UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14D-9
SOLICITATION/RECOMMENDATION
STATEMENT
UNDER SECTION 14(d)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 6)
RES-CARE, INC.
(Name of Subject Company)
RES-CARE, INC.
(Name of Person Filing Statement)
Common Stock, no par value
(Title of Class of Securities)
760943100
(CUSIP Number of Class of Securities)
David W. Miles
Res-Care, Inc.
9901 Linn Station Road
Louisville, Kentucky 40223
(502)394-2100
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of the persons filing statement)
With copies to:
Alan K. MacDonald
Frost Brown Todd LLC
400 West Market Street, 32
nd
Floor
Louisville, Kentucky 40202
(502)589-5400
o
Check the box
if the filing relates solely to preliminary communications made before the
commencement of a tender offer.
This
Amendment No. 6 to Schedule 14D-9 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (as amended from time
to time, the
Schedule 14D-9
) originally filed
by Res-Care, Inc., a Kentucky corporation (
ResCare
or the
Company
), with the
Securities and Exchange Commission (the
SEC
) on October 7,
2010, relating to the offer by Onex Rescare Acquisition, LLC, a Delaware
limited liability company (
Purchaser
),
as disclosed in the Tender Offer Statement and Rule 13e-3 Transaction
Statement on Schedule TO originally filed by Purchaser with the SEC on October 7,
2010 (as amended or supplemented from time to time, the
Schedule TO
),
to purchase all of the outstanding shares of common stock, no par value, of
ResCare (the
Shares
or
common shares
), other than Shares owned by Purchaser and
its affiliates, at a price of $13.25 per Share, net to the seller in cash,
without interest and less any required withholding taxes, upon the terms and
subject to the conditions set forth in the Amended and Restated Offer to
Purchase, dated October 25, 2010 (the
Offer
to Purchase
), and the related Letter of Transmittal, dated October 7,
2010 (which, together with the Offer to Purchase, as each may be amended or
supplemented from time to time, constitute the
Offer
). Capitalized terms used in this amendment without
definition have the respective meanings set forth in the Schedule 14D-9.
This
Amendment No. 6 is being filed to reflect certain updates as reflected
below. Except as specifically noted herein, the information set forth in the
Schedule 14D-9 remains unchanged.
1.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer is hereby amended by substituting the following paragraph for
the third paragraph of the section.
The Board of Directors established a Special Committee with authority
to evaluate any proposal that ResCare received with respect to a potential
business combination, to make recommendations to the full Board with respect to
any such proposal, and to engage its own financial, legal and other advisors
(the Special Committee or the Committee). The Board did not place any
limitations on the authority of the Special Committee to negotiate or otherwise
carry out those functions. The members
of the Special Committee receive a fee of $2,500 per meeting attended. The four Independent Directors appointed to
the Special Committee are Ronald Geary, Olivia Kirtley, James Bloem and Steven
Reed.
2.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with In December 2009.
In December 2009, Robert M. Le Blanc, a managing director of Onex
and a director or ResCare, requested the board of directors of ResCare provide
an opportunity for Onex to conduct an assessment of certain litigation and
other risk management and operational issues of ResCare. These issues included
ongoing litigation, insurance coverage, billing procedures, status of state
reimbursement, and collection of accounts receivable. The board of directors
granted Mr. Le Blancs request. Mr. Le Blanc also indicated to the
other ResCare directors that Onex was considering whether it would make a
proposal to consolidate its ownership.
3.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with On March 2.
On March 2, during ResCares regularly scheduled quarterly board
and committee meetings, the Special Committee members met with the other two
independent directors to brief them on the committees activities to date and
approve the engagement of Goldman Sachs. Although the Special Committee had,
and exercised, the exclusive authority to approve the engagement of Goldman
Sachs, the meeting provided an opportunity for the other independent directors,
who would ultimately participate in any decision to
2
approve
a transaction, to provide input to the Special Committee. Later that day, Mr. Le
Blanc informed the full Board of Directors that any decision by Onex to make a
proposal to consolidate its ownership would be made only after Onex had had an
opportunity to assess the markets reaction to ResCares release of its 2009
financial results and 2010 guidance scheduled for March 8.
4.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with At the Special Committees March 19
meeting.
At the Special Committees March 19 meeting, Mr. Geary
reported on a message received from Mr. Le Blanc a day earlier that Onex
was going to continue to monitor the stock price. On March 30, in response
to a request from Onex, ResCares senior management had a conference call with representatives of
Onex to give a preliminary assessment of the potential impact of the recently
passed federal health care legislation on ResCare, including both insurance
costs and revenue opportunities. The next day management delivered the
assessment to the Special Committee at a previously scheduled Committee
meeting.
5.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraphs for the three paragraphs immediately following the last bullet point
in the paragraph beginning with On August 14.
The proposal did not make any changes to Onexs existing rights and
also provided that it would expire if a definitive agreement was not entered
into by September 1, 2010. At no time did Onex indicate an intention to
dispose of its holdings in ResCare if an agreement on a strategic transaction
was not reached.
On August 15, the Special Committee had a telephonic meeting to
review the Onex proposal, to plan its process for evaluating the proposal, and
coordinate the release of a public announcement. The Special Committee authorized
representatives of Goldman Sachs to undertake a financial analysis of the Onex
proposal.
Later in the day Onex delivered a draft of its intended Schedule 13D
amendment for review by the Special Committee. The draft indicated that five
executive officers of ResCare had signed commitment letters agreeing that if a
transaction with Onex occurred, the officers would transfer their ResCare
shares to an Onex affiliate in exchange for equity interests in the Onex
affiliate. The Special Committee then learned that on the evening of August 14, Onex had requested the executive officers of
ResCare to sign commitment letters. The Special Committee convened on a
conference call later in the day on August 15, and then requested that
Onex terminate the rollover commitment letters that had been signed by
management up to that point. Onex agreed and delivered a written notice to that
effect. The Committee believed that these types of communications or arrangements
were premature at this point of the process and directed management not to have
any further direct contact with Onex unless authorized by the Committee.
6.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with On August 23.
On August 23, representatives of Goldman Sachs met with the
Special Committee to discuss preliminary financial analysis of the Onex
proposal. This financial analysis was
subsequently updated and presented by representatives of Goldman Sachs to the
Special Committee on September 5. A summary of
3
the
material financial analyses delivered by Goldman Sachs to the Special Committee
is set forth below under the sub caption Opinion of the Financial Advisor to the Special Committee.
7.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with Company A also advised.
Company A also advised that two of its lenders could not participate in
financing an acquisition due to a conflict. The Committee directed ResCares
chief financial officer to contact those lenders to waive any conflict on
behalf of the Company. When advised that the source of the conflict was not
ResCare, Mr. Bloem contacted Mr. Le Blanc to advise him of the
conflict. When it was confirmed that Onex had engaged the two lenders as
financial advisors, Onex was over the course of a few days asked to waive any
conflict for both or at least one lender. Onex declined those requests, stating
to ResCare that it had retained the two lenders as its own advisors.
8.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with On September 2.
On September 2, the Special Committee authorized Onex to contact
members of ResCare management who Onex would like to sign agreements to
exchange their ResCare common stock for equity interests in the new Onex
affiliate that would offer to purchase the ResCare common stock not already
owned by Onex affiliates. The agreements provided that the ResCare common
shares to be rolled over by these officers would be valued for purposes of
the exchange at $13.25 per share, the same price per share at which Onex would
purchase common shares in the proposed tender offer and share exchange. The
agreements also provided they would terminate if the share exchange agreement
with Onex terminated and neither prohibited the management signatories from
entering into similar arrangements with other bidders after the termination of
the share exchange agreement, nor prohibited the management signatories from
having discussions with other bidders before such termination.
9.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with On September 13.
On September 13, at the request of the Special Committee, representatives
of Goldman Sachs began to call approximately 50 other parties that the members
of the Special Committee, in consultation with representatives of Goldman
Sachs, had identified as potentially interested in a transaction with ResCare.
The parties that were contacted represented approximately 40 financial and
approximately 10 strategic buyers that the Special Committee, in consultation
with representatives of Goldman Sachs, identified as realistic potential
purchasers based upon the combined industry experience and knowledge of the
Special Committee and their advisors.
10.
SPECIAL
FACTORS 1. Purposes and Reasons for the Offer Background
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 1. Purposes and Reasons
for the Offer Background is hereby amended by substituting the following
paragraph for the paragraph beginning with On September 15.
4
On September 15, 2010, an officer of a private equity firm (Company
B) contacted representatives of Goldman Sachs to express interest in a
transaction to acquire ResCare. Company B, which historically had not been a
health care investor, was not among the parties contacted at the direction of
the Special Committee during the go-shop period. Representatives of Goldman Sachs spoke with
Company B several times over the next seven days to obtain additional
information. On September 22, 2010, Company B delivered a letter to the
Special Committee expressing interest in making a proposal to acquire ResCare
Shares at a price of up to $14.25 per Share, which included information about
the anticipated sources and uses of funds for such a transaction. Company B
entered into a confidentiality agreement with the Company on September 24.
Later that day, representatives of Goldman Sachs, at the request of the Special
Committee, contacted Company B to discuss apparent errors that members of the
Special Committee, based on consultation with representatives of Goldman Sachs,
learned of regarding some of the assumptions used by Company B in its
expression of interest. Specifically,
the expression of interest showed an amount of funds to be used to purchase all
of ResCares common and preferred shares that represented a price per share
less than $14.25. On September 27, 2010, Company B notified the Special
Committee that, after reworking its assumptions as to the funds required to
purchase all of the common and preferred shares, it was no longer considering
making an alternative proposal.
11.
SPECIAL
FACTORS 3. Reports, Opinions,
Appraisals and Negotiations Opinion of the Financial Advisor to the Special
Committee
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 3. Reports, Opinions, Appraisals and
Negotiations Opinion of the Financial Advisor to the Special Committee is
hereby amended by substituting the following table for the table under the
subheading Selected Companies Analysis.
|
|
Calendarized
Estimated
EV/EBIDTA
Multiples
|
|
Calendarized
Estimated P/E
Multiples
|
|
Company
|
|
2010
|
|
2010
|
|
2011
|
|
Res-Care at Undisturbed Price
|
|
4.8x
|
|
9.1x
|
|
8.5x
|
|
Res-Care at Offer Price
|
|
5.8x
|
|
11.9x
|
|
11.0x
|
|
Almost Family, Inc.
|
|
3.8x
|
|
7.8x
|
|
8.7x
|
|
Amedisys, Inc.
|
|
3.2x
|
|
5.6x
|
|
6.8x
|
|
LHC Group, Inc.
|
|
3.9x
|
|
7.5x
|
|
8.2x
|
|
Magellan Health
Services, Inc.
|
|
4.6x
|
|
12.4x
|
|
12.7x
|
|
Providence Services Corporation
|
|
5.0x
|
|
9.2x
|
|
8.9x
|
|
Rehabcare Group, Inc.
|
|
5.2x
|
|
6.8x
|
|
6.0x
|
|
|
|
|
|
|
|
|
|
Median (Res-Care at Undisturbed
Price and Selected Companies)
|
|
4.6x
|
|
7.8x
|
|
8.5x
|
|
12.
SPECIAL
FACTORS 3. Reports, Opinions,
Appraisals and Negotiations Opinion of the Financial Advisor to the Special
Committee
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 3. Reports, Opinions, Appraisals and
Negotiations Opinion of the Financial Advisor to the Special Committee is
hereby amended by substituting the following paragraph for the paragraph
beginning with the subheading Illustrative Present Value of Future Share Price
of the Company that precedes the table.
Illustrative Present Value
of Future Share Price of the Company
.
Goldman Sachs performed an illustrative analysis of the present value of the
future price per Share using the Forecasts. This analysis is designed to
provide an indication of the present value of a theoretical future value of a
companys equity as a function of such companys estimated future earnings and
its assumed price to future earnings per share multiple. For this analysis,
based on the Forecasts, Goldman Sachs first calculated the illustrative future
values per Share by applying a range of forward 2011 price-to-earnings multiple
estimates from 7.0x-10.0x to the forward earnings Forecasts for each of the
fiscal years 2011 to 2015 to derive a future value in each of the years 2010
through 2014. The ranges of implied values in this analysis were calculated
based on
5
ranges of multiples, including a range of
P/E multiples, derived by Goldman Sachs utilizing its experience and
professional judgment, taking into account current and historical trading data
and the current P/E multiples for ResCare and the Selected Companies which
exhibited similar business characteristics to the Company. The illustrative future values per Share in
each year were then discounted back to August 13, 2010, using a discount
rate of 10.0% reflecting an estimate of the Companys cost of equity. Goldman
Sachs derived this discount rate by utilizing the Capital Asset Pricing Model (CAPM).
Goldman Sachs utilized the CAPM to estimate the Companys cost of equity
because, in Goldman Sachs professional judgment, the CAPM is the most
appropriate method available to estimate cost of capital for purposes of
valuing companies operating in regions with active and liquid capital markets.
CAPM takes into account certain financial metrics for the Company and the
United States financial markets. The applied discount rate of 10% was based
upon Goldman Sachs judgment of an illustrative range based upon the above
analysis. This analysis resulted in illustrative ranges of present values per
Share for each of the years 2010, 2011, 2012, 2013 and 2014 as follows:
13.
SPECIAL
FACTORS 3. Reports, Opinions,
Appraisals and Negotiations Opinion of the Financial Advisor to the Special
Committee
The
section of the Schedule 14D-9 titled SPECIAL FACTORS 3. Reports, Opinions, Appraisals and
Negotiations Opinion of the Financial Advisor to the Special Committee is
hereby amended by substituting the following paragraph for the paragraph
beginning with the subheading Illustrative Discounted Cash Flow Analysis.
Illustrative Discounted
Cash Flow Analysis.
Goldman
Sachs performed an illustrative discounted cash flow analysis on the Company
using the Forecasts. Goldman Sachs calculated indications of net present value
of free cash flows for the Company for the fourth quarter of fiscal year 2010
and each of the fiscal years 2011 through 2015. Goldman Sachs calculated
implied prices per Share using illustrative terminal values in the year 2015
based on perpetuity growth rates ranging from (1.0%) to 1.0% and assuming no
acquisitions or acquisition costs in terminal year calculations. The range of
perpetuity growth rates was estimated by Goldman Sachs utilizing its
professional judgment and experience, taking into account the Forecasts and market
expectations regarding long-term growth of gross domestic product, inflation
and other industry factors. These illustrative terminal values were then
discounted to calculate implied indications of present values using
illustrative discount rates ranging from 8.00% to 9.00%, reflecting estimates
of the Companys weighted average cost of capital. Goldman Sachs derived this
range of discount rates by utilizing the CAPM. Goldman Sachs utilized the CAPM
to estimate the Companys weighted average cost of capital because, in Goldman
Sachs professional judgment, the CAPM is the most appropriate method available
to estimate cost of capital for purposes of valuing companies operating in
regions with active and liquid capital markets. CAPM takes into account certain
financial metrics for the Company and the United States financial markets. The
applied discount rates ranging from 8% to 9% were based upon Goldman Sachs
judgment of an illustrative range based upon the above analysis. This analysis
resulted in a range of illustrative per share value indications of $10.47 to
$17.15.
14.
SOLICITATION/RECOMMENDATION
STATEMENT Item 8. Additional
Information
The
section of the Schedule 14D-9 titled SOLICITATION/RECOMMENDATION STATEMENT
Item 8. Additional Information is
hereby amended by substituting the following paragraph for the third paragraph
under the subsection Company Financial Projections.
These Forecasts and other information were based on numerous variables
and assumptions that are inherently uncertain and may be beyond the control of
the Company and its management. Important factors that may affect actual
results and result in the Forecasts results not being achieved include, but are
not limited to, risks and uncertainties described in the Companys report on
Form 10-K filed with the SEC for the fiscal year ended December 31,
2009 and the Companys report on Form 10-Q for the period ended September 30,
2010. In addition, the internal financial forecasts and other information may
be affected by the Companys ability to achieve strategic goals, objectives and
targets over the applicable period. These assumptions upon which the financial
forecasts and other information were based necessarily involve judgments with
respect to, among other things, future economic, competitive and regulatory
conditions,
6
financial
market conditions and conditions affecting providers of government-funded human
services, all of which are difficult or impossible to predict accurately and
many of which are beyond the control of the Company and its management. The
Forecasts and other information also reflect assumptions as to certain business
decisions that are subject to change.
15.
SOLICITATION/RECOMMENDATION
STATEMENT Item 8. Additional
Information
The
section of the Schedule 14D-9 titled SOLICITATION/RECOMMENDATION STATEMENT
Item 8. Additional Information is
hereby amended by adding the following sentence at the end of the paragraph
under the subsection Antitrust.
The Federal Trade Commission informed
ResCare and Purchaser of the early termination of the waiting period under the
Hart-Scott-Rodino Act on October 19, 2010.
16.
SOLICITATION/RECOMMENDATION
STATEMENT Item 8. Additional
Information
The
section of the Schedule 14D-9 titled SOLICITATION/RECOMMENDATION STATEMENT
Item 8. Additional Information is
hereby amended by substituting the following paragraph for the last paragraph
under the subsection Regulatory Approvals.
The proposed acquisition of ResCare by
Purchaser is subject to a certificate of need review by the West Virginia
Health Care Authority. Purchaser has filed its application, and parties with
standing may request a hearing during a 30-day period ending on
November 8, 2010. On November 10, 2010, the Authority issued its
written approval of Purchasers acquisition of ResCare.
7
SIGNATURE
After
due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this amendment is true, complete and correct.
|
|
RES-CARE, INC.
|
|
|
|
Dated: November 12, 2010
|
|
By:
|
/s/
DAVID W. MILES
|
|
|
|
David
W. Miles
|
|
|
|
Executive Vice President and Chief Financial Officer
|
8
Res-Care, Inc. (MM) (NASDAQ:RSCR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Res-Care, Inc. (MM) (NASDAQ:RSCR)
Historical Stock Chart
From Jul 2023 to Jul 2024