Five Star Senior Living Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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| Item 1.01. | Entry into a Material Definitive Agreement. |
On January 27, 2022, certain subsidiaries of AlerisLife Inc., formerly known as Five Star Senior Living Inc., as described further in Item 5.03 below (together with its applicable subsidiaries, the “Company”), entered into a credit and security agreement (the “Credit Agreement”) with MidCap Funding VIII Trust, as administrative agent and a lender (“MidCap”). Under the terms of the Credit Agreement, the Company closed on a $95.0 million senior secured term loan (the “Loan”), $63.0 million of which was funded upon effectiveness of the Credit Agreement, including approximately $3.2 million in closing costs, while the remaining proceeds are subject to a $12.0 million capital improvements holdback and $20 million available upon achieving certain financial thresholds.
The maturity date of the Loan is January 27, 2025. Subject to the payment of an extension fee and meeting certain other conditions, the Company may elect to extend the stated maturity date of the Loan for two, one-year periods. The Company is required to pay interest on outstanding amounts at a base rate of the Secured Overnight Financing Rate (“SOFR”) (subject to a minimum base rate of 50 basis points) plus 450 basis points. The Credit Agreement requires customary mandatory prepayment of the Loan on account of certain events of default. Voluntary prepayments made within 18-months of the effective date of the Loan will be subject to a prepayment fee, but the Loan may thereafter be voluntarily prepaid without premium or penalty. The Company will be required to pay an exit fee upon any prepayment of the Loan, which would be in addition to any prepayment fee that may be payable.
Certain subsidiaries of the Company are borrowers under the Credit Agreement and the Company and one of its subsidiaries provided a payment guarantee of up to $40.0 million of the obligations under the Credit Agreement as well as standard non-recourse carve-outs. The guaranty is evidenced by a Guaranty and Security Agreement (the “Guaranty Agreement”) made by the Company and one of its subsidiaries in favor of MidCap. Pursuant to the Guaranty Agreement, the Company’s subsidiary granted MidCap a security interest on all of the assets of the subsidiary. The Guaranty Agreement requires the Company and its subsidiary to comply with various covenants, including restricting the Company’s ability to make distributions to shareholders.
The Loan is secured by real estate mortgages on 14 senior living communities owned by the borrowers, the borrowers’ assets and certain related collateral.
The Loan provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, including a change of control of the Company, as defined in the Credit Agreement. The Credit Agreement also contains a number of financial and other covenants, including covenants that restrict the borrowers’ ability to incur indebtedness or to pay or make distributions under certain circumstances and require the Company to maintain certain financial ratios. The Credit Agreement also contains certain customary representations and warranties and reporting obligations.
The foregoing descriptions of the Credit Agreement and Guaranty Agreement are not complete and are qualified in their entirety by reference to the full text of the Credit Agreement and the Guaranty Agreement, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.
| Item 1.02. | Termination of a Material Definitive Agreement. |
In connection with entering into the Loan, the Company terminated Company's secured revolving credit facility with Citibank, N.A, the Guarantors thereto and the other parties thereto and the related Second Amended and Restated Credit Agreement, dated as of June 12, 2019, among the Company, the Guarantors party thereto, Citibank N.A. and the other parties thereto (together, the “Citibank Credit Facility”). No borrowings were outstanding under the Citibank Credit Facility at the time the Company entered into the Credit Agreement. The information about the termination of the Citibank Credit Facility set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.02.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth above under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Effective on January 25, 2022, Five Star Senior Living Inc. changed its name to “AlerisLife Inc.” pursuant to Articles of Amendment to its Articles of Amendment and Restatement filed with the Maryland State Department of Assessments and Taxation. Effective as of the opening of trading on January 28, 2022, the Company’s shares of common stock began trading on The Nasdaq Stock Market LLC under the ticker symbol “ALR”.
Also effective January 25, 2022, the Company adopted Amended and Restated Bylaws reflecting the change of its name described above.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
The Company hereby furnishes the following exhibit:
*Schedules and similar attachments have been omitted from this exhibit pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby agrees to furnish a copy of any omitted schedule or attachment to the U.S. Securities and Exchange Commission upon request.
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.
| ALERISLIFE INC. | ||
| By: | /s/ Jeffrey C. Leer | |
| Name: | Jeffrey C. Leer | |
| Title: | Executive Vice President, Chief Financial Officer and Treasurer | |
Dated: January 31, 2022