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): May 29, 2001
---------------------
MEDIQ/PRN Life Support Services, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-11286 95-3692387
- ----------------------------- -------------------------- ----------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
One MEDIQ Plaza
Pennsauken, New Jersey 08110
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (856) 662-3200
---------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 3. Bankruptcy or Receivership
As previously reported, on January 24, 2001, MEDIQ Incorporated, a Delaware
corporation ("MEDIQ"), and its wholly-owned subsidiary MEDIQ/PRN Life Support
Services, Inc., a Delaware corporation ("PRN"), filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware. Since filing the
petitions, MEDIQ and PRN have operated as debtors-in-possession under the United
States Bankruptcy Code.
By order, dated May 24, 2001 (the "Confirmation Order"), the United States
Bankruptcy Court for the District of Delaware confirmed the Third Amended Joint
Plan of Reorganization dated May 22, 2001 (the "Plan"). The Confirmation Order
was entered on the docket of the United States Bankruptcy Court for the District
of Delaware on May 29, 2001. The Plan was proposed jointly by MEDIQ, PRN, MEDIQ
Imaging Services, Inc. ("MEDIQ Imaging"), MEDIQ Investment Services, Inc.
("MEDIQ Investment"), MEDIQ Management Services, Inc. ("MEDIQ Management"),
Value-Med Products, Inc. ("Value-Med"), American Cardiovascular Imaging Labs,
Inc. ("American Cardiovascular"), MEDIQ Diagnostic Centers, Inc. ("MEDIQ
Diagnostic"), MEDIQ Diagnostic Centers-I, Inc. ("MEDIQ Diagnostic I"), and MDTC
Haddon, Inc. ("MDTC") (collectively, the "Plan Proponent Debtors") under Chapter
11 of the United States Bankruptcy Code. Debtor MEDIQ Mobile X-Ray Services,
Inc. is not a proponent of the Plan. Accordingly, the Plan does not in any way
affect or address the assets, liabilities, or operations of MEDIQ Mobile X-Ray
Services, Inc.
Certain conditions precedent, which are set forth in the Plan, exist to the
effectiveness of the Plan. These conditions to effectiveness are described in
more detail below. As used in the Plan and the Confirmation Order, the term
"Effective Date" means the first business day (a) that is at least eleven days
after the Confirmation Date; (b) on which no stay of the Confirmation Order is
in effect; and (c) on which all conditions in Article VIII of the Plan have been
satisfied or waived in accordance with the Plan. The Effective Date of the Plan
will occur no later than June 15, 2001.
Set forth below is a summary of the material terms of the Plan. This summary is
qualified in its entirety by reference to the Plan, which is filed as Exhibit
2.1 to this report. Capitalized terms used, but not defined, herein shall have
the same meanings as in the Plan.
In summary, the Plan divides claims and interests into the following classes and
treats them as shown below:
- --------------------------------------------------------------------------------
Class Description Treatment
- --------------------------------------------------------------------------------
N/A Administrative Claims Cash equal to the amount of such Claim on the
later of (i) the Initial Distribution Date
and (ii) the date that is 10 days after the
Allowance Date, unless such Holder shall have
agreed to different treatment of such Allowed
Claim; provided, however, that Allowed
-------- -------
Administrative Claims representing
obligations incurred in the ordinary course
of business and assumed by the Plan Proponent
Debtors shall be paid or performed in
accordance with the terms and conditions of
the particular transactions and any
agreements relating thereto.
- --------------------------------------------------------------------------------
N/A Tax Claims At the election of the applicable Plan
Proponent Debtor, in its sole discretion,
either (i) cash equal to the amount of such
Claim on the later of (1) the Initial
Distribution Date and (2) the date that is 10
days after the Allowance Date, unless such
Holder shall have agreed to different
treatment of such Allowed Claim, or (ii) in
accordance with Bankruptcy Code (S)
1129(a)(9)(C), deferred
- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------
Class Description Treatment
- --------------------------------------------------------------------------------
cash payments over a period not exceeding six
years after the date of assessment of such
claim, of a value, as of the Effective Date,
equal to the allowed amount of such Allowed
Tax Claim.
- --------------------------------------------------------------------------------
1A DIP Facility Claims Pro Rata share of (i) a principal amount of
Tranche A Notes equal to the aggregate
outstanding principal amount of Advances (as
defined in the DIP Facility) under the DIP
Facility, plus the DIP L.C. Exposure, (ii)
cash payment equal to the amount of all DIP
Facility Claims in respect of accrued and
unpaid interest and all fees, costs, and
expenses and other amounts (other than
principal) payable under the DIP Facility,
and (iii) a specified portion of the New
MEDIQ Preferred Stock. Such specified portion
of the shares of New MEDIQ Preferred Stock to
be distributed to Holders of DIP Facility
Claims shall be determined by (A) multiplying
the aggregate number of shares of the New
MEDIQ Preferred Stock (650,000) by the number
equal to (B) (i) the aggregate principal
amount of Advances outstanding under the DIP
Facility on the Effective Date (the "DIP
Balance") plus the DIP L.C. Exposure divided
by (ii) the sum of (a) the DIP Balance plus
the DIP L.C. Exposure plus (b) the aggregate
principal amount outstanding (including the
maximum amount available to be drawn under
outstanding letters of credit), as of the
Effective Date, under the Old Credit
Agreement. The share of such portion of New
MEDIQ Preferred Stock to be received by each
Holder of DIP Facility Claims shall be
determined by dividing (a) such Holder's
share of the DIP Balance plus such Holder's
share of the DIP L.C. Exposure by (b) the DIP
Balance plus the DIP L.C. Exposure.
- --------------------------------------------------------------------------------
1B Priority Claims Cash equal to the amount of such Allowed
Claim on the latest of (i) the Initial
Distribution Date, (ii) the date that is 10
days after the Allowance Date of such Claim,
and (iii) the date when such Allowed Claim
becomes due and payable according to its
terms and conditions.
- --------------------------------------------------------------------------------
2A Old Credit Agreement Pro Rata share of (i) Tranche B Notes in the
Claims principal amount of $240 million, plus (ii)
if such Holder is a Revolving Credit Lender
(as defined in the Old Credit Agreement), the
maximum exposure in respect of Letters of
Credit (as defined in the Old Credit
Agreement) issued under the Old Credit
Agreement and outstanding on the Effective
Date, plus (iii) the maximum exposure in
respect of Letters of Credit available to be
issued under the Exit Credit Facility, (b)
payment in full in cash of all Old Credit
Agreement Claims in respect of accrued and
unpaid non-default interest and all fees,
costs, and expenses and other amounts (other
than principal) payable under the Old Credit
Agreement, and (iii) a specified portion the
New MEDIQ Preferred Stock. Such specified
portion of the New MEDIQ Preferred Stock to
be distributed to Holders of Old Credit
Agreement Claims shall be determined by (A)
multiplying the aggregate number of shares of
the New MEDIQ Preferred Stock (650,000) by
the number equal to (B) (i) the aggregate
principal amount outstanding (including the
maximum amount available to be drawn under
outstanding Letters of Credit, as such term
is defined in the Old Credit Agreement), as
of the Effective Date,
- --------------------------------------------------------------------------------
3
- --------------------------------------------------------------------------------
Class Description Treatment
- --------------------------------------------------------------------------------
under the Old Credit Agreement divided by
(ii) the sum of (a) the DIP Balance plus the
DIP L.C. Exposure plus (b) the aggregate
principal amount outstanding (including the
maximum amount available to be drawn under
outstanding letters of credit), as of the
Effective Date, under the Old Credit
Agreement. The share of such specified
portion of the New MEDIQ Preferred Stock to
be received by each Holder of Old Credit
Agreement Claims shall be determined by
dividing (a) such Holder's principal amount
outstanding (including the maximum amount
available to be drawn under outstanding
letters of credit) under the Old Credit
Agreement by (b) the aggregate principal
amount outstanding (including the maximum
amount available to be drawn under
outstanding letters of credit) under the Old
Credit Agreement.
- --------------------------------------------------------------------------------
2B Secured Claims Against a Each Allowed Class 2B Claim shall be
Debtor Reinstated such that each Allowed Class 2B
Claim shall be unimpaired
- --------------------------------------------------------------------------------
3A, 3B, Allowed Unsecured Claims Each Allowed Class 3A, 3B, 3C, 3D, 3E, 3F,
3C, 3D, Against PRN, MEDIQ 3G, 3H and 3I Claim shall be Reinstated such
3E, 3F, Imaging, MEDIQ that each such claim shall be unimpaired.
3G, 3H, Investment, MEDIQ
3I Management, MDTC,
Value-Med, American
Cardiovascular, MEDIQ
Diagnostic, and MEDIQ
Diagnostic I
- --------------------------------------------------------------------------------
4 Senior Subordinated Notes Pro Rata share of 350,000 shares of New MEDIQ
Claims Common Stock, which shall collectively
represent, as of the Effective Date, a 35%
fully diluted equity interest in the common
stock of Reorganized MEDIQ, after taking into
account the interests of the New MEDIQ
Preferred Stock, subject to dilution on a
pari passu basis with all other equity
holders in Reorganized MEDIQ on account of
the management compensation arrangements to
be effectuated pursuant to the Equity
Incentive Plan. In accordance with the Senior
Subordinated Notes Indenture, any
distributions provided for under the Plan on
account of the Senior Subordinated Notes
Claims shall be made to the Senior
Subordinated Notes Indenture Trustee for
further distribution to the Holders of Senior
Subordinated Notes Claims.
- --------------------------------------------------------------------------------
5A Allowed Unsecured Claims On the Effective Date, all outstanding MEDIQ
Against MEDIQ Discount Debentures and MEDIQ Exchangeable
Debentures shall be cancelled. No
distribution of any kind shall be made on
account of any Class 5A Claims under the
Plan, and all such Claims shall be discharged
and cancelled.
- --------------------------------------------------------------------------------
5B Allowed Deferred Payment of $65,000 in cash, which shall
Compensation Claims of constitute reimbursement for attorneys' fees
Messrs. Braverman, and expenses, and a promissory note of
Gleklen, Mathews, and Reorganized PRN in the aggregate amount of
Schloss, Jr. $500,000, which note shall be payable in 12
equal monthly installments commencing on the
30/th/ day after the Effective Date. This
promissory note shall be guaranteed by
Reorganized MEDIQ, Reorganized American
Cardiovascular, and Newco.
- --------------------------------------------------------------------------------
4
- --------------------------------------------------------------------------------
Class Description Treatment
- --------------------------------------------------------------------------------
6 MEDIQ Preferred Stock On the Effective Date, all outstanding shares
Interests of MEDIQ Preferred Stock shall be cancelled.
No distribution of any kind shall be made on
account of the MEDIQ Preferred Stock under
the Plan.
- --------------------------------------------------------------------------------
7 MEDIQ Common Stock On the Effective Date, all outstanding shares
Interests of MEDIQ Common Stock shall be cancelled. No
distribution of any kind shall be made on
account of the MEDIQ Common Stock under the
Plan.
- --------------------------------------------------------------------------------
The Plan provides that after the Effective Date, MEDIQ and PRN, as reorganized,
shall continue to exist, with separate corporate identities ("Reorganized MEDIQ"
and "Reorganized PRN," respectively). American Cardiovascular shall be
reorganized ("Reorganized American Cardiovascular") on or after the Effective
Date until the effective date of its dissolution in accordance with applicable
Pennsylvania state law. Each of the other Plan Proponent Debtors shall be
dissolved in accordance with the Delaware General Corporation Law and shall
cease to exist as separate corporate entities on or prior to the Effective Date.
Any tangible Assets (if any) of the Dissolved Entities shall be used to satisfy
any remaining obligations of such Dissolved Entity (if any). Thereafter, any
remaining assets of the Dissolved Entities shall be transferred to Reorganized
PRN to be administered in accordance with the terms of the Plan. Similarly, on
or prior to the Effective Date, any intellectual property of any Dissolved
Entity shall be transferred to Reorganized PRN to be administered in accordance
with the Plan.
On the Effective Date, Reorganized MEDIQ and Reorganized PRN will amend and
restate their respective charters. Reorganized MEDIQ's amended and restated
charter shall provide that the number of authorized shares of Common Stock of
Reorganized MEDIQ shall be 2,000,000 shares having a par value of $0.01 per
share. As of the Effective Date, the respective Boards of Directors of
Reorganized MEDIQ and Reorganized PRN shall each initially consist of five
individuals, three of whom will be designated by the New Agent on behalf of the
lenders under the Exit Credit Facility, one of whom shall be designated by the
Reorganized Debtors' management, and one of whom will be designated by the
Noteholders Committee's Representative, each of whom has been or will be
disclosed to the Bankruptcy Court.
Under the Plan, MEDIQ/PRN Property Management LLC, a new Delaware limited
liability company and a wholly-owned subsidiary of Reorganized PRN ("Newco"),
shall be established on or before the Effective Date. All of the critical care,
life support, and other movable medical equipment and therapeutic support
surfaces that are owned by PRN and are rented, or held for rent, to PRN's
customers shall be transferred by PRN to Newco as a capital contribution on the
Effective Date and, thereafter, on a quaterly basis.
On May 29, 2001, MEDIQ had 1,203,714 shares of common stock, par value $.01 per
share (together with any options, warrants, or rights, contractual or otherwise,
to acquire shares of such common stock, the "MEDIQ Common Stock") and 8,340,949
shares of Series A preferred stock, 3,146,302 shares of Series B preferred stock
and 3,264,438 shares of Series C preferred stock (collectively, the "MEDIQ
Preferred Stock") issued and outstanding.
The Plan and Confirmation Order provide that on the Effective Date, the 13%
Senior Discount Debentures due 2009 issued by MEDIQ pursuant to the MEDIQ
Discount Debentures Indenture, the 7.5% Exchangeable Debentures due 2003 issued
by MEDIQ pursuant to the MEDIQ Exchangeable Debentures Indenture, the 11% Senior
Subordinated Notes due 2008 issued by PRN pursuant to the Senior Subordinated
Notes Indenture, the MEDIQ Common Stock, the MEDIQ Preferred Stock, and any
options, warrants, calls, subscriptions, or other similar rights or other
agreements or commitments, contractual or otherwise, obligating any of the Plan
Proponent Debtors to issue, transfer, or sell any shares of MEDIQ Common Stock
or MEDIQ Preferred Stock shall be cancelled and the holders thereof shall
5
have no rights, and such instruments shall evidence no rights, except the right
to receive the distributions (if any) to be made to holders of such instruments
under the Plan.
On the Effective Date, Reorganized MEDIQ shall issue 650,000 shares of new
preferred stock (the "New MEDIQ Preferred Stock"), to be distributed to the
Holders of Allowed Class 1A and Class 2A Claims in accordance with the Plan.
Also on the Effective Date, Reorganized MEDIQ shall issue 350,000 shares of new
common stock (the "New MEDIQ Common Stock") to be distributed to Holders of
Allowed Class 4 Claims. The 350,000 shares of New MEDIQ Common Stock issued to
the Holders of Allowed Class 4 Claims shall collectively represent, as of the
Effective Date, a 35% fully diluted equity interest in the common stock of
Reorganized MEDIQ, after taking into account the interests of the New MEDIQ
Preferred Stock, subject to dilution on a pari passu basis with all other equity
holders in Reorganized MEDIQ on account of the management compensation
arrangements to be effectuated pursuant to the Equity Incentive Plan. The
Holders of Allowed Class 1A and Class 2A Claims shall, in the aggregate, receive
650,000 shares of New MEDIQ Preferred Stock that collectively shall be
convertible into common stock of Reorganized MEDIQ so as to provide Holders of
the New MEDIQ Preferred Stock, as of the Effective Date, with a 65% fully
diluted interest in the common equity of Reorganized MEDIQ, subject to dilution
on a pari passu basis with all other equity holders in Reorganized MEDIQ on
account of the management compensation arrangements to be effectuated pursuant
to the equity incentive plan. All of the New MEDIQ Common Stock issued to the
Holders of Allowed Class 4 Claims and the New MEDIQ Common Stock issuable upon
the conversion of the New MEDIQ Preferred Stock shall be subject to a
registration rights agreement.
Reorganized PRN, as borrower, shall enter into an Exit Credit Facility effective
as of the Effective Date. Reorganized MEDIQ, Reorganized American
Cardiovascular, and Newco will be guarantors under the Exit Credit Facility. The
aggregate principal amount outstanding on the Effective Date under the Exit
Credit Facility shall be (i) $240,000,000 plus (ii) the DIP Balance. In
addition, all letters of credit outstanding under either the Old Credit
Agreement or the DIP Facility as of the Effective Date shall continue to be
outstanding under the Exit Credit Facility. The obligations under the Exit
Credit Facility shall be evidenced by Tranche A Senior Secured Notes and Tranche
B Senior Secured Notes to be issued pursuant to the Plan. The term of the Exit
Credit Facility shall be twenty-four (24) months, although, provided that
certain conditions precedent have been satisfied, Reorganized PRN shall have the
opportunity to extend the term thereof for a period of up to an additional
twenty-four (24) months, in exchange for the payment of certain fees.
The following are conditions precedent to the consummation of the Plan: (a)
there has been (i) no Event of Default (as defined in the DIP Facility) that has
not been waived by the applicable parties in accordance with the terms thereof
and (ii) no acceleration under the DIP Facility; (b) there has been no Agreement
Termination Event (as defined in the Lock-Up Agreement) under the Lock-Up
Agreement that has not been waived by the applicable parties in accordance with
the terms thereof; (c) the Confirmation Order shall have been entered on the
docket by the Clerk of the Bankruptcy Court, and shall not have been reversed,
stayed, modified, or amended, and as to which the time for filing a notice of
appeal, or petition for certiorari, or request for reargument or further review
or rehearing shall have expired; (d) the Plan Documents and all other documents
provided for under, and necessary to effectuate the (i) terms of and (ii)
actions contemplated under, the Plan shall be in form and substance reasonably
satisfactory to the Noteholders Committee's Representative, the Agent, and the
DIP Agent, and shall have been executed and delivered by the parties thereto,
unless such execution or delivery has been waived in writing by the parties
benefited by such documents, including, but not limited to, the following
documents: (1) the Amended and Restated Certificates of Incorporation of
Reorganized MEDIQ, Reorganized PRN and Reorganized American Cardiovascular and
the Amended and Restated By-Laws of Reorganized MEDIQ and Reorganized PRN, (2)
the Exit Credit Facility, and all instruments, certificates, agreements, and
documents contemplated by Section 6.12 of the Plan; (3) the Tranche A Senior
Secured Notes, (4) the
6
Tranche B Senior Secured Notes, (5) the Guarantees and all instruments,
certificates, agreements, and documents contemplated by Section 6.12 of the
Plan; (6) Newco's limited liability company agreement and certificate of
formation; (7) the respective non-competition agreements of Messrs. Regis H.
Farrell, Kenneth R. Koester, and Steve Hansen; (8) the voting agreement by and
between the initial Holders of the New MEDIQ Common Stock and the New MEDIQ
Preferred Stock; (9) the Financial Services Consulting Agreement by and between
Reorganized MEDIQ, Reorganized PRN, Reorganized American Cardiovascular and
Casas, Benjamin & White; (10) the Bill of Sale and the rental services agreement
between Reorganized PRN and Newco; (11) the Registration Rights Agreement, and
(12) the Equity Incentive Plan; (e) the Plan Proponent Debtors shall have
satisfied all of their Obligations (as defined in the DIP Facility) under the
DIP Facility; (f) the Amended and Restated Certificates of Incorporation of
Reorganized MEDIQ, Reorganized PRN, and Reorganized American Cardiovascular
shall have been filed with the applicable authority of each entity's
jurisdiction of incorporation in accordance with such jurisdiction's corporation
laws; (g) the new respective Boards of Directors of Reorganized MEDIQ,
Reorganized PRN, and Reorganized American Cardiovascular shall have been
appointed; (h) all authorizations, consents, and regulatory approvals required
(if any) in connection with the effectiveness of the Plan shall have been
obtained; (i) the Certificate of Formation of Newco shall have been duly
executed and filed with the Secretary of State of the State of Delaware in
accordance with the Delaware Limited Liability Company Act, and the Newco
Transferred Assets shall have been transferred by PRN to Newco as a capital
contribution; (j) the Plan Proponent Debtors shall have complied with all
provisions of Section 12.7 of the Plan; and (k) the Effective Date shall occur
no later than June 15, 2001.
As of April 30, 2001, the total assets of MEDIQ/PRN and its subsidiaries on a
consolidated basis were $300,816,000 and the total liabilities of MEDIQ/PRN and
its subsidiaries on a consolidated basis were $561,142,000.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
2.1 Third Amended Joint Plan of Reorganization dated May 22, 2001
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MEDIQ/PRN Life Support Services, Inc.
By: /s/ Kenneth R. Koester
-----------------------------------------
Name: Kenneth R. Koester
Title: Senior Vice President and
Chief Financial Officer
Dated: June 7, 2001
7
EXHIBIT INDEX
Exhibit No. Document Page
----------- -------- ----
2.1 Third Amended Joint Plan of Reorganization dated May 22, 9
2001
8