Item 1.01. Entry Into a Material Definitive Agreement.
New Indenture and New Notes
Overview
On March 29, 2022, Owens & Minor, Inc., a Virginia corporation (the "Company"),
completed its previously announced sale of $600,000,000 aggregate principal
amount of the Company's 6.625% senior notes due 2030 (the "New Notes") in a
private offering (the "Notes Offering") to persons reasonably believed to be
"qualified institutional buyers" in the United States, as defined in Rule 144A
under the Securities Act, as amended (the "Securities Act") and to
certain non-U.S. persons outside the United States in offshore transactions
pursuant to Regulation S under the Securities Act.
The terms of the New Notes are governed by the Indenture, dated March 29, 2022
(the "New Indenture"), among the Company, the guarantors named therein and
Regions Bank, as trustee (the "Trustee").
Interest; Ranking; Guarantees
The New Notes bear interest at a rate of 6.625% per year payable semi-annually
in arrears on April 1 and October 1 of each year, commencing October 1, 2022.
The New Notes are our general senior unsecured obligations and will be equal in
right of payment with any of our existing and future senior indebtedness,
including obligations under our New Term Loan Credit Facilities (as defined
herein), Revolving Credit Facility (as defined herein), 4.375% Senior Notes due
2024 (the "2024 Notes"), 4.500% Senior Notes due 2029 (the "2029 Notes") and
senior in right of payment to any of our subordinated indebtedness. The New
Notes will be effectively subordinated to any of our secured indebtedness
(including indebtedness under the New Term Loan Credit Facilities, the Revolving
Credit Facility and the 2024 Notes) to the extent of the value of the assets
securing such indebtedness. The New Notes will be guaranteed on a senior
unsecured basis by our existing and future wholly-owned domestic restricted
subsidiaries (the "Guarantors") that will incur or guarantee debt under our New
Term Loan Credit Facilities (the "Guarantees"), subject to certain exceptions.
The New Notes and the related Guarantees will be structurally subordinated to
the indebtedness and other liabilities, including preferred stock, of
our non-guarantor subsidiaries.
Optional Redemption
The Company may, at its option, redeem at any time and from time to time, all or
part of the New Notes, prior to April 1, 2025, at a price equal to 100% of the
principal amount of the New Notes to be redeemed, plus accrued and unpaid
interest, if any, to, but excluding, the redemption date, plus a "make-whole"
premium, as described in the New Indenture. From and after April 1, 2025, the
Company may redeem all or part of the New Notes at the applicable redemption
prices described in the New Indenture, plus accrued and unpaid interest, if any,
to, but excluding, the redemption date.
The Company may also redeem up to 40% of the aggregate principal amount of New
Notes at any time prior to April 1, 2025, at a redemption price equal to
106.625% with an amount equal to or less than the net cash proceeds from certain
equity offerings, plus accrued and unpaid interest, if any, to, but excluding,
the redemption date.
Change of Control
Subject to certain limitations, in the event of a Change of Control (as defined
in the New Indenture), the Company will be required to offer to repurchase the
New Notes from holders at 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to, but excluding, the purchase date.
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Covenants; Events of Default
The New Indenture contains certain covenants, including, among others, covenants
that restrict the ability of the Company and its restricted subsidiaries to
incur or guarantee additional indebtedness or issue disqualified stock or
certain preferred stock, pay dividends and make other distributions or
repurchase stock, make certain investments, create or incur liens, sell assets,
enter into restrictions affecting the ability of restricted subsidiaries to make
distributions, loans or advances or transfer assets to the issuer or the
guarantors, enter into certain transactions with the issuer's affiliates,
designate restricted subsidiaries as unrestricted subsidiaries, and merge,
consolidate or transfer or sell all or substantially all of the issuer's or the
guarantors' assets. These covenants are subject to a number of important
limitations and exceptions. Most of these covenants will not apply to the
Company and its restricted subsidiaries during any period in which the New Notes
are rated investment grade by any two of Moody's Investors Service, Inc., S&P
Global Ratings and Fitch Inc.
The New Indenture also contains customary provisions for events of default
including, but not limited to, for failure to pay principal or interest when due
and payable, failure to comply with covenants or agreements in the New Indenture
or the New Notes and failure to cure or obtain a waiver of such default upon
notice, and events of bankruptcy, insolvency or reorganization affecting the
Company and certain of its subsidiaries. In the case of an event of default, the
principal amount of the New Notes plus accrued and unpaid interest may be
accelerated.
The description of the New Notes and the New Indenture in this Current Report on
Form 8-K (this "Current Report") are summaries, and are qualified in their
entirety by reference to the complete terms of the New Indenture and the form of
New Note included therein. The New Indenture and the form of global note
representing the New Notes are filed hereto as Exhibits 4.1 and 4.2,
respectively, and are incorporated by reference herein.
New Term Loan Credit Facilities
Overview
On March 29, 2022, the Company and certain of its subsidiaries (including Apria,
. . .
Item 2.01. Completion of Acquisition or Disposition of Assets.
On March 29, 2022 (the "Closing Date"), the Company completed (the "Closing")
the acquisition of Apria, Inc., a Delaware corporation ("Apria"), pursuant to
the Agreement and Plan of Merger (the "Merger Agreement"), dated as of
January 7, 2022, by and among the Company, Apria and StoneOak Merger Sub Inc., a
Delaware corporation and indirect wholly owned subsidiary of the Company
("Merger Sub"), pursuant to which Merger Sub merged with and into Apria, with
Apria continuing as the surviving corporation and an indirect wholly owned
subsidiary of the Company (the "Merger").
At the effective time of the Merger (the "Effective Time"), each share of
Apria's common stock, par value $0.01 per share ("Apria Common Stock") (other
than shares held by Apria (including shares held in treasury), the Company or
any of their direct or wholly owned subsidiaries and shares owned by
stockholders who have properly made and not waived, withdrawn or lost a demand
for appraisal rights) was converted into the right to receive $37.50 in cash
(the "Merger Consideration"). Pursuant to the Merger Agreement, immediately
prior to the Effective Time, (i) each outstanding Apria restricted stock unit,
whether vested or unvested, was cancelled in exchange for a cash payment,
without interest and subject to withholding, equal to the Merger Consideration,
(ii) each outstanding Apria performance stock unit, whether vested or unvested,
was cancelled in exchange for a cash payment, without interest and subject to
withholding, equal to the Merger Consideration, based on attainment of
applicable performance metrics at the greater of target or actual level of
performance as of the Closing Date, as determined in good faith by the board of
directors of Apria (the "Board of Directors") in reasonable consultation with
the Company, (iii) (a) each outstanding vested Apria long-term incentive plan
award was cancelled in exchange for a cash payment, without interest and subject
to withholding, equal to the number of shares represented by such Apria
long-term incentive plan award deemed earned in accordance with the terms of the
applicable governing documents (after giving effect to the incremental vesting
resulting from the Closing) as determined by the Board of Directors after
reasonable consultation with the Company multiplied by the Merger Consideration,
and (b) each outstanding unvested Apria long-term incentive plan award (after
giving effect to incremental vesting resulting from the Closing) was cancelled
for no consideration and (iv) each outstanding Apria stock appreciation right,
whether vested or unvested, was cancelled in exchange for a cash payment,
without interest and subject to withholding, equal to the total value of the
payout that would have been earned in accordance with the terms of the
applicable governing documents (including any previously unpaid dividends or
dividend equivalents thereon, in accordance with such governing documents).
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The foregoing summary description of the Merger Agreement and the transactions
contemplated by the Merger Agreement does not purport to be complete and is
qualified in its entirety by reference to the terms of the Merger Agreement,
which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the
Company with the Securities and Exchange Commission (the "SEC") on January 10,
2022 and is incorporated by reference into this Item 2.01.
In connection with the Merger, the Company is filing: (i) Apria's consolidated
balance sheets as of December 31, 2021 and 2020 and the related consolidated
statements of income, stockholders' equity (deficit), and cash flows, for each
of the three years in the period ended December 31, 2021, the related notes, and
the related Report of Independent Registered Public Accounting Firm thereon,
which are incorporated by reference as Exhibit 99.1 hereto and (ii) certain
unaudited pro forma condensed combined financial information of the Company,
giving effect to the Merger, which is filed herewith as Exhibit 99.2 and
included herein.
The unaudited pro forma condensed combined financial information are based on
the Company's and Apria's consolidated historical financial statements as
adjusted to give effect to the Merger and Merger related transactions, including
the Notes Offering and use of proceeds therefrom. The pro forma adjustments
reflecting the completion of the Merger are based upon the acquisition method of
accounting in accordance with generally accepted accounting principles in the
United States, and upon the assumptions set forth in the notes to the unaudited
pro forma condensed combined financial statements. The Company has made
significant assumptions and estimates in determining the preliminary estimated
purchase price consideration and the preliminary allocation of the estimated
purchase price in the unaudited pro forma condensed combined financial
statements. These preliminary estimates and assumptions are subject to change
during the estimated purchase price allocation period (not to exceed one year
from the pending Closing Date) as the Company finalizes the valuations of the
net tangible assets and intangible assets. Differences between these preliminary
estimates and the final acquisition accounting could have a material impact on
the accompanying unaudited pro forma condensed combined financial statements and
the combined company's future results of operations and financial position.
Accordingly, the pro forma adjustments are preliminary and have been made solely
for the purpose of preparing unaudited pro forma condensed combined financial
statements.
The unaudited pro forma condensed combined financial statements are not intended
to represent or be indicative of the consolidated results of operations or
. . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under
an Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 8.01. Other Events.
On March 29, 2022, the Company issued a press release announcing the completion
of the Merger. A copy of the press release is filed hereto as Exhibit 99.3 and
incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Apria's consolidated balance sheets as of December 31, 2021 and 2020 and the
related consolidated statements of income, stockholders' equity (deficit), and
cash flows, for each of the three years in the period ended December 31, 2021,
the related notes, and the related Report of Independent Registered Public
Accounting Firm thereon are incorporated by reference as Exhibit 99.1 hereto.
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(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined financial information of the Company,
giving effect to the acquisition of Apria, which includes the unaudited pro
forma condensed combined balance sheet as of December 31, 2021, the unaudited
pro forma condensed combined statements of operations for the year ended
December 31, 2021 and the related notes, is filed herewith as Exhibit 99.2 and
included herein.
(d) Exhibits.
The following exhibits are filed herewith:
Exhibit Description
2.1 Agreement and Plan of Merger, dated as of January 7, 2022, by and
among Owens & Minor, Inc., StoneOak Merger Sub Inc. and Apria, Inc.
(incorporated by reference to Exhibit 2.1 to Current Report on Form
8-K filed with the SEC on January 10, 2022, File No. 001-09810).
4.1 Indenture dated March 29, 2022 by and among the Company, the
guarantors named therein and Regions Bank, as trustee
4.2 Form of Global Note for the 6.625% Senior Notes due 2030 (included
as Exhibit A to Exhibit 4.1 hereto)
4.3 Seventh Supplemental Indenture dated as of March 29, 2022, by and
among the Company, the guarantors named therein and U.S. Bank National
Association, as trustee
4.4 First Supplemental Indenture dated as of March 29, 2022, by and
among the Company, the guarantors named therein and Regions Bank, as
trustee, to the Indenture dated as of March 10, 2021
4.5 First Supplemental Indenture dated as of March 29, 2022, by and
among the Company, the guarantors named therein and Regions Bank, as
trustee, to the Indenture dated of March 29, 2022
10.1 Credit Agreement dated as of March 29, 2022, by and among the
Company, certain subsidiaries of the Company party thereto, as
borrowers, JPMorgan Chase Bank, N.A., as an administrative agent and
collateral agent, and a syndicate of financial institutions, as
lenders*
10.2 Fourth Amendment to Receivables Financing Agreement, dated as of
March 29, 2022, by and among O&M Funding LLC, as borrower, Owens &
Minor Medical, Inc., as initial servicer, the lenders party thereto,
and PNC Bank, National Association, as administrative agent*
23.1 Consent of Deloitte & Touche LLP, independent registered public
accounting firm of Apria, Inc.
99.1 Apria's consolidated balance sheets as of December 31, 2021 and 2020
and the related consolidated statements of income, stockholders'
equity (deficit), and cash flows, for each of the three years in the
period ended December 31, 2021, the related notes, and the related
Report of Independent Registered Public Accounting Firm
99.2 The unaudited pro forma condensed combined financial information of
the Company, giving effect to the acquisition of Apria, which includes
the unaudited pro forma condensed combined balance sheet as of
December 31, 2021, the unaudited pro forma condensed combined
statements of operations for the year ended December 31, 2021 and the
related notes
99.3 Press Release of the Company, dated as of March 29, 2022
104 Cover Page Interactive Data File (the cover page XBRL tags are
embedded in the Inline XBRL document)
* Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2)
of Regulation S-K. The Company hereby undertakes to furnish copies of such
omitted materials supplementally upon request by the SEC.
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