SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 15, 1997
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INTEGRATED HEALTH SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-12306 23-2428312
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10065 Red Run Boulevard, Owings Mills, Maryland 21117
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 998-8400
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS
On September 15, 1997, IHS entered into a $1.75 billion revolving credit
and term loan facility with Citibank, N.A., as Administrative Agent, and certain
other lenders (the "New Credit Facility") to replace its existing $700 million
revolving credit facility. The New Credit Facility consists of a $750 million
term loan facility (the "Term Facility") and a $1 billion revolving credit
facility, including a $100 million letter of credit subfacility and a $10
million swing line subfacility (the "Revolving Facility"). The Term Facility,
all of which was borrowed on September 17, 1997, matures on December 31, 2004
and will be amortized beginning December 31, 1998 as follows: 1998 -- $7.5
million; each of 1999, 2000, 2001 and 2002 -- $7.5 million (payable in equal
quarterly installments); 2003 -- $337.5 million (payable in equal quarterly
installments); and 2004 -- $375 million (payable in equal quarterly
installments). Any unpaid balance will be due on the maturity date. The Term
Facility will bear interest at a rate equal to, at the option of IHS, either (i)
in the case of Eurodollar loans, the sum of (x) one and three-quarters percent
or two percent (depending on the ratio of IHS' Debt (as defined in the New
Credit Facility) to earnings before interest, taxes, depreciation, amortization
and rent, pro forma for any acquisitions or divestitures during the measurement
period (the "Debt/EBITDAR Ratio")) and (y) the interest rate in the London
interbank market for loans in an amount substantially equal to the amount of
borrowing and for the period of borrowing selected by IHS or (ii) the sum of (a)
the higher of (1) Citibank, N.A.'s base rate or (2) one percent plus the latest
overnight federal funds rate plus (b) a margin of one-half percent or
three-quarters of one percent (depending on the Debt/EBITDAR Ratio). The Term
Facility can be prepaid at any time in whole or in part without penalty.
The Revolving Facility will reduce to $800 million on September 30, 2001
and $500 million on September 30, 2002, with a final maturity on September 15,
2004; however, the $100 million letter of credit subfacility and $10 million
swing line subfacility will remain at $100 million and $10 million,
respectively, until final maturity. The Revolving Facility will bear interest at
a rate equal to, at the option of IHS, either (i) in the case of Eurodollar
loans, the sum of (x) between three-quarters of one percent and one and
three-quarters percent (depending on the Debt/EBITDAR Ratio) and (y) the
interest rate in the London interbank market for loans in an amount
substantially equal to the amount of borrowing and for the period of borrowing
selected by IHS or (ii) the sum of (a) the higher of (1) Citibank, N.A.'s base
rate or (2) one percent plus the latest overnight federal funds rate plus (b) a
margin of between zero percent and one-half percent (depending on the
Debt/EBITDAR Ratio). Amounts repaid under the Revolving Facility may be
reborrowed prior to the maturity date.
The New Credit Facility limits IHS' ability to incur indebtedness or
contingent obligations, to make additional acquisitions, to sell or dispose of
assets, to create or incur liens on assets, to pay dividends, to purchase or
redeem IHS' stock and to merge or consolidate with any other person. In
addition, the New Credit Facility requires that IHS meet certain financial
ratios, and provides the banks with the right to require the
payment of all amounts outstanding under the facility, and to terminate all
commitments under the facility, if there is a change in control of IHS or if any
person other than Dr. Robert N. Elkins, IHS' Chairman and Chief Executive
Officer, or a group managed by Dr. Elkins, owns more than 40% of IHS' stock. The
New Credit Facility is guaranteed by all of IHS' subsidiaries (other than
inactive subsidiaries) and secured by a pledge of all of the stock of
substantially all of IHS' subsidiaries.
The New Credit Facility replaced IHS' $700 million credit facility (the
"Prior Credit Facility"). As a result, IHS anticipates that it will record an
extraordinary loss on extinguishment of debt of approximately $2.4 million (net
of related tax benefit of approximately $1.6 million) in the third quarter of
1997 resulting from the write-off of deferred financing costs of $4.0 million
related to the Prior Credit Facility.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS.
10 $1,750,000,000 Revolving Credit and Term Loan Agreement, dated as of
September 15, 1997, among Integrated Health Services, Inc., the
lenders named therein, Citibank, N.A., as administrative agent, The
Toronto- Dominion Bank, as documentation agent, and Citicorp
Securities, Inc., as arranger.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTEGRATED HEALTH SERVICES, INC.
Date: September 19, 1997 By: /s/ W. Bradley Bennett
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Name: W. Bradley Bennett
Title: Executive Vice President-Chief
Accounting Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10 $1,750,000,000 Revolving Credit and Term Loan Agreement, dated as of
September 15, 1997, among Integrated Health Services, Inc., the
lenders named therein, Citibank, N.A., as administrative agent, The
Toronto- Dominion Bank, as documentation agent, and Citicorp
Securities, Inc., as arranger.