may, without the consent of the holders of notes, consolidate with,
merge into or transfer all or substantially all of our assets to any other
corporation organized under the laws of the United States or any of its
political subdivisions provided that:
- the surviving corporation assumes all our obligations under the
indenture and the notes;
- at the time of such transaction, no event of default, and no event
which, after notice or lapse of time, would become an event of default,
shall have happened and be continuing; and
- certain other conditions are met.
MODIFICATIONS AND WAIVER
The indenture (including the terms and conditions of the notes) may be
modified or amended by us and the trustee, without the consent of the holder of
any note, for the purposes of, among other things:
- adding to our covenants for the benefit of the holders of notes;
- surrendering any right or power conferred upon us;
- providing for conversion rights of holders of notes if any
reclassification or change of our common stock or any consolidation,
merger or sale of all or substantially all of our assets occurs;
- providing for the assumption of our obligations to the holders of notes
in the case of a merger, consolidation, conveyance, transfer or lease;
- reducing the conversion price, provided that the reduction will not
adversely affect the interests of holders of notes in any material
respect;
- complying with the requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust Indenture
Act of 1939, as amended;
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- making any changes or modifications to the indenture necessary in
connection with the registration of the notes under the Securities Act
as contemplated by the registration rights agreement, provided that
this action does not adversely affect the interests of the holders of
the notes in any material respect;
- curing any ambiguity or correcting or supplementing any defective
provision contained in the indenture; provided that such modification
or amendment does not, in the good faith opinion of our board of
directors and the trustee, adversely affect the interests of the
holders of the notes in any material respect; or
- adding or modifying any other provisions which we and the trustee may
deem necessary or desirable and which will not adversely affect the
interests of the holders of notes in any material respect.
Modifications and amendments to the indenture or to the terms and
conditions of the notes may also be made, and past default by us may be waived,
with the written consent of the holders of at least a majority in aggregate
principal amount of the notes at the time outstanding.
However, no such modification, amendment or waiver may, without the
written consent of the holder of each note affected:
- change the maturity of the principal of or any installment of interest
on any note (including any payment of liquidated damages);
- reduce the principal amount of, or any premium or interest on
(including any payment of liquidated damages), any note;
- change the currency of payment of such note or interest thereon;
- impair the right to institute suit for the enforcement of any payment
on or with respect to any note;
- modify our obligations to maintain an office or agency in New York
City;
- except as otherwise permitted or contemplated by provisions concerning
corporate reorganizations, adversely affect the repurchase option of
holders upon a change of control or the conversion rights of holders of
the notes;
- modify the subordination provisions of the notes in a manner adverse to
the holders of notes; or
- reduce the percentage in aggregate principal amount of notes
outstanding necessary to modify or amend the indenture or to waive any
past default.
SATISFACTION AND DISCHARGE
We may discharge our obligations under the indenture while notes remain
outstanding, subject to certain conditions, if:
- all outstanding notes will become due and payable at their scheduled
maturity within one year; or
- all outstanding notes are scheduled for redemption within one year,
- and, in either case, we have deposited with the trustee an amount
sufficient to pay and discharge all outstanding notes on the date of
their scheduled maturity or the scheduled date of redemption; provided
that we shall remain obligated to issue shares upon conversion of the
notes.
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GOVERNING LAW
The indenture and the notes are governed by, and shall be construed in
accordance with, the law of the State of New York.
INFORMATION CONCERNING THE TRUSTEE
National City Bank, as trustee under the indenture, has been appointed by
us as paying agent, conversion agent, registrar and custodian with regard to the
notes. First Union National Bank is the transfer agent and registrar for our
common stock. The trustee or its affiliates may from time to time in the future
provide banking and other services to us in the ordinary course of their
business.
REGISTRATION RIGHTS
When we issued the notes, we entered into a registration rights agreement
with the initial purchasers of the notes. As required under that agreement, we
have filed with the Securities and Exchange Commission, at our expense, a shelf
registration statement, of which this prospectus forms a part, covering the
resale by holders of the notes and the common stock issuable upon conversion of
the notes. Under the terms of the registration rights agreement, we have agreed
to use our best efforts to:
- cause such registration statement to become effective as promptly as is
practicable, but in no event later than 150 days after the earliest
date of original issuance of any of the notes; and
- keep the registration statement effective until the earlier of (A) such
date that is two years after the last date of original issuance of any
of the notes; (B) the date when the holders of the notes and the common
stock issuable upon conversion of the notes are able to sell all such
securities immediately without restriction pursuant to the volume
limitation provisions of Rule 144 under the U.S. Securities Act of 1933
or any successor rule thereto or otherwise; or (C) the sale pursuant to
the shelf registration statement of all securities registered
thereunder.
We have agreed to provide to each registered holder copies of this
prospectus, notify each registered holder when the shelf registration statement
has become effective and take certain other actions as are required to permit
unrestricted resales of the notes and the common stock issuable upon conversion
of the notes. A holder who sells those securities pursuant to the shelf
registration statement generally will be required to be named as a selling
stockholder in this prospectus (or a supplement to this prospectus) and to
deliver this prospectus (together with any prospectus supplement) to purchasers.
The holder also is bound by the provisions of the registration rights agreement
that is applicable to that holder (including certain indemnification
provisions).
We will be permitted to suspend the use of the prospectus that is part of
the shelf registration statement under certain circumstances relating to pending
corporate developments, public filings with the SEC and similar events for a
period not to exceed 45 days in any three-month period and not to exceed an
aggregate of 90 days in any 12-month period.
If,
- on the 90th day following the earliest date of original issuance of any
of the notes, the shelf registration statement of which this prospectus
is a part has not been filed with the SEC; or
- on the 150th day following the earliest date of original issuance of
any of the notes, the shelf registration statement is not declared
effective; or
- the registration statement shall cease to be effective or fail to be
usable without being succeeded within five business days by a
post-effective amendment or a report filed with the SEC pursuant to the
Exchange Act that cures the failure of the registration statement to be
effective or usable; or
- the prospectus has been suspended as described in the preceding
paragraph longer than the period permitted by such paragraph (each, a
"registration default"),
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then additional interest as liquidated damages will accrue on the notes, from
and including the day following the registration default to but excluding the
day on which the registration default has been cured. Liquidated damages will be
paid semi-annually in arrears, with the first semi-annual payment due on the
first interest payment date, as applicable, following the date on which such
liquidated damages begin to accrue, and will accrue at a rate per year equal to:
- an additional 0.25% of the principal amount to and including the 90th
day following such registration default; and
- an additional 0.5% of the principal amount from and after the 91st day
following such registration default.
In no event will liquidated damages accrue at a rate per year exceeding
0.5%. If a holder has converted some or all of its notes into common stock, the
holder will be entitled to receive equivalent amounts based on the principal
amount of the notes converted.
The summary herein of certain provisions of the registration rights
agreement between Province and the initial purchasers is subject to, and is
qualified in its entirety by reference to, all the provisions of the
registration rights agreement, a copy of which has been filed as an exhibit to
the registration statement of which this prospectus is a part or is available
upon request to Province.
Upon their original issuance, the notes became eligible for trading on
The PORTAL Market. The notes sold pursuant to this prospectus, however, will no
longer be eligible for trading on The PORTAL Market, and we do not intend to
apply for listing of the notes on any securities exchange or quotation system.
We can not assure you that an active trading market for the notes will develop
or as to the liquidity or sustainability of any such market, the ability of the
holders to sell their notes or the price at which holders of the notes will be
able to sell their notes. Future trading prices of the notes will depend on many
factors, including, among other things, prevailing interest rates, our operating
results, the price of our common stock and the market for similar securities.
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FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain U.S. federal income tax
consequences to a holder with respect to the purchase, ownership and disposition
of the notes or our common stock acquired upon conversion of a note as of the
date hereof. This summary is generally limited to holders who will hold the
notes and the shares of common stock into which the notes are convertible as
capital assets and does not deal with special situations including those that
may apply to particular holders such as exempt organizations, holders subject to
the U.S. federal alternative minimum tax, dealers in securities, commodities or
foreign currencies, financial institutions, insurance companies, regulated
investment companies, holders whose "functional currency" is not the U.S. dollar
and persons who hold the notes or shares of common stock in connection with a
"straddle," "hedging," "conversion" or other risk reduction transaction.
The federal income tax considerations set forth below are based upon the
Internal Revenue Code of 1986, as amended, Treasury Regulations promulgated
thereunder, court decisions, and rulings and pronouncements of the Internal
Revenue Service, referred to as the "IRS," now in effect, all of which are
subject to change. Prospective investors should particularly note that any such
change could have retroactive application so as to result in federal income tax
consequences different from those discussed below. We have not sought any ruling
from the IRS with respect to statements made and conclusions reached in this
discussion and there can be no assurance that the IRS will agree with such
statements and conclusions.
As used herein, the term "U.S. holder" means a beneficial owner of a note
(or our common stock acquired upon conversion of a note) that is for U.S.
federal income tax purposes:
- an individual who is a citizen or resident of the United States;
- a corporation or partnership created or organized in or under the laws
of the United States or of any political subdivision thereof (other
than a partnership that is not treated as a U.S. person under any
applicable Treasury Regulations);
- an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or
- a trust, if a court within the United States is able to exercise
primary jurisdiction over its administration and one or more U.S.
persons have authority to control all of its substantial decisions, or
if the trust has a valid election in effect under applicable Treasury
Regulations to be treated as a U.S. person.
As used herein, a "non-U.S. holder" means a holder that is not a U.S.
holder. Non-U.S. holders are subject to special U.S. federal income tax
considerations, some of which are discussed below. While the following does not
purport to discuss all tax matters relating to the notes or the common stock
acquired upon conversion of a note, the following are the material tax
consequences associated with the purchase, ownership and disposition of the
notes and common stock acquired upon conversion of a note, subject to the
qualifications set forth below. This discussion does not address the tax
consequences arising under any state, local or foreign law. In addition, this
summary does not consider the effect of the federal estate or gift tax laws
(except as set forth below with respect to non-U.S. holders).
Based on currently applicable authorities, we will treat the notes as
indebtedness for U.S. federal income tax purposes. However, since the notes have
certain equity characteristics, it is possible that the IRS will contend that
the notes should be treated as an equity interest in, rather than indebtedness
of Province. Except as otherwise noted, the remainder of this discussion assumes
that the notes will constitute indebtedness for U.S. federal income tax
purposes.
INVESTORS CONSIDERING THE PURCHASE OF THE NOTES SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS
TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE
FEDERAL ESTATE OR GIFT TAX
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RULES OR UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR
UNDER ANY APPLICABLE TAX TREATY.
U.S. HOLDERS
Taxation of Interest
U.S. holders will be required to recognize as ordinary income any
interest paid or accrued on the notes, in accordance with their regular method
of tax accounting. In certain circumstances, we may be obligated to pay holders
of the notes amounts in excess of stated interest or principal. For example, the
interest rate on the notes is subject to increase by the payment of liquidated
damages if the notes are not registered with the SEC within prescribed time
periods. We intend to treat the possibility that we will pay any such excess
amounts as a remote or incidental contingency, within the meaning of applicable
Treasury Regulations and, therefore, we believe that these possibilities will
not affect the determination of the yield to maturity on the notes. In the
unlikely event an additional amount becomes due on the notes, we believe U.S.
holders will be taxable on such amount at the time it accrues or is received in
accordance with each such holder's method of tax accounting. Our determination
that these amounts are incidental and that there is a remote likelihood of
paying additional amounts on the notes is binding on each U.S. holder unless the
holder explicitly discloses in the manner required by applicable Treasury
Regulations that its determination is different from ours. Our determination is
not, however, binding on the IRS.
Conversion or Repurchase for Common Stock
A U.S. holder should not recognize income, gain or loss upon conversion
of the notes solely into our common stock (except with respect to any amounts
attributable to accrued interest on the notes, which will be treated as interest
for U.S. federal income tax purposes), and except with respect to cash received
in lieu of fractional shares, and with respect to market discount, as described
below under "-- Market Discount." If we repurchase a note in exchange for common
stock pursuant to exercise of the repurchase right, although the matter is not
entirely clear, such exchange should be treated in the same manner as a
conversion of the note as described in the preceding sentence. The U.S. holder's
tax basis in the common stock received on conversion or repurchase of a note for
common stock pursuant to the repurchase right should be the same as the U.S.
holder's adjusted tax basis in the notes exchanged therefore at the time of
conversion or repurchase (reduced by any basis allocable to a fractional share),
and the holding period for the common stock received on conversion or repurchase
should include the holding period of the notes that were converted or
repurchased.
Cash received in lieu of a fractional share of common stock upon
conversion of the notes into common stock or upon a repurchase for common stock
of a note pursuant to exercise of the repurchase right will generally be treated
as a payment in exchange for the fractional share of common stock. Accordingly,
the receipt of cash in lieu of a fractional share of common stock generally will
result in capital gain or loss measured by the difference between the cash
received for the fractional share and the U.S. holder's adjusted tax basis in
the fractional share.
Dividends on Common Stock
We have not paid any dividends on our common stock and do not anticipate
paying any dividends in the foreseeable future. However, if we do make
distributions on our common stock, the distributions will constitute dividends
for U.S. federal income tax purposes to the extent of our current or accumulated
earnings and profits as determined under U.S. federal income tax principles. To
the extent that a U.S. holder receives distributions on shares of common stock
that would otherwise constitute dividends for U.S. federal income tax purposes
but that exceed our current and accumulated earnings and profits, such
distributions will be treated first as a non-taxable return of capital reducing
the holder's basis in the shares of common stock. Any such distributions in
excess of the holder's basis in the shares of common stock will generally be
treated as capital gain. Subject to applicable limitations, dividends paid to
holders that are
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U.S. corporations will qualify for the dividends-received deduction so long as
there are sufficient earnings and profits.
Sale, Redemption or Repurchase for Cash
Except as set forth above under "-- Conversion or Repurchase for Common
Stock," and below under "-- Market Discount," U.S. holders generally will
recognize capital gain or loss upon the sale, redemption, including a repurchase
by us for cash pursuant to the repurchase right, or other taxable disposition of
the notes or common stock in an amount equal to the difference between:
- the U.S. holder's adjusted tax basis in the notes or common stock (as
the case may be); and
- the amount of cash and fair market value of any property received from
such disposition (other than amounts attributable to accrued interest
on the notes, which will be treated as interest for U.S. federal income
tax purposes).
A U.S. holder's adjusted tax basis in a note generally will equal the
cost of the note to such U.S. holder, increased by market discount previously
included in income by the U.S. holder and reduced by any amortized premium. (For
a discussion of the holder's basis in shares of our common stock, see
"-- Conversion or Repurchase for Common Stock").
In general, gain or loss realized from the taxable disposition of the
notes or common stock will be capital gain or loss. Prospective investors should
consult their tax advisers regarding the treatment of capital gains (which may
be taxed at lower rates than ordinary income for taxpayers who are individuals,
trusts or estates and have held their notes for more than one year) and losses
(the deductibility of which is subject to limitations).
Market Discount
The resale of notes may be affected by the impact on a purchaser of the
"market discount" provisions of the Internal Revenue Code. For this purpose, the
market discount on a note generally will be equal to the amount, if any, by
which the stated redemption price at maturity of the note immediately after its
acquisition exceeds the U.S. holder's adjusted tax basis in the note. Subject to
a de minimis exception, these provisions generally require a U.S. holder who
acquires a note at a market discount to treat as ordinary income any gain
recognized on the disposition of the note to the extent of the "accrued market
discount" on the note at the time of disposition, unless the U.S. holder elects
to include accrued market discount in income currently. This election to include
market discount in income currently, once made, applies to all market discount
obligations acquired on or after the first day of the first taxable year to
which the election applies and may not be revoked without the consent of the
IRS. In general, market discount will be treated as accruing on a straight-line
basis over the remaining term of the note at the time of acquisition, or, at the
election of the U.S. holder, under a constant yield method. A U.S. holder who
acquires a note at a market discount and who does not elect to include accrued
market discount in income currently may be required to defer the deduction of a
portion of the interest on any indebtedness incurred or maintained to purchase
or carry the note until the note is disposed of in a taxable transaction. If a
U.S. holder acquires a note with market discount and receives common stock upon
conversion of the note, the amount of accrued market discount not previously
included in income with respect to the converted note through the date of
conversion will be treated as ordinary income upon the disposition of the common
stock.
Amortizable Premium
A U.S. holder who purchases a note at a premium over its stated principal
amount, plus accrued interest, generally may elect to amortize such premium,
referred to as "Section 171 premium," from the purchase date to the note's
maturity date under a constant-yield method that reflects semiannual compounding
based on the note's payment period. Amortizable premium, however, will not
include any premium attributable to a note's conversion feature. The premium
attributable to the conversion feature is
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the excess, if any, of the note's purchase price over what the note's fair
market value would be if there were no conversion feature. Amortized Section 171
premium is treated as an offset to interest income on a note and not as a
separate deduction. A U.S. holder who elects to amortize the note premium must
reduce his tax basis in the note as described above under "-- Sale, Redemption
or Repurchase for Cash." Bond premium on a note held by a U.S. holder that does
not make the election to amortize will decrease the gain or increase the loss
otherwise recognized upon disposition of the note. The election to amortize
premium on a constant yield method, once made, applies to all debt obligations
held or subsequently acquired by the electing U.S. holder on or after the first
day of the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
Adjustment of Conversion Price
The conversion price of the notes is subject to adjustment under certain
circumstances, see "Description of the Notes -- Conversion Rights." Certain
adjustments to (or the failure to make such adjustments to) the conversion price
of the notes that increase the proportionate interest of a U.S. holder in our
assets or earnings and profits may result in a taxable constructive distribution
to the U.S. holders of the notes, whether or not the U.S. holders ever convert
the notes. Such constructive distribution will be treated as a dividend,
resulting in ordinary income (and a possible dividends received deduction in the
case of corporate holders) to the extent of our current or accumulated earnings
and profits, with any excess treated first as a tax-free return of capital which
reduces the U.S. holder's tax basis in the notes to the extent thereof and
thereafter as gain from the sale or exchange of the notes. Generally, a U.S.
holder's tax basis in a note will be increased to the extent any such
constructive distribution is treated as a dividend. Moreover, if there is an
adjustment (or a failure to make an adjustment) to the conversion price of the
notes that increases the proportionate interest of the holders of outstanding
common stock in our assets or earnings and profits, then such increase in the
proportionate interest of the holders of the common stock generally will be
treated as a constructive distribution to such holders, taxable as described
above. As a result, U.S. holders of notes could have taxable income as a result
of an event pursuant to which they receive no cash or property.
Backup Withholding and Information Reporting
Certain noncorporate U.S. holders may be subject to IRS information
reporting and backup withholding at a rate of 31% on payments of interest on the
notes, dividends on common stock and proceeds from the sale or other disposition
of the notes or common stock. Backup withholding will only be imposed where the
noncorporate U.S. holder:
- fails to furnish its taxpayer identification number, referred to as a
"TIN";
- furnishes an incorrect TIN;
- is notified by the IRS that he or she has failed to properly report
payments of interest or dividends; or
- under certain circumstances, fails to certify, under penalties of
perjury, that he or she has furnished a correct TIN and has not been
notified by the IRS that he or she is subject to backup withholding.
The amount of any backup withholding from a payment to a U.S. holder will
be allowed as a credit against the U.S. holder's federal income tax liability
and may entitle such holder to a refund, provided that the required information
is furnished to the IRS.
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NON-U.S. HOLDERS
Payments of Interest
Generally, payments of interest on the notes to, or on behalf of, a
non-U.S. holder will not be subject to U.S. federal withholding tax where such
interest is not effectively connected with the conduct of a trade or business
within the U.S. by such non-U.S. holder if:
- such non-U.S. holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of our stock
entitled to vote;
- such non-U.S. holder is not (a) a controlled foreign corporation for
U.S. federal income tax purposes that is related to us through stock
ownership or (b) a bank that received the note on an extension of
credit made pursuant to a loan agreement entered into in the ordinary
course of its trade or business; and
- the certification requirements, as described below, are satisfied.
Interest on notes not excluded from U.S. federal withholding tax
generally will be subject to withholding at a 30% rate, except where a non-U.S.
holder can claim the benefits of an applicable tax treaty to reduce or eliminate
such withholding tax and demonstrates such eligibility to the IRS.
To satisfy the certification requirements referred to above, either (i)
the beneficial owner of a note must certify, under penalties of perjury, to us
or our paying agent, as the case may be, that such owner is a non-U.S. person
and must provide such owner's name and address, and TIN, if any, or (ii) a
securities clearing organization, bank or other financial institution that holds
customer securities in the ordinary course of its trade or business, referred to
as a "Financial Institution," and holds the note on behalf of the beneficial
owner thereof must certify, under penalties of perjury, to us or our paying
agent, as the case may be, that such certificate has been received from the
beneficial owner and must furnish the payor with a copy thereof. Such
requirement will be fulfilled if the beneficial owner of a note certifies on IRS
Form W-8BEN, under penalties of perjury, that it is a non-U.S. holder and
provides its name and address or any Financial Institution holding the note on
behalf of the beneficial owner files a statement with the withholding agent to
the effect that it has received such a statement from the beneficial owner (and
furnishes the withholding agent with a copy thereof). For notes held by a
foreign partnership, unless the foreign partnership has entered into a
withholding agreement with the IRS, a foreign partnership will be required, in
addition to providing a Form W-8IMY, to attach an appropriate certification by
each partner. A look-through rule will apply in the case of tiered partnerships.
Prospective investors, including foreign partnerships and their partners, should
consult their tax advisors regarding possible additional reporting requirements.
If a non-U.S. holder of a note is engaged in a trade or business in the
United States and if interest on the note is effectively connected with the
conduct of such trade or business (and, if certain tax treaties apply, is
attributable to a U.S. permanent establishment maintained by the non-U.S. holder
in the United States), the non-U.S. holder, although exempt from U.S. federal
withholding tax (provided that the certification requirements discussed in the
next sentence are met), will generally be subject to U.S. federal income tax on
such interest on a net income basis in the same manner as if it were a U.S.
holder. Such a non-U.S. holder will be required to provide us with a properly
executed IRS Form W-8ECI in order to claim an exemption from withholding tax. In
addition, if such non-U.S. holder so engaged is a foreign corporation, it may be
subject to a branch profits tax equal to 30% (or such lower rate provided by an
applicable treaty) of its effectively connected earnings and profits for the
taxable year, subject to certain adjustments.
Conversion of Notes
A non-U.S. holder generally will not be subject to U.S. federal
withholding tax on the conversion of a note into common stock. To the extent a
non-U.S. holder receives cash in lieu of a fractional share of common stock upon
conversion, such cash may give rise to gain that would be subject to the rules
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described below with respect to the sale or exchange of a note or common stock.
See "-- Sale or Exchange of Notes or Common Stock" below.
Adjustment of Conversion Price
The conversion price of the notes is subject to adjustment in certain
circumstances. Any such adjustment could, in certain circumstances, give rise to
a deemed distribution to non-U.S. holders of the notes. See "U.S.
Holders -- Adjustment of Conversion Price" above. In such case, the deemed
distribution would be subject to the rules below regarding withholding of U.S.
federal tax on dividends in respect of common stock. See "-- Distributions on
Common Stock" below.
Distributions on Common Stock
We have not paid any dividends on our common stock and do not anticipate
paying any dividends in the foreseeable future. However, if we do make
distributions on our common stock, the distributions will constitute a dividend
for U.S. federal income tax purposes to the extent of our current or accumulated
earnings and profits as determined under U.S. federal income tax principles.
Except as described below, dividends paid on common stock held by a non-U.S.
holder will be subject to U.S. federal withholding tax at a rate of 30% (or
lower treaty rate, if applicable). A non-U.S. holder generally will be required
to satisfy certain IRS certification requirements in order to claim a reduction
of or exemption from withholding under a tax treaty by filing IRS Form W-8BEN
upon which the non-U.S. holder certifies, under penalties of perjury, its status
as a non-U.S. person and its entitlement to the lower treaty rate with respect
to such payments.
If dividends paid to a non-U.S. holder are effectively connected with the
conduct of a U.S. trade or business by the non-U.S. holder and, if required by a
tax treaty, the dividends are attributable to a permanent establishment
maintained in the United States, we and other payors generally are not required
to withhold tax from the dividends, provided that the non-U.S. holder furnishes
to us or another payor a valid IRS Form W-8ECI certifying, under penalties of
perjury, that the holder is a non-U.S. person, and the dividends are effectively
connected with the holder's conduct of a U.S. trade or business and are
includible in the holder's gross income. Effectively connected dividends will be
subject to U.S. federal income tax on net income that applies to U.S. persons
generally (and, with respect to corporate holders under certain circumstances,
the branch profits tax).
Sale or Exchange of Notes or Common Stock
A non-U.S. holder generally will not be subject to U.S. federal income or
withholding tax on gain realized on the sale or other disposition (including a
redemption) of a note or common stock received upon conversion thereof unless:
- the holder is an individual who was present in the United States for
183 days or more during the taxable year and (a) such holder has a "tax
home" in the United States or (b) the gain is attributable to an office
or other fixed place of business maintained in the United States by
such holder;
- the gain is effectively connected with the conduct of a U.S. trade or
business by the non-U.S. holder and, if required by a tax treaty, the
gain is attributable to a permanent establishment maintained in the
United States; or
- we are or have been a U.S. real property holding corporation at any
time within the shorter of the five-year period preceding such
disposition or such holder's holding period.
If we were to become a U.S. real property holding corporation, a non-U.S.
holder might be subject to U.S. federal income tax with respect to gain realized
on the disposition of notes or shares of common stock. In that case, any
withholding tax withheld pursuant to the rules applicable to dispositions of a
U.S. real property interest would be creditable against such non-U.S. holder's
U.S. federal income tax liability and might entitle such non-U.S. holder to a
refund upon furnishing required information to the
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IRS. However, in the case of a sale of our common stock, such gain would not be
subject to federal income or withholding tax if (1) our common stock is
regularly traded on an established securities market and (2) the non-U.S. holder
disposing of our common stock did not own, actually or constructively, at any
time during the five-year period preceding the disposition, more than 5% of our
common stock.
U.S. Estate Tax
Notes owned or treated as owned by an individual who is not a citizen or
resident (as specifically defined for U.S. federal estate tax purposes) of the
United States at the time of death, referred to as a "nonresident decedent,"
will not be includible in the nonresident decedent's gross estate for U.S.
federal estate tax purposes as a result of such nonresident decedent's death,
provided that, at the time of death, the nonresident descendant does not own,
actually or constructively, 10% or more of the total combined voting power of
all classes of our stock entitled to vote and payments with respect to such
notes would not have been effectively connected with the conduct of a U.S. trade
or business by the nonresident decedent. Common stock owned or treated as owned
by a nonresident decedent will be includible in the nonresident decedent's gross
estate for U.S. federal estate tax purposes as a result of the nonresident
decedent's death. Subject to applicable treaty limitations, if any, a
nonresident decedent's estate may be subject to U.S. federal estate tax on
property includible in the estate for U.S. federal estate tax purposes.
Backup Withholding and Information Reporting
A non-U.S. holder will generally not be subject to information reporting
or backup withholding (imposed at the rate of 31%) with respect to payments of
interest on the notes or dividends on common stock and proceeds from the sale or
other disposition of the notes or common stock to or through a U.S. office of a
broker, as long as the income associated with such payments is otherwise exempt
from U.S. federal income tax, and the payor or broker does not have actual
knowledge or reason to know that the non-U.S. holder is a U.S. person and the
non-U.S. holder has furnished to the payor or broker:
- a valid IRS Form W-8BEN certifying, under penalties of perjury, status
as a non-U.S. person;
- other documentation upon which it may rely to treat the payments as
made to a non-U.S. person in accordance with Treasury Regulations; or
- otherwise establishes an exemption.
The payment of the proceeds from the sale or other disposition of the
notes or common stock to or through a foreign office of a broker generally will
not be subject to information reporting or backup withholding. However, a sale
or disposition of the notes or common stock will be subject to information
reporting, but not backup withholding, if it is to or through a foreign office
of a broker that is:
- a U.S. person,
- a controlled foreign corporation for U.S. federal income tax purposes,
- a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a U.S. trade or business for a specified
three-year period, or
- a foreign partnership, if at any time during its tax year one or more
of its partners are U.S. persons, as defined in Treasury Regulations,
who in the aggregate hold more than 50% of the income or capital
interest in the partnership, or such foreign partnership is engaged in
the conduct of a U.S. trade or business,
unless the broker does not have actual knowledge or reason to know that the
holder is a U.S. person and the documentation requirements described above are
met or the holder otherwise establishes an exemption.
Any amounts withheld under the backup withholding rates from a payment to
a non-U.S. holder will be allowed as a credit against such holder's U.S. federal
income tax liability, if any, or will otherwise be refundable, provided that the
requisite procedures are followed and the proper information is filed with the
IRS on a timely basis. Non-U.S. holders of the notes or common stock should
consult their own tax
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advisors regarding their qualification for exemption from backup withholding and
the procedure for obtaining such an exemption, if applicable.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, YOU SHOULD
CONSULT YOUR OWN TAX ADVISER AS TO PARTICULAR TAX CONSEQUENCES TO YOU OF
PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND OUR COMMON STOCK, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY
PROPOSED CHANGES IN APPLICABLE LAWS.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 shares of common
stock, par value $0.01 per share; and 100,000 shares of preferred stock. As of
March 1, 2001, there were 31,099,081 shares of common stock outstanding held of
record by 768 stockholders, and no shares of preferred stock outstanding. The
following description of our capital stock and provisions of our certificate of
incorporation and bylaws are only summaries, and we encourage you to review
complete copies of our certificate of incorporation and bylaws, which we have
filed previously with the Securities and Exchange Commission.
COMMON STOCK
Holders of our common stock are entitled to receive, as, when and if
declared by our board of directors, dividends and other distributions in cash,
stock or property from our assets or funds legally available for those purposes
subject to any dividend preferences that may be attributable to preferred stock.
Holders of common stock are entitled to one vote for each share held of record
on all matters on which stockholders may vote. Holders of common stock are not
entitled to cumulative voting for the election of directors. There are no
preemptive, conversion, redemption or sinking fund provisions applicable to our
common stock. All outstanding shares of common stock are fully paid and
non-assessable. In the event of our liquidation, dissolution or winding up,
holders of common stock are entitled to share ratably in the assets available
for distribution, subject to any prior rights of any holders of preferred stock
then outstanding.
PREFERRED STOCK
Our board of directors may from time to time, without stockholder
approval, designate one or more series of preferred stock with dividend rates,
redemption prices, preferences on liquidation or dissolution, conversion rights,
voting rights and any other preferences, which rights and preferences could
adversely affect the voting power of the holders of common stock. Issuances of
preferred stock could:
- restrict the payment of dividends on common stock if dividends on the
preferred stock have not been paid in full;
- dilute the voting power and equity interests of holders of common stock
to the extent the preferred stock is convertible into common stock or
has voting rights; or
- prevent the holders of common stock from participating in the
distribution of our assets upon liquidation until any liquidation
preferences held by the holders of preferred stock are satisfied.
In addition, issuances of preferred stock could make it harder for a
third party to acquire, or could discourage or delay a third party from
acquiring, a majority of our outstanding common stock.
OPTIONS
As of March 1, 2001, there were outstanding options for the purchase of
3,229,128 shares of our common stock at a weighted average exercise price of
$15.83 per share, and 1,173,697 shares of common stock reserved for future grant
or issuance under our 1997 stock option plan and 12,476 shares of common stock
reserved for issuance under our employee stock purchase plan.
CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS
Provisions in our certificate of incorporation, bylaws and Delaware law
could make it harder for someone to acquire us through a tender offer, proxy
contest or otherwise. We are governed by the provisions of Section 203 of the
Delaware General Corporation Law, which provides that a person who owns (or
within three years, did own) 15% or more of a company's voting stock is an
"interested stockholder." Section 203 prohibits a public Delaware corporation
from engaging in a business combination
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with an interested stockholder for a period commencing three years from the date
in which the person became an interested stockholder unless:
- the board of directors approved the transaction which resulted in the
stockholder becoming an interested stockholder;
- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of the voting stock of the corporation (excluding shares
owned by officers, directors, or certain employee stock purchase
plans); or
- at or subsequent to the time the transaction is approved by the board
of directors, there is an affirmative vote of at least 66.66% of the
outstanding voting stock.
Section 203 could prohibit or delay mergers or other takeover attempts
against us, and accordingly, may discourage attempts to acquire us through
tender offer, proxy contest or otherwise.
Our certificate of incorporation and bylaws include certain restrictions
on who may call a special meeting of stockholders and prohibit certain actions
by written consent of the holders of common stock. These provisions could delay,
deter or prevent a future takeover or acquisition of us unless such takeover or
acquisition is approved by the board of directors.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The registrant's certificate of incorporation provides that, to the
fullest extent provided by Delaware law, no director of the registrant shall be
liable to the registrant or its stockholders for monetary damages arising from a
breach of fiduciary duty owed to the registrant or its stockholders. Delaware
law provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability for:
- breach of the director's duty of loyalty;
- acts or omissions not in good faith, intentional misconduct or a
knowing violation of the law;
- the unlawful payment of a dividend or unlawful stock purchase or
redemption; and
- any transaction from which the director derives an improper personal
benefit.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
The registrant maintains standard policies of insurance under which
coverage is provided (a) to its directors and officers against loss rising from
claims made by reason of breach of duty or other wrongful act, and (b) to the
registrant with respect to payments which may be made by the registrant to such
officers and directors pursuant to the above indemnification provision or
otherwise as a matter of law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is First Union
National Bank. Its address is 1525 West WT Harris Boulevard, Building 3C3,
Charlotte, NC 28262-1153, and its telephone number at this location is (704)
590-7385.
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SELLING SECURITYHOLDERS
The notes originally were issued by us and sold by Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Credit Suisse First Boston Corporation, UBS Warburg
LLC, First Union Securities, Inc. and Robertson Stephens, Inc. as the initial
purchasers in transactions exempt from the registration requirements of the
Securities Act to persons reasonably believed by the initial purchasers to be
qualified institutional buyers. Selling securityholders, including their
transferees, pledgees or donees or their successors, may from time to time offer
and sell any or all of the notes and the common stock into which the notes are
convertible pursuant to this prospectus. The selling securityholders may offer
all, some or none of the notes and the common stock into which the notes are
convertible.
The table below sets forth information, as of March 30, 2001, with
respect to the selling securityholders and the principal amounts of notes and
amounts of common stock beneficially owned by each selling holder that may be
offered under this prospectus by the selling securityholders. The information is
based on information provided by or on behalf of the selling securityholders.
The selling securityholders identified below may have sold, transferred or
otherwise disposed of all or a portion of their notes or common stock since the
date on which they provided the information regarding their notes or common
stock in transactions exempt from the registration requirements of the
Securities Act.
Because the selling securityholders may offer all or some portion of the
notes or the common stock to be offered by them, we cannot estimate the amount
of the completion of any sales.
Some of the initial purchasers of the notes and Deutsche Bank Securities,
Inc. or their affiliates have engaged in, and may in the future engage in,
investment banking and other commercial dealings in the ordinary course of
business with us. They have received customary fees and commissions for these
transactions. Credit Suisse First Boston Corporation and First Union Securities,
Inc., each of which was an initial purchaser of the notes, are affiliates of a
lender under our revolving credit facility. Such affiliates of Credit Suisse
First Boston Corporation and First Union Securities, Inc. received their
proportionate share of the repayment by us of amounts outstanding under our
revolving credit facility from the sale of the notes to the initial purchasers.
To our knowledge, none of the other selling securityholders has had any
position, office or other material relationship with us or our affiliates within
the past three years.
PRINCIPAL AMOUNT OF PERCENTAGE OF NUMBER OF SHARES
NOTES OWNED NOTES OF COMMON STOCK
NAME OF SELLING SECURITYHOLDER AND OFFERED OUTSTANDING THAT MAY BE SOLD
- ------------------------------ ------------------- ------------- ----------------
AAM/ZAZOVE Institutional Income Fund, L.P. .. $ 1,280,000 *% 32,268
Aegon U.S.A. Charitable Foundation........... 1,000,000 * 25,209
Alpine Associates............................ 2,600,000 1.73 65,544
Alpine Partners, L.P. ....................... 400,000 * 10,083
Alta Partners Holdings, LDC.................. 7,500,000 5.00 189,072
Bank Austria Cayman Islands, Ltd. ........... 1,600,000 1.07 40,335
BBT Fund, L.P. .............................. 13,500,000 9.00 340,329
BNP Cooper Neff Convertible Strategies Fund,
L.P. ...................................... 1,000,000 * 25,209
BNP Paribus Equity Strategies................ 12,000,000 8.00 302,515
Boulder II Limited........................... 7,700,000 5.13 194,113
BT Opportunity............................... 4,000,000 2.67 100,838
BTS Strategy................................. 1,000,000 * 25,209
Castle Convertible Fund, Inc. ............... 750,000 * 18,907
Chase Manhattan International................ 7,000,000 4.67 176,467
Chrysler Corporation Master Retirement
Trust...................................... 680,000 * 17,142
Citi Small Cap Fund.......................... 1,525,000 1.02 38,444
Clinton Riverside Convertible Portfolio
Limited.................................... 4,000,000 2.67 100,838
(table continued on following page)
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PRINCIPAL AMOUNT OF PERCENTAGE OF NUMBER OF SHARES
NOTES OWNED NOTES OF COMMON STOCK
NAME OF SELLING SECURITYHOLDER AND OFFERED OUTSTANDING THAT MAY BE SOLD
- ------------------------------ ------------------- ------------- ----------------
Credit Suisse First Boston Corporation....... $ 3,500,000 2.33% 88,233
Delta Airlines Master Trust (c/o Oaktree
Capital Management, LLC)................... 230,000 * 5,798
Delta Pilots D&S Trust....................... 480,000 * 12,100
Deutsche Bank Securities, Inc. .............. 4,100,000 2.73 103,359
Diversified Arb Fund......................... 1,235,000 * 31,133
Employee Benefit Convertible Securities
Fund....................................... 270,000 * 6,806
Enhanced Arb Fund............................ 1,235,000 * 31,133
First Union Securities, Inc. ................ 6,750,000 4.50 170,164
General Motors -- LT......................... 706,000 * 17,797
General Motors Welfare Benefit Trust Arb
Fund....................................... 1,413,000 * 35,621
Grace Brothers, Ltd. ........................ 1,500,000 1.00 37,814
ITT Industries............................... 176,000 * 4,436
JMG Capital Partners, L.P. .................. 2,000,000 1.33 50,419
JMG Triton Offshore Fund, Ltd. .............. 2,000,000 1.33 50,419
Kentfield Trading, Ltd. ..................... 8,460,000 5.64 213,273
Lehman Brothers, Inc. ....................... 5,000,000 3.33 126,048
Lipper Convertibles, L.P. ................... 3,000,000 2.00 75,628
Mainstay Convertible Fund.................... 5,500,000 3.67 138,652
Mainstay VP Convertible Portfolio............ 2,000,000 1.33 50,419
Market Neutral Arb Fund...................... 1,235,000 * 31,133
McMahan Securities Co. L.P................... 165,000 * 4,159
Merrill Lynch Pierce Fenner and Smith,
Inc. ...................................... 1,740,000 1.16 43,864
Motion Picture Industry Health Plan -- Active
Members Fund............................... 80,000 * 2,016
Motion Picture Industry Health
Plan -- Retiree Member Fund................ 40,000 * 1,008
Museum of Fine Arts, Boston.................. 10,000 * 252
Nations Convertible Securities Fund.......... 4,700,000 3.13 118,485
New York Life Separate Account............... 500,000 * 12,604
OCM Convertible Trust........................ 2,300,000 1.53 57,982
Onex Industrial Partners..................... 4,000,000 2.67 100,838
Parker-Hannifin Corporation.................. 20,000 * 504
Partner Reinsurance Company Ltd. ............ 135,000 * 3,403
Pebble Capital Inc. ......................... 1,650,000 1.10 41,595
ProMutual.................................... 40,000 * 1,008
Putnam Asset Allocation Funds-Balanced
Portfolio.................................. 90,000 * 2,268
Putnam Asset Allocation Funds-Conservative
Portfolio.................................. 50,000 * 1,260
Putnam Convertible Income-Growth Trust....... 1,250,000 * 31,512
Putnam Convertible Opportunities and Income
Trust...................................... 30,000 * 756
Ramius Capital Group Holdings, Ltd. ......... 400,000 * 10,083
San Diego County Employees Retirement
Association................................ 2,920,000 1.95 73,612
SB Small Cap Fund............................ 2,000,000 1.33 50,419
SB Variable Small Cap Fund................... 50,000 * 1,260
Silvercreek Limited Partnership.............. 2,150,000 1.43 54,200
(table continued on following page)
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PRINCIPAL AMOUNT OF PERCENTAGE OF NUMBER OF SHARES
NOTES OWNED NOTES OF COMMON STOCK
NAME OF SELLING SECURITYHOLDER AND OFFERED OUTSTANDING THAT MAY BE SOLD
- ------------------------------ ------------------- ------------- ----------------
State Employees' Retirement Fund of the State
of Delaware................................ $ 340,000 *% 8,571
State of Connecticut Combined Investment
Funds...................................... 740,000 * 18,655
UBS O'Connor, LLC f/b/o UBS Global Equity
Arbitrage Master Ltd. ..................... 1,500,000 1.00 37,814
University of Rochester...................... 10,000 * 252
Vanguard Convertible Securities Fund,
Inc. ...................................... 800,000 * 20,167
Zurich HFR Master Hedge Fund Index, Ltd. .... 100,000 * 2,520
Any other holder of notes or future
transferee, pledgee, donee or successor of
any holder................................. 3,865,000 2.58 97,435
------------ ---- ---------
Total........................................ $150,000,000 100% 3,781,409**
- ---------------
* Less than 1%.
** Total differs from the amount registered due to the rounding down of
fractional shares of common stock issuable to each selling securityholder
upon conversion of the notes.
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45
PLAN OF DISTRIBUTION
The selling securityholders will be offering and selling all securities
offered and sold under this prospectus. We will not receive any of the proceeds
on these sales of these securities. In connection with the initial offering of
the notes, we entered into a registration rights agreement dated November 20,
2000 with the initial purchasers of the notes. Securities may only be offered or
sold under this prospectus pursuant to the terms of the registration rights
agreement. However, selling securityholders may resell all or a portion of the
securities in open market transactions in reliance upon Rule 144 or Rule 144A
under the Securities Act, provided they meet the criteria and conform to the
requirements of one of these rules.
WHO MAY SELL AND APPLICABLE RESTRICTIONS
The securities may be sold from time to time directly by the selling
securityholders or alternatively through underwriters or broker-dealers or
agents. The selling securityholders may decide not to sell any of the securities
offered under this prospectus, and selling securityholders could transfer,
devise or give these securities by other means. If the securities are sold
through underwriters or broker-dealers or agents, the selling securityholders
will be responsible for underwriting discounts or commissions or agent's
commissions.
The securities may be sold in one or more transactions at fixed prices,
at prevailing market prices at the time of sale, at varying prices determined at
the time of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve block transactions)
- on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;
- in the over-the-counter market; or
- through the writing of options.
In connection with sales of the securities or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers, which
may in turn engage in short sales of the securities, and deliver the securities
to close out such short positions, or loan or pledge securities to
broker-dealers that in turn may sell such securities.
To the extent the selling securityholders may be deemed to be
underwriters, the selling securityholders may be subject to statutory
liabilities, including, but not limited to, liability under Sections 11, 12 and
17 of the Securities Act and Rule 10b-5 under the Exchange Act.
PROSPECTUS DELIVERY
The selling securityholders and any participating underwriters,
broker-dealers or agents may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act. Any discounts, commissions, concessions
or profit they earn on any resale of such securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Because they
may be deemed to be underwriters, the selling securityholders will be subject to
the prospectus delivery requirements of the Securities Act. At any time a
particular offer of the securities is made, a revised prospectus or prospectus
supplement, if required, will be distributed which will disclose:
- the name of the selling securityholders and of any participating
underwriters, broker-dealers or agents;
- the aggregate amount and type of securities being offered;
- the price at which the securities were sold and other material terms of
the offering;
- any discounts, commissions, concessions or other items constituting
compensation from the selling securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers; and
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46
- that the participating broker-dealers did not conduct any investigation
to verify the information in this prospectus or incorporated in this
prospectus by reference.
The prospectus supplement or a post-effective amendment will be filed
with the SEC to reflect the disclosure of additional information with respect to
the distribution of the securities.
MANNER OF SALES
The selling securityholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. Sales may be
made through the Nasdaq National Market (in the case of our common stock) or in
the over-the-counter market. The securities may be sold at then prevailing
market prices, at fixed prices or at negotiated prices.
The securities may be sold according to one or more of the following
methods:
- a block trade in which the broker or dealer so engaged will attempt to
sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by the broker
or dealer for its account as allowed under this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- an exchange distribution under the rules of the exchange;
- face-to-face transactions between sellers and purchasers without a
broker-dealer; and
- by writing options.
Some persons participating in the offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the securities
including the entry of stabilizing bids or syndicate covering transactions or
the imposition of penalty bids.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934 and the rules and regulations thereunder, including Regulation M.
This regulation may limit the timing of purchases and sales of any of the
securities by the selling securityholders and any other person. The
anti-manipulation rules under the Securities Exchange Act may apply to sales of
securities in the market and to the activities of the selling securityholders
and their affiliates. Furthermore, Regulation M of the Securities Exchange Act
may restrict the ability of any person engaged in the distribution of the
securities to engage in market-making activities with respect to the particular
securities being distributed for a period of up to five business days before the
distribution. All of the foregoing may affect the marketability of the
securities and the ability of any person or entity to engage in market-making
activities with respect to the securities.
HEDGING AND OTHER TRANSACTIONS WITH BROKER-DEALERS
In connection with distributions of the securities, the selling
securityholders may enter into hedging transactions with broker-dealers. In
connection with these transactions, broker-dealers may engage in short sales of
the registered securities in the course of hedging the positions they assume
with selling securityholders. The selling securityholders may also sell
securities short and redeliver the securities to close short positions. The
selling securityholders may also enter into options or other transactions with
broker-dealers which require the delivery to the broker-dealer of the registered
securities. The broker-dealer may then resell or transfer these securities under
this prospectus. A selling securityholder may also loan or pledge the registered
securities to a broker-dealer and the broker-dealer may sell the securities so
loaned or, upon a default, the broker-dealer may effect sales of the pledged
securities under this prospectus.
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EXPENSES ASSOCIATED WITH REGISTRATION
We have agreed to pay substantially all of the expenses of registering
the securities under the Securities Act and of compliance with blue sky laws,
including registration and filing fees, printing and duplicating expenses, legal
fees of our counsel, fees for one legal counsel retained by the selling
securityholders and fees of the trustee under the indenture pursuant to which we
originally issued the notes and of the registrar and transfer agent of the
common stock. If the notes or the common stock into which the notes may be
converted are sold through underwriters or broker-dealers, the selling
securityholders will be responsible for underwriting discounts, underwriting
commissions and agent commissions.
INDEMNIFICATION AND CONTRIBUTION
In the registration rights agreement, we and the selling securityholders
have agreed to indemnify or provide contribution to each other and specified
other persons against some liabilities in connection with the offering of the
securities, including liabilities arising under the Securities Act. The selling
securityholders may also agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the securities against some
liabilities, including liabilities that arise under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers of persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
SUSPENSION OF THIS OFFERING
We may suspend the use of this prospectus if we learn of any event that
causes this prospectus to include an untrue statement of a material fact
required to be stated in the prospectus or necessary to make the statements in
the prospectus not misleading in light of the circumstances then existing. If
this type of event occurs, a prospectus supplement or post-effective amendment,
if required, will be distributed to each selling securityholder. Each selling
securityholder has agreed not to trade securities from the time the selling
securityholder receives notice from us of this type of event until the selling
securityholder receives a prospectus supplement or amendment. This time period
will not exceed 45 days in any 3-month period and 90 days in any 12-month
period.
TERMINATION OF THIS OFFERING
Under the registration rights agreement, we are obligated to use
reasonable efforts to keep the registration statement effective until, and
therefore this offering will terminate on, the earlier of: (i) two years from
the date on which this registration statement is declared effective by the SEC,
(ii) the date on which all securities offered under this prospectus have been
sold pursuant to this prospectus, and (iii) the date on which all outstanding
securities held by non-affiliates of Province may be resold without registration
under the Securities Act pursuant to Rule 144(k) under the Securities Act.
LEGAL MATTERS
The validity of the notes offered hereby and the shares of common stock
issuable upon conversion will be passed upon for us by Waller Lansden Dortch &
Davis, A Professional Limited Liability Company, Nashville, Tennessee.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
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statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
The audited combined financial statements of Doctors' Hospital of
Opelousas and certain affiliated entities are included in our Form 8-K/A dated
August 16, 1999, which is incorporated by reference in this prospectus and the
registration statement. Ernst & Young LLP, independent auditors, have audited
these combined financial statements as of and for the year ended December 31,
1998, as set forth in their report, which is incorporated by reference in the
prospectus and the registration statement. The combined financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
The audited combined financial statements of Minden Medical Center and
Trinity Valley Medical Center, including certain medical office buildings and
other healthcare businesses related to the operations of these hospitals
(collectively, the Tenet Province Hospitals) as of and for the year ended May
31, 1999, are included in our Form 8-K/A dated December 17, 1999, and have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants, which is
incorporated by reference herein and upon the authority of said firm as experts
in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended, under which we file periodic
reports, proxy statements and other information with the Securities and Exchange
Commission. Copies of the reports, proxy statements and other information may be
examined without charge at the Public Reference Section of the Securities and
Exchange Commission, 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549,
and the Securities and Exchange Commission's regional offices located at 500
West Madison Street, Suite 1400, Chicago, IL 60661, and 7 World Trade Center,
13th Floor, New York, NY 10048 or on the Internet at http://www.sec.gov. Copies
of all or a portion of such materials can be obtained from the Public Reference
Section of the Securities and Exchange Commission upon payment of prescribed
fees. Please call the Securities and Exchange Commission at 800-SEC-0330 for
further information about the Public Reference Room. These reports, proxy and
information statements and other information may also be inspected at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
We have agreed that if, at any time that the notes or the common stock
issuable upon conversion of the notes are "restricted securities" within the
meaning of the Securities Act of 1933 and we are not subject to the information
reporting requirements of the Securities Exchange Act of 1934, we will furnish
to holders of the notes and such common stock and to prospective purchasers
designated by them the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act of 1933 to permit compliance with Rule 144A
in connection with resales of the notes and such common stock.
We are "incorporating by reference" specified documents that we file with
the SEC, which means:
- incorporated documents are considered part of this prospectus;
- we are disclosing important information to you by referring you to
those documents; and
- information that we file in the future with the SEC will automatically
update and supersede this prospectus.
We incorporate by reference the documents listed below and any documents
that we file with the SEC under Section 13(c) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the date of this
prospectus and before the end of the offering of the notes:
- our Current Report on Form 8-K, filed on June 17, 1999, as amended on
August 16, 1999 (with respect only to the combined financial statements
of Doctors' Hospital of Opelousas and certain affiliated entities as of
and for the fiscal year ended December 31, 1998);
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- our Current Report on Form 8-K, filed on October 18, 1999, as amended
on December 17, 1999 (with respect only to the combined financial
statements of Minden Medical Center and Trinity Valley Medical Center
including certain medical office buildings and other health care
businesses related to the operations of these hospitals (collectively,
the Tenet Province Hospitals) as of and for the fiscal year ended May
31, 1999);
- our Annual Report on Form 10-K for the fiscal year ended December 31,
1999;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2000;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2000;
- our Current Report on Form 8-K, filed on March 2, 2000 (with respect to
our acquisition of City of Ennis Hospital in Ennis, Texas);
- our Current Report on Form 8-K, filed on April 4, 2000 (with respect to
our announcement that we entered into a long-term lease agreement for
Bolivar Medical Center in Cleveland, Mississippi);
- our Current Report on Form 8-K, filed on May 2, 2000 (with respect to
the closing of the transaction to lease Bolivar Medical Center);
- our Current Report on Form 8-K, filed on September 5, 2000 (with
respect to our announcement of the approval of a three-for-two stock
split to be effected in the form of a 50% stock dividend);
- our Current Report on Form 8-K, filed on October 16, 2000 (with respect
to our sale of Ojai Valley Community Hospital and our announcement of a
definitive agreement to sell General Hospital);
- our Current Report on Form 8-K, filed on December 6, 2000 (with respect
to our announcement that we completed the issuance and sale of
$150,000,000 aggregate principal amount of 4 1/2% Convertible
Subordinated Notes due 2005 for purchase by qualified institutional
buyers under Rule 144A of the Securities Act of 1933, $25,000,000 of
which were issued and sold to cover over-allotments); and
- our Current Report on Form 8-K, filed on January 8, 2001 (with respect
to the closing of the transaction to sell General Hospital).
You may request a copy of these filings, at no cost, by writing or
telephoning our Corporate Secretary at the following address:
Province Healthcare Company
105 Westwood Place
Suite 400
Brentwood, Tennessee 37027
Attention: Corporate Secretary
(615) 370-1377
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$150,000,000
PROVINCE HEALTHCARE LOGO
4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2005
----------------------------------
PROSPECTUS
----------------------------------
MARCH 27, 2001
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