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UNITED STATES
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): OCTOBER 9, 2007
INTEGRATED HEALTHCARE HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
NEVADA 0-23511 87-0412182
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
1301 NORTH TUSTIN AVENUE, SANTA ANA, CALIFORNIA 92705
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (714) 953-3503
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Refinancing of Loans with Medical Capital Corporation
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Effective October 9, 2007, Integrated Healthcare Holdings, Inc. and its
subsidiaries (collectively, the "Company") and Medical Capital Corporation and
its affiliates (collectively, "MedCap") executed agreements to refinance
MedCap's credit facilities with the Company aggregating up to $140,700,000 in
principal amount (the "New Credit Facilities"). The New Credit Facilities
replaced the Company's previous credit facilities with MedCap, which matured on
March 2, 2007. The Company had been operating under an Agreement to Forbear with
MedCap with respect to the previous credit facilities.
The New Credit Facilities consist of the following instruments:
o An $80,000,000 Credit Agreement, under which the Company issued a
$45,000,000 Term Note bearing a fixed interest rate of 9% in the first
year and 14% after the first year, which was used to repay amounts
owing under the Company's existing $50,000,000 real estate term loan.
o A $35,000,000 Non-Revolving Line of Credit Note issued under the
$80,000,000 Credit Agreement, bearing a fixed interest rate of 9.25%
per year, which was used to repay amounts owing under the Company's
existing $30,000,000 line of credit, pay the origination fees on the
other credit facilities and for working capital.
o A $10,700,000 Credit Agreement, under which the Company issued a
$10,700,000 Convertible Term Note bearing a fixed interest rate of
9.25% per year, which was used to repay amounts owing under the
Company's existing $10,700,000 loan. The $10,700,000 Convertible Term
Note is convertible into common stock of the Company at $0.21 per share
during the term of the Note.
o A $50,000,000 Revolving Credit Agreement, under which the Company
issued a $50,000,000 Revolving Line of Credit Note bearing a fixed
interest rate of 24% per year (subject to reduction to 18% if the
$45,000,000 Real Estate Term Loan is repaid prior to its maturity) and
an unused commitment fee of 0.50% per year, which was used to finance
the Company's accounts receivable.
Each of the above Credit Agreements and Notes (i) required a 1.5% origination
fee due at funding, (ii) matures in three years, (iii) requires monthly payments
of interest and repayment of principal upon maturity, (iv) are collateralized by
all of the assets of the Company and its subsidiaries and the real estate
underlying the Company's hospital facilities (which are owned by Pacific Coast
Holdings Investments, LLC ("PCHI") and leased to the Company), and (v) are
guaranteed by Orange County Physicians Investment Network, LLC and West Coast
Holdings, LLC ("West Coast") pursuant to
separate Guaranty Agreements in favor of the lender. West Coast is a
member of PCHI.
Concurrently with the execution of the New Credit Facilities, the Company issued
to an affiliate of MedCap a five-year warrant to purchase the greater of
16,880,484 shares of the Company's common stock or up to 4.95% of the Company's
common stock equivalents, as defined, at $0.21 per share (the "4.95% Warrant").
In addition, the Company and MedCap entered into Amendment No. 2 to Common Stock
Warrant, originally dated December 12, 2005, which entitles an affiliate of
MedCap to purchase the greater of 26,097,561 shares of the Company's common
stock or up to 31.09% of the Company's common stock equivalents (the "31.09%
Warrant"). Amendment No. 2 to the 31.09% Warrant extended the expiration date of
the Warrant to October 9, 2012, removed the condition that it only be exercised
if the Company is in default of its previous credit agreements, and increased
the exercise price to $0.21 per share unless the Company's stock ceases to be
registered under the Securities Exchange Act of 1934, as amended. The 4.95%
Warrant and the 31.09% Warrant are collectively referred to herein as the "New
Warrants."
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Amended and Restated Triple Net Hospital Building Lease
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As a condition of the New Credit Facilities, the Company entered into an Amended
and Restated Triple Net Hospital Building Lease with PCHI (the "Amended Lease").
The Amended Lease terminates on the 25-year anniversary of the original lease
(March 8, 2005) (and grants the Company the right to renew for one additional
25-year period) and requires annual base rental payments of $8,300,000 (but
until the Company refinances its $50,000,000 Revolving Line of Credit Loan with
a stated interest rate less than 14% per annum or PCHI refinances the Real
Estate Loan, the annual base rental payments are reduced to $7,100,000). In
addition, the Company may offset against its rental payments owed to PCHI
interest payments that it makes to MedCap under certain of its indebtedness
discussed above. The Amended Lease also gives PCHI sole possession of the
medical office buildings located at 1901/1905 North College Avenue, Santa Ana,
California (the "Kindred Property") that are unencumbered by any claims by or
tenancy of the Company.
Settlement Agreement
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Concurrently with the execution of the Amended Lease, the Company, PCHI,
Ganesha, and West Coast entered into a Settlement Agreement and Mutual Release
(the "Settlement Agreement") whereby the Company agreed to pay to PCHI
$2,500,000 as settlement for unpaid rents specified in the Settlement Agreement,
relating to the Kindred Property, and for compensation relating to the medical
office buildings located at 999 North Tustin Avenue in Santa Ana, California,
under a previously executed Agreement to Compensation.
The definitive forms of each of the New Credit Facilities, New Warrants, Amended
Lease and Settlement Agreement are furnished as exhibits to this Report. The
preceding descriptions of these documents are summary in nature and do not
purport to be complete. This summary should be read in connection with the
exhibits hereto.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The disclosure under Item 1.01 of this Report is hereby incorporated herein by
reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
The disclosure under Item 1.01 of this Report is hereby incorporated herein by
reference.
The sale of securities referenced in Item 1.01 of this Report have not been
registered under the Securities Act, or any state securities laws, and were sold
in a private transaction exempt from registration pursuant to Section 4(2) of
the Securities Act and Regulation D promulgated thereunder.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
EXHIBIT NUMBER DESCRIPTION
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99.1 $80,000,000 Credit Agreement *
99.2 $45,000,000 Term Note
99.3 $35,000,000 Non Revolving Line of Credit Note
99.4 $50,000,000 Revolving Credit Agreement *
99.5 $50,000,000 Revolving Line of Credit Note
99.6 $10,700,000 Credit Agreement *
99.7 $10,700,000 Convertible Term Note
99.8 4.95% Common Stock Warrant
99.9 Amendment No. 2 to 31.09% Common Stock Warrant
99.10 Amended and Restated Triple Net Hospital Building Lease
99.11 Settlement Agreement and Mutual Release
* Certain exhibits, schedules and/or annexes have been omitted. A copy of any
omitted exhibit, schedule or annex will be furnished supplementally to the
Securities and Exchange Commission upon request.
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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.
Date: October 15, 2007
INTEGRATED HEALTHCARE HOLDINGS, INC.
By: /s/ Steven R. Blake
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Steven R. Blake
Chief Financial Officer
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