10-Q/A: Quarterly report pursuant to Section 13 or 15(d)
Published on November 22, 2000
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary special proxy statement
[] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e) (2))
[ ] Definitive proxy statement
[x] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OMEGA HEALTHCARE INVESTORS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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OMEGA HEALTHCARE INVESTORS, INC.
Questions and Answers for July 14, 2000 Stockholders Meeting
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The following sets forth "Questions and Answers" furnished to persons
soliciting proxies for the special meeting of Omega Healthcare Investors, Inc.
to be held July 14, 2000. This information is to be used as a general reference
in responding to stockholder questions. Omega is filing this information with
the SEC pursuant to Rule 14a-6(c).
For more detailed information, please see the text of the Proxy
Statement. These "Questions and Answers" are qualified by the full text of the
Proxy Statement.
Why does Omega need an equity infusion?
Omega has $81 million of debt due July 15, 2000, and another $48
million due February 2001. Omega needs to complete the planned
equity infusion to fund the upcoming debt maturities.
The long-term care industry has been facing unprecedented
financial difficulties. A wave of bankruptcy filings by large
nursing home operators, including a number of Omega's customers,
has adversely affected Omega's cash flow and the availability of
capital.
Omega is not currently in compliance with some of the financial
covenants under its existing credit facility. Omega's banks
have agreed to provide Omega a new $175 million secured credit
facility, subject to completion of a significant equity infusion.
The proposed Explorer investment would satisfy this condition.
The new secured credit facility would have a revised set of
financial covenants and would replace Omega's existing $200
million unsecured line of credit that expires September 30, 2000.
Omega has obtained temporary waivers of technical defaults
of financial covenants under the existing line of credit in
order to allow for the implementation of the new secured credit
facility.
See "Reasons for the Explorer Investment" on pages 2-3 of the
Proxy Statement.
Why doesn't Omega borrow money rather than issue equity?
The industry conditions affecting long-term care operators and the
wave of operator bankruptcies have virtually frozen other capital
sources that have historically been readily available to Omega,
including the bond markets and bank loans.
See "Reasons for the Explorer Investment" on pages 2-3 of the
Proxy Statement.
What will happen to the dividend rate on Omega's Common Stock?
Resumption of quarterly dividends is conditioned on the completion
of the proposed equity infusion.
Omega expects to resume quarterly dividends in the third quarter
at the rate of $0.25 per common share assuming the equity infusion
is completed.
See "Dividends on Common Stock" on page 8 of the Proxy Statement.
What are the terms of the proposed equity investment?
The transaction is complicated but in essence it is as follows:
Initial $100 Million Investment.
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Explorer would initially invest $100 million in Omega to
purchase Series C Preferred Stock. The initial $100 million
of Series C Preferred Stock will be convertible at $6.25
per share of Common Stock, resulting in the issuance of 16
million shares of Common Stock upon conversion. The
conversion rate is subject to customary antidilution
adjustments.
The proceeds of the initial investment will be used to
fund the July 2000 debt maturity.
New Credit Facility.
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Omega's bank group will provide a new $175 million credit
facility only if the Explorer investment closes.
Additional Funding Available.
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If Omega lacks sufficient money to fund the February 2001 debt
maturity, then Explorer will provide an additional $50 million
- again in Series C Preferred. This is called the
Liquidity Commitment
Any portion of the $50 million Liquidity Commitment that
Omega does not need to fund the February 2001 debt
maturity may be available to fund acquisitions. This is
called the Growth Equity Commitment. That amount will be
raised by selling Omega Common Stock to Explorer. If Omega
uses all of the Growth Equity Commitment, then
stockholders will have an opportunity to acquire a pro
rata portion of the Common Stock initially sold to
Explorer, generally on the same terms as Explorer's
purchase of Common Stock as part of the Growth Equity
Commitment.
Explorer has the option to make an additional $50 million
available to fund further growth. This is called the
Increased Growth Equity Commitment. Again, Omega's
stockholders will be able to acquire their pro rata share
of whatever Common Stock is sold to Explorer.
See "Summary of Key Terms of Explorer Investment" on pages 3-8 of
the Proxy Statement for further details.
Why is Omega asking stockholders to approve a new stock incentive plan now?
Explorer conditioned its investment on reaching satisfactory
agreement with current management regarding compensation and
incentive matters. Stockholder approval of the 2000 Stock
Incentive Plan is very important to satisfying the condition to
Explorer's investment relating to management arrangements.
If the 2000 Stock Incentive Plan is not approved, there is a risk
that Explorer may not provide the $100 million equity infusion.
Both Proposal 1 and 2 must receive a majority of the votes cast
for the stockholder approval condition to the equity infusion to
be satisfied.
The entire Omega Board approved the proposed compensation
arrangements and the 2000 Stock Incentive Plan.
See pages 14-15 of the Proxy Statement.
Why do I need to vote promptly? Why is the stockholders meeting being held so
quickly?
The meeting will be held July 14 so Omega can complete the equity
infusion and use the proceeds to fund the maturity of bonds that
must be paid on Monday, July 17.
It is very important for you to vote promptly so your votes can
be processed and tabulated in time for the meeting.
Did Omega consider alternatives to the Explorer Investment?
Omega, together with its financial advisor J.P. Morgan, considered
various potential alternative transactions and courses of action
other than the proposed Explorer equity infusion, including:
privatization strategies
private placement of equity and debt
loan syndications
asset sales
mortgage financing
merger and other business combinations
These efforts did not result in any transactions that would have a
high likelihood of completion in the near term, or that would
effectively address Omega's liquidity and capital concerns.
See "Reasons for the Explorer Investment" on pages 2-3 and
"Opinion of J.P. Morgan" at Appendix B of the Proxy Statement.
Who is the investor providing the equity infusion?
Explorer is a newly formed affiliate of the Hampstead Group, an
experienced private equity fund manager, that has identified the
long-term care sector for investment.
What effect will the lawsuits have on the Explorer transaction?
Omega believes these lawsuits are baseless and will defend them
vigorously.
Omega does not believe the lawsuits are material and does
not expect them to affect the proposed transaction.