SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
(CURRENT REPORT)
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PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: DECEMBER 2, 1998
(DATE OF EARLIEST EVENT REPORTED)
COMMISSION FILE NUMBER: 1-7293
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TENET HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 95-2557091
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3820 STATE STREET
SANTA BARBARA, CALIFORNIA 93105
(Address of principal executive offices) (Zip Code)
AREA CODE (805) 563-7000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
INTRODUCTION
On December 2, 1998, the Board of Directors (the "Board") of Tenet
Healthcare Corporation ("Tenet" or the "Company") adopted a new stockholders'
rights plan (the "New Rights Plan") to replace an existing stockholders' rights
plan that expires at 5:00 p.m. Eastern time on December 22, 1998. Under the
terms of the New Rights Plan, each stockholder of record at 5:00 p.m. Eastern
time on December 22, 1998 (the "Record Date") will receive a Right that will
become exercisable only upon the occurrence of certain events, described below.
Once the Right becomes exercisable, it will entitle the holder to purchase, upon
payment of the purchase price, shares of the Company's common stock (the "Common
Stock"), or under certain circumstances common stock of a company acquiring the
Company, at 50% of their then-current market value.
The New Rights Plan is described in more detail below. The following
summary does not purport to be complete and is subject to, and qualified in
its entirety by, the terms of the New Rights Plan set forth in a Rights
Agreement to be entered into between the Company and The Bank of New York, as
Rights Agent, the form of which is incorporated herein by this reference. A
copy of the form of Rights Agreement is available upon request to the
Company's corporate Secretary, Scott M. Brown, 3820 State Street, Santa
Barbara, California, 93105, (805) 563-7000. A copy of the form of Rights
Agreement also has been filed with the Securities and Exchange Commission as
an Exhibit to this Current Report on Form 8-K.
DESCRIPTION OF THE RIGHTS
Each Right, upon becoming exercisable as described below, will entitle its
registered holder to purchase from the Company one one-thousandth of a share of
Series B Preferred Stock (the "Preferred Stock") of the Company (which is
intended to be roughly the economic equivalent of the Common Stock), at a
purchase price initially intended to reflect the long-term trading value of a
share of Common Stock (the "Purchase Price"). After consulting with the
Company's advisors, the Board set the Purchase Price at $120.00 per Right.
Each share of Preferred Stock in turn will entitle its registered holder
(except for an Acquiring Person, as defined below, and its affiliates) to
purchase shares of the Company's Common Stock (or, under circumstances, the
shares of an acquiring company) having a value of two times the Purchase Price.
In general, the Rights will become exercisable ten business days (or such
later date as the Board shall determine) after:
(i) a person (acting alone or together with others) becomes the beneficial
owner of 15% or more of the Company's Common Stock (an "Acquiring Person")
or
(ii) a person publishes or mails an exchange or tender offer pursuant to which
such person would become an Acquiring Person.
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The earlier of (i) and (ii) is referred to as the "Distribution Date." Under
certain circumstances, a person will not be an Acquiring Person even if that
person acquires 15% or more of the Company's Common Stock, such as when the
transaction is approved by a majority of the Board who are not officers and who
are not affiliated with the Acquiring Person or the person referred to in (ii)
above. Upon the occurrence of either (i) or (ii) above, all Rights held by the
Acquiring Person or the person described in (ii) above (and their affiliates and
associates), as the case may be, will become null and void.
From and after the Distribution Date, each holder of a Right (other than
an Acquiring Person, and its affiliates and associates, whose Rights are voided)
thereafter will have the Right to receive, upon exercise of the Right at the
Purchase Price, Common Stock having a value of two times the Purchase Price.
Under certain circumstances, the Company may distribute to holders a combination
of cash, Common Stock, other securities and/or other assets.
For example, if the Purchase Price is $100 per Right, each Right that has
not been voided, as described above, will entitle its holder to purchase $200
worth of Common Stock for $100. Assuming that the Common Stock had a per share
value of $50 at such time, the holder of each valid Right would pay the Purchase
Price of $100 and would receive Common Stock with a value of $200, or four
shares (since $200 divided by $50 equals four).
If a person becomes an Acquiring Person and the Company then
(i) engages in a merger or other business combination transaction with another
person in which the Common Stock is changed or exchanged, or
(ii) sells or transfers 50% or more of its assets, cash flow or earning power
to another person or persons,
from and after the Distribution Date, each Right (other than Rights of the
Acquiring Person and its affiliates and associates, which will have been
voided), thereafter will entitle its holder to receive, upon exercise of the
Right at the Purchase Price, common stock of such other person (or, in certain
circumstances, of an affiliate of such other person) having a value of two times
the Purchase Price.
At any time after a person or group becomes an Acquiring Person, but
prior to the acquisition by such person or group of fifty percent (50%) or
more of the outstanding Common Stock, the Board may exchange the Rights
(other than Rights owned by such person or group, which will have become
void), in whole or in part, at an exchange ratio of (i) (a) one share of
Common Stock, or (b) one one-thousandth of a share of Preferred Stock (or of
a share of a class or series of the Company's Preferred Stock having
equivalent Rights, preferences and privileges), per (ii) each Right (subject
to adjustment).
Until the Distribution Date, the Rights (i) will be evidenced by the
Common Stock certificates and no separate certificates evidencing the Rights
will be issued, (ii) may be transferred with and only with the Common Stock and
may not be transferred separately from the Common Stock, and (iii) will not be
exercisable.
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On the Distribution Date, the Rights will become exercisable. As soon as
practicable after the Distribution Date, separate certificates evidencing the
Rights will be distributed to the holders of record of the Common Stock. After
the Distribution Date, the Common Stock and the Rights will trade separately.
Until a Right is exercised, its holder has no stockholder rights (such as
voting rights or rights to receive dividends). The terms of the Rights,
generally, may be amended by the Board in any manner prior to the Distribution
Date. Thereafter, the terms of the Rights may be amended to shorten or lengthen
any time period under the New Rights Plan and in any other manner, as long as
the amendment does not adversely affect the interests of holders of Rights.
OPTIONAL REDEMPTION OF THE RIGHTS
At any time prior to the Distribution Date, the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (payable in
cash, Common Stock or other consideration deemed appropriate by the Board).
Immediately upon the action of the Board ordering redemption of the Rights, the
Rights will terminate and the only right holders of Rights will have is to
receive the $0.01 redemption price.
EXPIRATION OF THE RIGHTS
The Rights will expire at 5:00 p.m., Eastern time, December 22, 2008,
unless earlier redeemed by the Company. The Board generally may redeem the
Rights for $0.01 per Right until the Distribution Date. Generally, so long as
the Rights are redeemable the Board may extend the period for redemption by
extending the Distribution Date.
AMENDMENT OF THE RIGHTS AGREEMENT
Any of the provisions of the Rights Agreement may be amended by the Board
prior to the Distribution Date. After the Distribution Date, the provisions of
the Rights Agreement may be amended by the Board in order to cure any ambiguity,
to make changes which do not adversely affect the interests of holders of Rights
or to shorten or lengthen any time period under the Rights Agreement; PROVIDED,
HOWEVER, that no amendment may be made after the Rights are no longer
redeemable.
TAX CONSEQUENCES
The distribution of the Rights will not be a taxable event for
stockholders or the Company. Depending upon the circumstances, stockholders may
recognize taxable income in the event that the Rights become exercisable for
Common Stock, common stock of the acquiring company or other consideration, or
in the event of the Company redeems the Rights.
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WHY THE NEW RIGHTS PLAN WAS ADOPTED
The New Rights Plan is designed to deter coercive takeover tactics and
otherwise to encourage third parties interested in acquiring the Company to
negotiate with the Board. In particular, the New Rights Plan is intended to
help
(i) reduce the risk of acquisitions that offer greater consideration to some
stockholders than to others (such as coercive two-tiered, front-end loaded
or partial offers) and that thus may not offer fair value to all
stockholders;
(ii) mitigate against market accumulators who through open market and/or
private purchases may achieve a position of substantial influence or
control without paying to selling or remaining stockholders a fair control
premium or who are simply interested in putting the Company "into play;"
(iii) preserve the Board's bargaining power and flexibility to deal with
third-party acquirors and otherwise to seek to maximize values for all
stockholders;
(iv) enhance the Company's ability to respond to an inadequate offer; and
(v) convey to the marketplace that the Company intends to aggressively
preserve its bargaining power and deter coercive takeover activities.
The New Rights Plan achieves these goals by confronting a potential
acquiror with the possibility that the Company's stockholders will be able to
dilute substantially the acquiror's equity interest by exercising the Rights and
buying additional shares in the Company (or in certain cases, in the acquiror)
at a fifty percent discount, unless the acquiror negotiates with the Board and
the Board (i) elects to redeem the Rights for nominal consideration or (ii)
otherwise makes the New Rights Plan inapplicable to the proposed transaction.
In this regard, the New Rights Plan serves a useful function in the context of
unsolicited takeovers by providing a negotiating tool for the Company's Board
and by helping to ensure that the Board has ample time to explore alternatives.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
Not applicable
(b) PRO FORMA FINANCIAL STATEMENTS
Not applicable
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(c) EXHIBITS
Exhibit 99.1: Form of Rights Agreement, to be dated as of December
22, 1998, between the Company and The Bank of New York,
as Rights Agent
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TENET HEALTHCARE CORPORATION
By: /s/ RAYMOND L. MATHIASEN
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Raymond L. Mathiasen
Senior Vice President and Chief Accounting
Officer
November 24, 1998
EXHIBIT INDEX
Number Exhibit
99.1 Form of Rights Agreement, to be dated as of December 22, 1998,
between the Company and The Bank of New York, as Rights Agent