Combined Company to be Named “Agiliti, Inc.”
and Listed on Nasdaq Stock Market
Combined Company Positioned to Execute on
Compelling Growth Opportunities in Healthcare Services Market Under
Leadership of Current Management Team
Federal Street Acquisition Corp. (NASDAQ: FSACU, FSAC, FSACW)
(“FSAC”), a special purpose acquisition company sponsored by an
affiliate of Thomas H. Lee Partners, L.P. (“THL”), and the holding
company of Universal Hospital Services, Inc. (“UHS” or the
“Company”), a leading, nationwide provider of healthcare technology
management and service solutions and a portfolio company of Irving
Place Capital Management, L.P. (“IPC”), today announced that they
have entered into a definitive merger agreement.
Under the terms of the agreement, FSAC and UHS will combine
under a new holding company to be named Agiliti, Inc. (“Agiliti”),
which intends to apply to have its common stock and warrants listed
on the Nasdaq Stock Market under the ticker symbols “AGTI” and
“AGTIW,” respectively. The purchase price for the acquisition
implies an initial enterprise value for the combined company of
approximately $1.74 billion, or 11.6x UHS’s forecasted 2018
Adjusted EBITDA of approximately $150 million and 10.2x UHS’s
forecasted 2019 Adjusted EBITDA of approximately $170 million, in
each case, based on the higher end of UHS’s forecasted Adjusted
EBITDA range.
“We have long admired Tom Leonard and the incredible team at UHS
and could not be more excited to partner with them as the Company
enters an exciting, new chapter with a new name – Agiliti – which
is emblematic of their everyday approach,” said Scott Sperling,
Executive Chairman of FSAC and Co-President of THL. “UHS’s strong
competitive position, broad range of high-value capabilities, and
strong business model, make this a highly attractive investment
opportunity for FSAC and THL. We look forward to contributing our
operational and strategic expertise as the combined company builds
on its proven platform, executes on its compelling growth
objectives, and continues to deliver to its customers the
industry’s best healthcare technology management and service
solutions.”
“For nearly 80 years, UHS has provided market-leading equipment
management services to the U.S. healthcare industry,” said Tom
Leonard, Chief Executive Officer of UHS. “Throughout the Company’s
evolution, our goal has always been to help customers manage the
complexities of owning and maintaining medical equipment, so that
caregivers have more time to focus on patients. Today, we serve
more than 7,000 healthcare providers nationwide with an end-to-end
solution called ‘Equipment Value Management’ that helps customers
address important clinical, operational and financial objectives.
The Company is well positioned in the market with strong momentum
for continued value creation, and we are pleased to have the
opportunity to advance our business as Agiliti, alongside our new
partners at FSAC and THL.”
Upon consummation of the transaction, Tom Leonard will continue
leading the Company as Chief Executive Officer, along with his
current management team, including Jim Pekarek, Chief Financial
Officer, Kevin Ketzel, President, and Bettyann Bird, Senior Vice
President of Marketing and Commercial Solutions.
IPC, UHS’s current private equity sponsor and majority owner,
will retain a minority equity stake in the combined company.
John Howard, Co-Managing Partner of IPC said, “We are extremely
proud of what UHS has accomplished since we acquired the business.
The results we have achieved demonstrate the unique value UHS
brings to its healthcare customers. This transaction will enable
the Company to accelerate its existing growth initiatives and
further maximize its market position under the leadership of a
world-class management team. We look forward to the ongoing success
of Agiliti as a public company.”
Transaction Summary
Along with the $460 million of cash held in a trust account
raised from its initial public offering in July 2017, FSAC has
secured commitments for a $250 million common stock private
placement from institutional investors at a price of $10.00 per
share. The private placement includes a $200 million investment by
a newly formed entity that will be owned by FSAC’s sponsor entity,
FS Sponsor, LLC (“FS Sponsor”), and certain investment funds
affiliated with THL. Assuming no redemptions by FSAC’s public
stockholders, this entity will own approximately 30% of Agiliti’s
outstanding common stock following the merger and private
placement, including FS Sponsor’s existing founder shares and the
shares purchased in the private placement. IPC and the other former
stockholders of UHS will retain an ownership interest of
approximately 22% and the current public stockholders of FSAC will
own approximately 43% of Agiliti’s outstanding common stock, in
each case, assuming no redemptions by FSAC’s public stockholders.
FSAC’s existing warrants will become warrants to purchase Agiliti
common stock in accordance with their terms.
FSAC has entered into a debt commitment agreement with certain
lenders, pursuant to which the lenders have committed to make
available to Agiliti a term loan of $660 million, the proceeds of
which will be used to repay existing UHS indebtedness. It is
currently anticipated that UHS will issue a notice of redemption
with respect to its outstanding second lien notes immediately prior
to the merger and that these notes would be redeemed approximately
30 days following the closing date. The lenders have also committed
to provide a $150 million revolving credit facility.
The boards of directors of UHS and FSAC have unanimously
approved the proposed transaction. Completion of the transaction,
which is expected to occur in the fourth quarter of 2018, is
subject to customary and other closing conditions, including
regulatory approvals and FSAC stockholder approval. In addition to
having the right to vote on the transactions, FSAC’s current public
stockholders have the right to elect to have FSAC redeem their
shares for cash in connection with the consummation of the
transaction. The transaction is also conditioned upon there being
sufficient cash, after giving effect to any redemptions, to pay the
cash portion of the merger consideration, repay existing
indebtedness and make other required cash payments at closing. More
information on these conditions will be contained in the
preliminary proxy statement that FSAC intends to file with the
Securities and Exchange Commission (“SEC”).
As part of the transaction, Agiliti will also enter into a tax
receivable agreement with the equity holders of UHS, which will
provide for the sharing of tax benefits relating to certain
pre-business combination tax attributes and tax attributes relating
to the transaction as those tax benefits are realized by
Agiliti.
Conference Call Information
UHS and FSAC will host a presentation to discuss the transaction
beginning at 9 a.m. Eastern Time on Monday, August 13. Those who
wish to view the presentation may access it here, or by visiting
www.uhs.com/investors and selecting the “Presentations” tab. An
audio form of the presentation will be available toll-free at
1-877-523-5612 using Conference ID 13682526.
The presentation will be available from 9 a.m. Eastern Time on
August 13, 2018, to 11:59 pm Eastern Time on October 31, 2018,
using the access information above.
Advisors
J.P. Morgan Securities LLC acted as financial advisor and Weil,
Gotshal & Manges LLP acted as legal counsel to UHS. Citigroup
Global Markets Inc. acted as financial advisor, capital markets
advisor and placement agent and Kirkland & Ellis LLP acted as
legal counsel to FSAC. BofA Merrill Lynch acted as capital markets
advisor and placement agent in connection with the private
placement. Debt financing will be provided by JPMorgan Chase Bank,
N.A., Citigroup Global Markets Inc., and KeyBanc Capital Markets
Inc.
About Universal Hospital Services, Inc.
Universal Hospital Services, Inc. is a leading nationwide
provider of healthcare technology management and service solutions
to the healthcare industry. UHS owns or manages more than 800,000
units of medical equipment for approximately 7,000 national,
regional and local acute care hospitals and alternate site
providers across the U.S. For nearly eight decades, UHS has
delivered medical equipment management and service solutions that
help clients reduce costs, increase operating efficiencies, improve
caregiver satisfaction and support optimal patient outcomes. More
information is available at www.uhs.com.
About Federal Street Acquisition Corp.
Federal Street Acquisition Corp. is a special purpose
acquisition company sponsored by an affiliate of Thomas H. Lee
Partners, L.P., formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase or
similar business combination with one or more businesses.
About Agiliti
Agiliti will be the company created by the business combination
of Universal Hospital Services, Inc. and Federal Street Acquisition
Corp. Agiliti builds on a legacy of nearly 80 years of market
leading healthcare technology and service solutions to the U.S.
healthcare industry, serving approximately 7,000 national, regional
and local acute care hospitals and alternate site providers across
the country. Agiliti intends to apply to list its common stock and
warrants on the Nasdaq Stock Market under the ticker symbols “AGTI”
and “AGTIW,” respectively.
About Thomas H. Lee Partners, L.P.
Thomas H. Lee Partners, L.P. is a premier private equity firm
investing in middle market growth companies, headquartered in North
America, exclusively in four industry sectors: Business &
Financial Services, Consumer & Retail, Healthcare, and Media,
Information Services & Technology. Using the firm's deep domain
expertise and the internal operating capabilities of its Strategic
Resource Group, THL seeks to create deal sourcing advantages, and
to accelerate growth and improve operations in its portfolio
companies in partnership with management teams. Since its founding
in 1974, THL has raised over $22 billion of equity capital,
acquired over 140 portfolio companies and completed over 360 add-on
acquisitions which collectively represent a combined enterprise
value at the time of acquisition of over $200 billion.
About Irving Place Capital Management, L.P.
Since its founding in 1997, Irving Place Capital has invested in
over 60 portfolio companies, primarily in the industrial,
packaging, consumer and retail industries. The firm focuses on
making control or entrepreneur-driven investments where it can
apply its substantial operating and strategic resources and
expertise to enhance value. Irving Place Capital has successfully
executed a broad range of transactions, including buyouts,
recapitalizations, build-ups, corporate divestitures, take-privates
and distressed-to-control situations. More information about Irving
Place Capital is available at www.irvingplacecapital.com.
Forward-looking Statements
This press release includes forward looking statements within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. When used in this
press release, the words “estimates,” “projected,” “expects,”
“anticipates,” “forecasts,” “plans,” “intends,” “believes,”
“seeks,” “may,” “will,” “should,” “future,” “propose” and
variations of these words or similar expressions (or the negative
versions of such words or expressions) are intended to identify
forward-looking statements. These forward-looking statements are
not guarantees of future performance, conditions or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
FSAC’s or UHS’s management’s control, that could cause actual
results or outcomes to differ materially from those discussed in
the forward-looking statements. These risks and uncertainties
include, but are not limited to, those factors described in the
section entitled “Risk Factors” in the Prospectus filed by FSAC
with the SEC and those described in the section entitled “Risk
Factors” in UHS’s annual report on Form 10-K for the year ended
December 31, 2017 filed with the SEC, as well as UHS’s other
filings with the SEC. Important factors, among others, that may
affect actual results or outcomes include: the inability to
complete the transactions contemplated by the proposed business
combination; the inability to recognize the anticipated benefits of
the proposed business combination, which may be affected by, among
other things, the amount of cash available following any
redemptions by FSAC stockholders; the ability to meet NASDAQ’s
listing standards following the consummation of the transactions
contemplated by the proposed business combination; and costs
related to the proposed business combination. Important factors
that could cause the combined company’s actual results or outcomes
to differ materially from those discussed in the forward-looking
statements include: UHS’s history of net losses; the need for
substantial cash to operate and expand the combined company’s
business as planned; the combined company’s expected substantial
outstanding debt following the business combination; a decrease in
the number of patients the combined company’s customers serve; the
combined company’s ability to effect change in the manner in which
healthcare providers traditionally procure medical equipment; the
absence of long-term commitments with customers; the combined
company’s ability to renew contracts with group purchasing
organizations and integrated delivery networks; changes in
reimbursement rates and policies by third-party payors; the impact
of healthcare reform initiatives; the impact of significant
regulation of the healthcare industry and the need to comply with
those regulations; the effect of prolonged negative changes in
domestic and global economic conditions; difficulties or delays in
the combined company’s continued expansion into certain of UHS’s
businesses/geographic markets and developments of new
businesses/geographic markets; additional credit risks in
increasing business with home care providers and nursing homes,
impacts of equipment product recalls or obsolescence; and increases
in vendor costs that cannot be passed through to the combined
company’s customers.
Neither FSAC nor UHS undertakes any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP measure. UHS believes Adjusted
EBITDA provides useful information to management and investors
regarding UHS’s business and results of operations. Because
Adjusted EBITDA is not in conformity with GAAP, we urge you to
review UHS’s audited financial statements filed with the SEC.
Adjusted EBITDA is defined by UHS as Earnings Before Interest,
Taxes, Depreciation and Amortization (“EBITDA”), and excludes
non-cash share-based compensation expense, management, board and
other non-recurring gain, expenses, or loss, which may not be
calculated consistently among other companies applying similar
reporting measures.
In addition to using Adjusted EBITDA internally as a measure of
operational performance, UHS discloses it externally to assist
analysts, investors and lenders in their comparisons of operational
performance, valuation and debt capacity across companies with
differing capital, tax and legal structures. Adjusted EBITDA,
however, is not a measure of financial performance under generally
accepted accounting principles and should not be considered as an
alternative to, or more meaningful than, net income as a measure of
operating performance or to cash flows from operating, investing or
financing activities or as a measure of liquidity.
Additional Information about the Transaction and Where to
Find It
FSAC intends to file a proxy statement with the SEC for use at
the special meeting of stockholders to approve the business
combination and FSAC will cause Agiliti, the newly formed holding
company, to file a Registration Statement on Form S-4 with respect
to the securities being issued in the transaction. The proxy
statement and the prospectus contained in the Registration
Statement will be mailed to FSAC stockholders as of a record date
to be established for voting on the proposed business combination.
Investors and security holders of FSAC and UHS are urged to read
the proxy statement, prospectus and other relevant documents that
will be filed with the SEC carefully and in their entirety when
they become available because they will contain important
information about the proposed transaction. Investors and security
holders will be able to obtain free copies of the proxy statement,
prospectus and other documents containing important information
about FSAC, UHS and Agiliti once such documents are filed with the
SEC, through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
FSAC when and if available, can be obtained free of charge on
FSAC’s website at http://www.thl.com/fsac or by directing a written
request to Federal Street Acquisition Corp., 100 Federal Street,
35th Floor, Boston, MA 02110, (617) 227-1050.
Participants in the Solicitation
FSAC, UHS, Agiliti and their respective directors and executive
officers, under SEC rules, may be deemed to be participants in the
solicitation of proxies of FSAC’s stockholders in connection with
the proposed transaction. Investors and security holders may obtain
more detailed information regarding the names and interests in the
proposed transaction of FSAC’s directors and officers in FSAC’s
filings with the SEC, including FSAC’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2017, which was filed with
the SEC on March 23, 2018. Information regarding the persons who
may, under SEC rules, be deemed participants in the solicitation of
proxies to FSAC’s shareholders in connection with the proposed
business combination will be set forth in the registration
statement for the proposed business combination when available.
Additional information regarding the interests of participants in
the solicitation of proxies in connection with the proposed
business combination will be included in the Registration Statement
that FSAC intends to cause Agiliti to file with the SEC.
No Offer or Solicitation
This communication shall neither constitute an offer to sell or
the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such
jurisdiction
.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180813005263/en/
UHS:James Pekarek, 952-607-3054Executive Vice President
and Chief Financial Officerjbpekarek@uhs.comorKate Kaiser,
619-507-9135Vice President, Corporate Communication and Investor
Relationskmkaiser@uhs.comorFSAC & THL:Sard Verbinnen
& Co.Matt Benson/Robin Weinberg/Cameron Seligmann,
212-687-8080orIrving Place Capital:Brunswick GroupAlex
Yankus / Christina Tilt,
212-333-3810IRVINGPLACECAPITAL@brunswickgroup.com
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