0000895345-05-000331.txt : 20120626
0000895345-05-000331.hdr.sgml : 20120626
20050314171804
ACCESSION NUMBER: 0000895345-05-000331
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 20050314
DATE AS OF CHANGE: 20050314
GROUP MEMBERS: 1995 DAVID REIS FAMILY TRUST
GROUP MEMBERS: 1995 DONNA REIS FAMILY TRUST
GROUP MEMBERS: AARON REIS SPRAY TRUST
GROUP MEMBERS: ALEXANDER REIS SPRAY TRUST
GROUP MEMBERS: ANNA REIS SPRAY TRUST
GROUP MEMBERS: APPALOOSA INVESTMENT LIMITED PARTNERSHIP I
GROUP MEMBERS: APPALOOSA MANAGEMENT L.P.
GROUP MEMBERS: APPALOOSA PARTNERS INC.
GROUP MEMBERS: ARNOLD M. WHITMAN
GROUP MEMBERS: BAYLOR ENTERPRISES LLC
GROUP MEMBERS: DAVID A. TEPPER
GROUP MEMBERS: DAVID HOKIN
GROUP MEMBERS: DAVID REIS
GROUP MEMBERS: DAVID REIS FAMILY TRUST
GROUP MEMBERS: FRANKLIN MUTUAL ADVISERS, LLC
GROUP MEMBERS: NORTHBROOK NBV, LLC
GROUP MEMBERS: PALOMINO FUND LTD.
GROUP MEMBERS: ROB RUBIN
GROUP MEMBERS: ROBERT HARTMAN
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: BEVERLY ENTERPRISES INC
CENTRAL INDEX KEY: 0001040441
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051]
IRS NUMBER: 621691861
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-52627
FILM NUMBER: 05679211
BUSINESS ADDRESS:
STREET 1: ONE THOUSAND BEVERLY WAY
CITY: FORT SMITH
STATE: AR
ZIP: 72919
BUSINESS PHONE: 5014526712
MAIL ADDRESS:
STREET 1: ONE THOUSAND BEVERLY WAY
CITY: FORT SMITH
STATE: AR
ZIP: 72919
FORMER COMPANY:
FORMER CONFORMED NAME: NEW BEVERLY HOLDINGS INC
DATE OF NAME CHANGE: 19970604
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: APPALOOSA MANAGEMENT LP
CENTRAL INDEX KEY: 0001006438
IRS NUMBER: 223220835
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: 26 MAIN ST
STREET 2: 1ST FLOOR
CITY: CHATHAM
STATE: NJ
ZIP: 07928
BUSINESS PHONE: 9737017000
MAIL ADDRESS:
STREET 1: 26 MAIN ST
STREET 2: 1ST FLOOR
CITY: CHATAM
STATE: NJ
ZIP: 07928
SC 13D/A
1
pr13da5.txt
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Schedule 13D/A
(Amendment No. 5)
Under the Securities Exchange Act of 1934
Beverly Enterprises, Inc.
-----------------------------------------
(Name of Issuer)
Common Stock, $0.10 par value per share
------------------------------------------
(Title of class of securities)
087851309
-----------------------------------------
(CUSIP Number)
Kenneth Maiman, Esq. Bradley Takahashi, Esq.
Appaloosa Management L.P. Franklin Mutual Advisers, LLC
26 Main Street, First Floor 51 John F. Kennedy Parkway
Chatham, NJ 07928 Short Hills, NJ 07078
(973) 701-7000 (973) 912-2000
Arnold M. Whitman Richard Marks, Esq.
Formation Capital, LLC Northbrook NBV, LLC
1035 Powers Place 500 Skokie Blvd, Ste. 310
Alpharetta, GA 30004 Northbrook, IL 60062
(770) 754-9660 (847) 559-1002
Robert C. Schwenkel, Esq.
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, NY 10004-1980
(212) 859-8000
(Persons Authorized to Receive Notices and Communications)
March 14, 2005
-----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
CUSIP NO. 087851309 13D PAGE 2 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Appaloosa Investment Limited Partnership I
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,873,122
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,873,122
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
1,873,122
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.7%
TYPE OF REPORTING PERSON
14 PN
CUSIP NO. 087851309 13D PAGE 3 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Palomino Fund Ltd.
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 British Virgin Islands
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,641,178
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,641,178
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
1,641,178
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
TYPE OF REPORTING PERSON
14 CO
CUSIP NO. 087851309 13D PAGE 4 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Appaloosa Management L.P.
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,514,300
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 3,514,300
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
3,514,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.2%
TYPE OF REPORTING PERSON
14 PN;IA
CUSIP NO. 087851309 13D PAGE 5 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Appaloosa Partners Inc.
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,514,300
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 3,514,300
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
3,514,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.2%
TYPE OF REPORTING PERSON
14 CO
CUSIP NO. 087851309 13D PAGE 6 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 David A. Tepper
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 USA
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,514,300
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 3,514,300
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
3,514,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.2%
TYPE OF REPORTING PERSON
14 IN;HC
CUSIP NO. 087851309 13D PAGE 7 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Franklin Mutual Advisers, LLC
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 3,508,900
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,508,900
PERSON 10 SHARED DISPOSITIVE POWER
WITH -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
3,508,900
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.2%
TYPE OF REPORTING PERSON
14 IA
CUSIP NO. 087851309 13D PAGE 8 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Northbrook NBV, LLC
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 WC
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,487,200
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,487,200
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
1,487,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 9 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 David Hokin
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 USA
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,487,200
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,487,200
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
1,487,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4%
TYPE OF REPORTING PERSON
14 IN;HC
CUSIP NO. 087851309 13D PAGE 10 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Rob Rubin
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 USA
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,487,200
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,487,200
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
1,487,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4%
TYPE OF REPORTING PERSON
14 IN
CUSIP NO. 087851309 13D PAGE 11 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Robert Hartman
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 USA
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,487,200
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,487,200
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
1,487,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4%
TYPE OF REPORTING PERSON
14 IN
CUSIP NO. 087851309 13D PAGE 12 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 1995 David Reis Family Trust
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 10,000
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
10,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 13 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 1995 Donna Reis Family Trust
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 25,000
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 25,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
25,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 14 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Aaron Reis Spray Trust
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 20,000
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 20,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
20,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 15 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Anna Reis Spray Trust
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 22,500
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 22,500
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
22,500
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 16 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Alexander Reis Spray Trust
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 22,500
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 22,500
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
22,500
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 17 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 David Reis Family Trust
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 OO
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 25,000
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 25,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
25,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 18 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 David Reis
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 PF
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 75,000
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 125,000
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 75,000
PERSON 10 SHARED DISPOSITIVE POWER
WITH 125,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
200,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 IN
CUSIP NO. 087851309 13D PAGE 19 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Baylor Enterprises LLC
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 AF
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Georgia
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 21,900
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON 10 SHARED DISPOSITIVE POWER
WITH 21,900
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
21,900
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1.0%
TYPE OF REPORTING PERSON
14 OO
CUSIP NO. 087851309 13D PAGE 20 OF 43 PAGES
NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 Arnold M. Whitman
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |X|
2 (b) |_|
3 SEC USE ONLY
SOURCE OF FUNDS
4 PF
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
5 N/A
CITIZENSHIP OR PLACE OF ORGANIZATION
6 USA
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,700
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 21,900
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 4,700
PERSON 10 SHARED DISPOSITIVE POWER
WITH 21,900
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
26,600
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
N/A
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1%
TYPE OF REPORTING PERSON
14 IN;HC
This Amendment No. 5 amends the Schedule 13D originally filed on
January 24, 2005, as amended by Amendment No. 1 filed on January 25, 2005,
by Amendment No. 2 filed on January 27, 2005, by Amendment No. 3 filed on
February 4, 2005 and by Amendment No. 4 filed on February 22, 2005 (as
amended, the "Statement"), by (i) Appaloosa Investment Limited Partnership
I, (ii) Palomino Fund Ltd., (iii) Appaloosa Management L.P., (iv) Appaloosa
Partners, Inc., (v) David A. Tepper, (vi) Franklin Mutual Advisers, LLC,
(vii) Northbrook NBV, LLC, (viii) David Hokin, (ix) Rob Rubin, (x) Robert
Hartman, (xi) 1995 David Reis Family Trust, (xii) 1995 Donna Reis Family
Trust, (xiii) Aaron Reis Spray Trust, (xiv) Anna Reis Spray Trust, (xv)
Alexander Reis Spray Trust, (xvi) David Reis Family Trust, (xvii) David
Reis, (xviii) Baylor Enterprises LLC and (xix) Arnold Whitman, relating to
the common stock, $0.10 par value per share, of Beverly Enterprises, Inc.
Unless otherwise indicated, all capitalized terms used herein shall have
the meanings given to them in the Statement, and unless amended hereby, all
information previously filed remains in effect.
ITEM 4. PURPOSE OF TRANSACTION
Item No. 4 is hereby supplemented by the following:
On March 14, 2005, Arnold M. Whitman, Chief Executive Officer of
Formation, filed with the SEC and commenced mailing to the Company's
stockholders a definitive proxy statement in connection with the proposals
he intends to bring before the Company's 2005 annual meeting of
stockholders, including his nomination for election to the Board of
Directors of the Company of a slate consisting of the following nominees:
Jeffrey A. Brodsky, John J. Durso, Philip L. Maslowe, Charles M. Masson,
Mohsin Y. Meghji and Guy Sansone.
On March 14, 2005, Formation and Arnold M. Whitman filed a
complaint (the "Complaint") against Kurt Knickrehm, Director of the
Arkansas Department Of Human Services in response to the "Long Term Care
Resident Protection Act of 2005" proposed in the Arkansas Legislature. The
Complaint was filed in the United States District Court, Eastern District
of Arkansas. A copy of the Complaint is attached as Exhibit M.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A. Joint Filing Agreement dated January 24, 2005.*
B. Executive Officers of Franklin Mutual.*
C. Transactions in Beverly Enterprises Shares Since November 18,
2004.****
D. Letter dated December 22, 2004 from Formation to the Company.*
E. Letter dated January 5, 2005 from the Company to Formation.*
F. Letter dated January 19, 2005 from Formation to the Company.*
G. Term Sheet dated December 14, 2004.*
H. Agreement among Stockholders dated January 24, 2005.+
I. Letter dated January 27, 2005 from Fried, Frank, Harris, Shriver &
Jacobson LLP to Douglas J. Babb, Executive Vice President, Chief
Administrative and Legal Officer of the Company.**
J. Press Release issued on February 3, 2005 (including Letter dated
February 3, 2005 from Mr. Whitman to Mr. Floyd).***
K. Notice of Business and Proposals to be Brought before the 2005
Annual Meeting of Stockholders.***
L. List of Participants in Solicitation of Company Stockholders.***
M. Complaint, filed by Formation and Arnold M. Whitman.*****
--------------------------------
* Filed on January 24, 2005
+ Filed with Amendment No. 1 on January 25, 2005
** Filed with Amendment No. 2 on January 27, 2005
*** Filed with Amendment No. 3 on February 4, 2005
**** Filed with Amendment No. 4 on February 22, 2005
***** Filed herewith
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
APPALOOSA INVESTMENT LIMITED PARTNERSHIP I
By: Appaloosa Management L.P.,
its General Partner
By: Appaloosa Partners Inc.,
its General Partner
By: /s/ David A. Tepper
-------------------------
Name: David A. Tepper
Title: President
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
PALOMINO FUND LTD.
By: Appaloosa Management L.P.,
its Investment Adviser
By: Appaloosa Partners Inc.,
its General Partner
By: /s/ David A. Tepper
-------------------------
Name: David A. Tepper
Title: President
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
APPALOOSA MANAGEMENT L.P.
By: Appaloosa Partners Inc.,
its General Partner
By: /s/ David A. Tepper
-------------------------
Name: David A. Tepper
Title: President
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
APPALOOSA PARTNERS INC.
By: /s/ David A. Tepper
-------------------------
Name: David A. Tepper
Title: President
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
/s/ David A. Tepper
-------------------------------
DAVID A. TEPPER
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
FRANKLIN MUTUAL ADVISERS, LLC
By: /s/ David J. Winters
------------------------
Name: David J. Winters
Title: President, Chief Executive
Officer and Chief Investment
Officer
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
NORTHBROOK NBV, LLC
By: /s/ Rob Rubin
------------------------
Name: Rob Rubin
Title: Manager
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
/a/ David Hokin
-------------------------------
DAVID HOKIN
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
/s/ Rob Rubin
-------------------------------
ROB RUBIN
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
/s/ Robert Hartman
-------------------------------
ROBERT HARTMAN
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
1995 DAVID REIS FAMILY TRUST
By: /s/ David Reis
-------------------------------
Name: David Reis
Title: Trustee
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
1995 DONNA REIS FAMILY TRUST
By: /s/ David Reis
-------------------------------
Name: David Reis
Title: Trustee
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
AARON REIS SPRAY TRUST
By: /s/ David Reis
-------------------------------
Name: David Reis
Title: Trustee
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the Reporting Person certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 14, 2005
ANNA REIS SPRAY TRUST
By: /s/ David Reis
-------------------------------
Name: David Reis
Title: Trustee
SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the Reporting Person certifies that the information set forth in
this statement is true, complete and correct.
Dated: March 14, 2005
ALEXANDER REIS SPRAY TRUST
By: /s/ David Reis
-------------------------------
Name: David Reis
Title: Trustee
SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the Reporting Person certifies that the information set forth in
this statement is true, complete and correct.
Dated: March 14, 2005
DAVID REIS FAMILY TRUST
By: /s/ David Reis
-------------------------------
Name: David Reis
Title: Trustee
SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the Reporting Person certifies that the information set forth in
this statement is true, complete and correct.
Dated: March 14, 2005
/S/ David Reis
-------------------------------
DAVID REIS
SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the Reporting Person certifies that the information set forth in
this statement is true, complete and correct.
Dated: March 14, 2005
BAYLOR ENTERPRISES LLC
By: /s/ Arnold M. Whitman
---------------------------
Name: Arnold M. Whitman
Title: Managing Member
SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the Reporting Person certifies that the information set forth in
this statement is true, complete and correct.
Dated: March 14, 2005
/s/ Arnold M. Whitman
-------------------------------
ARNOLD M. WHITMAN
EXHIBIT INDEX
EXHIBIT NAME
A. Joint Filing Agreement dated January 24, 2005.*
B. Executive Officers of Franklin Mutual.*
C. Transactions in Beverly Enterprises Shares Since November 18, 2004.****
D. Letter dated December 22, 2004 from Formation to the Company.*
E. Letter dated January 5, 2005 from the Company to Formation.*
F. Letter dated January 19, 2005 from Formation to the Company.*
G. Term Sheet dated December 14, 2004.*
H. Agreement among Stockholders dated January 24, 2005.+
I. Letter dated January 27, 2005 from Fried, Frank, Harris, Shriver &
Jacobson LLP to the Company.**
J. Press Release issued on February 3, 2005 (including Letter dated
February 3, 2005 from Mr. Whitman to Mr. Floyd).***
K. Notice of Business and Proposals to be Brought before the 2005 Annual
Meeting of Stockholders.***
L. List of Participants in Solicitation of Company Stockholders.***
M. Complaint, filed by Formation and Arnold M. Whitman*****
--------------------------------
* Filed on January 24, 2005
+ Filed with Amendment No. 1 on January 25, 2005
** Filed with Amendment No. 2 on January 27, 2005
*** Filed with Amendment No. 3 on February 4, 2005
**** Filed with Amendment No. 4 on February 22, 2005
***** Filed herewith
EX-99
2
exh99_1.txt
EXHIBIT M
---------
[FILED
U.S DISTRICT COURT
EASTERN DISTRICT ARKANSAS
MARCH 14 2005
BY: /S/ JAMES W. MCCORMACK, CLERK
------------------------------
DEPT. CLERK]
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
FORMATION CAPITAL, LLC,
AND ARNOLD M. WHITMAN PLAINTIFFS
VS. NO. 4-05 CV0000452
KURT KNICKREHM, DIRECTOR
OF ARKANSAS DEPARTMENT OF HUMAN SERVICES DEFENDANT
COMPLAINT
Plaintiffs Formation Capital, LLC ("Formation") and Arnold M. Whitman,
by their undersigned attorneys, as and for their complaint against Kurt
Knickrehm, Director of the Arkansas Department of Human Services (the
"Director of DHS"), respectfully state, on personal knowledge as to their
own actions and on information and belief as to all other matters, as
follows:
BACKGROUND
1. Just one week ago, on March 4, 2005, a bill -- entitled the Long
Term Care Resident Protection Act of 2005, House Bill 2593 (the "Act") --
was introduced into the Arkansas Legislature, the stated purpose of which
is to protect "the health, safety and well-being of residents . . . in
long-term care facilities and to promote, assure, and maintain the
continuity of health, safety and well-being of citizens of the State of
Arkansas." Act ss. 20-10-2002. (The Act is attached hereto as Exhibit A).
That stated purpose has no relationship to the Act.
2. The Long-Term Care Resident Protection Act applies only in the
event of a potential change of control of Beverly Enterprises, Inc.
("Beverly") -- the only long-term care company that is now or will ever be
subject to its provisions. (The Long-Term Care Resident Protection Act is
referenced hereinafter as the "Beverly Act".) While the Beverly Act
purports to protect residents of long-term care facilities in the State of
Arkansas, Beverly owns no more than twenty (20) of the approximately 235
long-term care facilities within Arkansas, i.e., less than ten percent
(10%). The Beverly Act, by its terms, is thus wholly unconcerned with the
"health, safety and well-being" of those Arkansas residents who reside in
the remaining 90% of the long-term care facilities in this State. Rather,
those Arkansas residents (along with those in the Beverly facilities) are
protected by the existing extensive regulatory framework -- at both the
federal and state level -- that applies to all long-term care facilities.
3. The residents of Arkansas in long-term care facilities do not need
the Beverly Act for their protection, but the directors and senior-most
officers of Beverly, who number among them two of the highest paid
executives in the State, do. For the past three months, Beverly's directors
and senior management have been resisting an offer made by Formation and
others to negotiate a transaction with Beverly (the "Proposed Transaction,"
more fully described in the Definitive Proxy Statement dated March 14,
2005, attached as Exhibit B hereto), that would provide substantial benefit
to its shareholders. Not only did Beverly's Board of Directors and senior
management reject the offer out of hand without any discussion with
Plaintiffs, they have put in place impediments to any such transaction by,
for example, accelerating the date for its 2005 annual meeting of
stockholders and the deadline for nominating director candidates for
election at that meeting and by implementing a poison pill.
4. Despite Beverly's tactics, Mr. Whitman was able to nominate for
election by Beverly's stockholders a slate of independent directors who, if
elected, would, consistent with their fiduciary duties, be committed to
implementing a process to consider the Proposed Transaction or any other
transactions that may be presented to the Board. So, in a last-ditch effort
to derail Plaintiffs (and other members of the Consortium) and to the
detriment of the shareholders it is supposed to protect, Beverly's board
and senior management are using company funds (which could otherwise be
used for the benefit of residents of Beverly's long-term care facilities)
to finance a massive lobbying effort to have the Legislature hastily pass
the Beverly Act without any meaningful debate and without any demonstrable
need for its existence. Beverly's board and senior management have also
agreed to pay Wall Street investment banks, Lehman Brothers, Inc. and J.P.
Morgan Securities, Inc., fees of over $16.5 million to assist senior
management in resisting the Proposed Transaction. These investment banking
fees are in addition to the $2,700,000 Beverly expects to pay two proxy
solicitation firms, lawyers and other advisors working to block the
Proposed Transaction. All of this is money that could better be used for
the benefit of residents of Beverly's long-term care facilities.
5. The Beverly Act purports to bar Plaintiffs from even offering the
Proposed Transaction to Beverly's shareholders, much less consummating it,
without the prior approval of the Director of DHS. The Director's approval
may be provided only after a lengthy process in which the incumbent Beverly
management is given every opportunity to block and otherwise delay the
transaction. Moreover, if the Beverly Act were to be construed broadly, the
Director of DHS would purportedly have the right to determine whether
Beverly's shareholders may support the election of directors of their own
choice to Beverly's board, despite the fact that the process by which
shareholders may choose the company's directors must be exclusively subject
to federal law and the law of the state of incorporation (in Beverly's
case, Delaware).
6. In the post-Enron era, in which the Sarbanes-Oxley Act and a myriad
of other statutes and regulations have been enacted to enhance management
accountability to investors, the Beverly Act would operate to entrench
Beverly's high-paid senior management. It also blatantly interferes with
the rights of shareholders around the nation to determine who should manage
and control the corporation they own -- a corporation which has the vast
majority of its shareholders, employees, and operations outside of Arkansas
-- as well as the right of others even to propose or discuss potential
change of control transactions, in contravention of federal and Delaware
law. The corporate control issues have no impact on the quality of life of
residents in long-term care facilities in Arkansas who are already
protected.
7. In sum, the statute the Arkansas Legislature is on the verge of
enacting, misleadingly named the "Long-Term Care Resident Protection Act",
has nothing to do with protecting residents of long-term care facilities,
and everything to do with protecting Beverly's incumbent directors and
senior management team from being voted out of office and/or losing their
positions if the Proposed Transaction or some other transaction came to
fruition. But the Beverly Act is not just bad policy. It is clearly
unconstitutional under both the U.S. and Arkansas constitutions.
PARTIES
8. Plaintiff Formation is a limited liability company organized under
the laws of the Commonwealth of Pennsylvania with an office located at 1035
Powers Place, Alpharetta, Georgia. Formation, which was founded in 1999,
provides equity to the senior housing and long-term care industry, and
currently manages assets in excess of $650 million in value. Over the last
three years, Formation and its partners have acquired an ownership interest
in 152 nursing facilities in 20 states, including 49 skilled nursing
facilities and four assisted living centers Formation acquired from Beverly
in 2002. Both patient care and financial performance have improved at the
facilities acquired from Beverly since they have been owned by Formation.
9. Plaintiff Arnold M. Whitman is a resident of the State of Georgia
and the Chief Executive Officer of Formation. He is currently a beneficial
owner of 26,600 shares of Beverly's common stock.
10. Defendant Kurt Knickrehm is the Director of the State of Arkansas
Department of Human Services, with an office at Donaghey Plaza, 7th and
Main Streets, Little Rock, Arkansas. The Beverly Act endows the Director
with the authority to administer and enforce its terms.
JURISDICTION AND VENUE
11. This Court has subject matter jurisdiction over this action under
28 U.S.C. ss. 1331 because it arises under the Constitution and laws of the
United States as well as under 28 U.S.C. ss. 1367 with respect to the
non-federal claims asserted. Because Plaintiffs are seeking only
declaratory and injunctive relief against the Director of DHS, pursuant to
the well-established Ex parte Young doctrine, the Eleventh Amendment does
not affect this Court's jurisdiction over the action. Defendant is an
official of the State of Arkansas who resides in this State and District
and is subject to personal jurisdiction in this Court.
12. Venue is proper in this District pursuant to 28 U.S.C. ss. 1391(b)
because the defendant resides in this District and/or a substantial part of
the events giving rise to the claim has occurred in this District.
FACTUAL BACKGROUND
BEVERLY'S BUSINESS
------------------
13. Beverly is one of the largest owners of nursing facilities in the
United States. Although Beverly is headquartered in Fort Smith, Arkansas,
it chose to incorporate itself under Delaware law, and it chose therefore
for Delaware law to control, among other things, how it is governed.
Beverly has approximately 109 million outstanding shares; of those, only
about 2 million are owned by residents of Arkansas. Thus, the vast majority
of Beverly's shares are owned by persons who reside outside of Arkansas.
14. According to its public filings, Beverly operates over 300
facilities located in 23 states and the District of Columbia, with over
30,000 licensed beds. Within Arkansas, Beverly operates no more than 20
facilities with approximately 2,300 licensed beds. This constitutes less
than 10% of the facilities and beds within Arkansas, where there are
roughly 240 facilities with 24,105 beds. Indeed, Beverly's presence in
Arkansas has recently substantially decreased, due to its sale during 2004
of 10 nursing facilities (with a total of 1,304 beds) located in Arkansas
(as well as an assisted living facility) to Perennial Healthcare Management
LLC of Maryland. According to Beverly's public statements, Beverly effected
this sale in order to reduce its patient-care liability costs.
15. One of the nursing facilities sold by Beverly was the Saline
County Nursing Center in which, according to the Arkansas Advocates for
Nursing Home Residents, state investigators found 13 deficiencies in 2003.
According to an article published by the Arkansas News Bureau, Nancy
Allison of the Arkansas Advocates for Nursing Home Residents and Arkansas
State Rep. Stephen Bright, R-Maumelle, both said during a news conference
at the time the sale was announced that, under Beverly's management, Saline
Nursing Center had a spotty record of resident care over the years and that
Beverly should be held accountable. Indeed, Bright is reported to have
said: "This horrible example of shifting blame [for selling the facilities
by blaming insurance costs] is inexcusable and falls squarely on the
shoulders of [Beverly's] corporate bosses in Fort Smith - not on the
government, not on taxpayers and certainly not on those injured by abuse or
neglect."
16. Beverly has experienced other significant legal and regulatory
problems under its current management. It has publicly disclosed that it
settled allegations by the federal government of overbilling for $170
million, and that it entered a Corporate Integrity Agreement subjecting it
to various audit and compliance requirements beyond those otherwise
required by law. Beverly has also disclosed that it is the subject of an
ongoing investigation by state and federal authorities in California for
overbilling, for which it has reserved $18 million for a potential
settlement. Nor are current management's legal problems limited to
overbilling: in 2002, Beverly's California subsidiary entered nolo
contendere pleas to two felony charges of Elder Abuse, and agreed to pay
the California authorities over $2.5 million in connection with those
pleas.
BEVERLY'S INCUMBENT BOARD REFUSES TO NEGOTIATE AND THE PROXY CONTEST BEGINS
---------------------------------------------------------------------------
17. In December 2004, Mr. Whitman contacted Beverly's CEO William
Floyd and made an offer to purchase 100% of Beverly's outstanding stock at
$11.50 per share, a roughly 30% premium over its market price at the time,
on behalf of Formation, Appaloosa Management L.P. and Franklin Mutual
Advisers, LLC (the "Consortium"). The Consortium indicated it was willing
to consider offering a higher price if it were permitted to conduct due
diligence which might reveal additional value in Beverly and might also be
willing to consider various alternative transaction structures.
18. Beverly refused to engage in any meaningful discussion with the
Consortium. Instead, as further detailed in the Definitive Proxy Statement
filed by Mr. Whitman (see Exhibit B):
A. Beverly, on January 21, 2005, accelerated the date of its annual
meeting from May 19, 2005 to April 21, 2005, meaning candidates
for the board had to be nominated (and any proposals for
consideration by the shareholders made) by February 5, 2005
(rather than March 6, 2005) so that, as Mr. Floyd was quoted as
saying in the Northwest Arkansas Democrat-Gazette, Beverly could
"short-circuit[] the Formation Capital financial group . . . If
they wanted to put their directors up for election . . . it would
eliminate some of the time they would have to prepare";
B. Beverly, on January 25, 2005, adopted a so-called "poison pill,"
making it effectively impossible for Beverly's shareholders to
accept the Consortium's premium all-cash offer for their stock
without the approval of Beverly's board of directors and/or
judicial intervention.
C. Beverly, on February 3, 2005, only two days before the deadline
for nominating new directors, summarily rejected the Consortium's
proposals, without having engaged in any negotiation or permitted
the Consortium to conduct any due diligence.
19. On February 4, 2005, in order to provide Beverly's shareholders
with a real choice about the future direction of the company, Mr. Whitman
nominated a slate of independent directors and announced that he and the
Consortium would solicit proxies to support their election to Beverly's
board.
THE BEVERLY ACT IS FLAWED
-------------------------
20. On March 4, 2005, Beverly -- knowing that Mr. Whitman had
nominated a slate of independent directors committed to fulfilling their
fiduciary duties to public shareholders -- engaged in a massive lobbying
campaign to have the Beverly Act first introduced in the House of
Representatives as HB 2593, initially presented a "shell bill" containing
no substantive provisions. Due to Beverly's tremendous lobbying efforts, on
March 10, 2005, the bill was amended to include the objectionable
provisions and immediately approved favorably by the Arkansas House of
Representative's Public Health, Welfare and Labor Committee. The bill is
reportedly to be voted on by the full House on March 14, 2005.
The Beverly Act Grants Unique Protections to the Incumbent Board of Beverly
and to No Other Person or Entity
21. The Beverly Act purports to impose various burdensome
requirements, as detailed below, where there are potential changes in the
control of a "long-term care facility owner," as defined in section
20-10-2003(6) which meets certain additional criteria set forth in section
20-10-2004(a). Taking these two sections together, potential changes of
control will be subject to the Beverly Act only if the entity in question:
is (a) a company with shares traded in the national securities markets; (b)
was licensed to operate a minimum of 2,000 beds in Arkansas as of December
31, 2004; (c) had assets in excess of $1 billion as of December 31, 2004;
(d) maintained at least 70% of its total resident census in the United
States and over 70% of its Arkansas resident census as Medicaid-covered
residents, both as of December 31, 2004; and (e) employed in excess of
2,000 full-time employees in Arkansas, as of December 31, 2004.
22. Beverly is the only entity in existence that currently meets these
criteria. Moreover, it is the only entity that ever could meet these
criteria because four of them are conclusively determined as of December
31, 2004, which has already passed. This is no coincidence. The statute
has, and was intended to have, exactly the same effect as a statute that
expressly provided that it was applicable only to potential changes of
control of Beverly.
23. Moreover, Beverly's board has the unilateral power to decide that
the Beverly Act should not apply to it at all. Beverly's incumbent
directors are expressly allowed to waive the requirements imposed by the
Beverly Act if they were to unanimously choose to do so. ss. 20-10-2005(b).
The Beverly Act Does Not Protect Patients In Arkansas Long-Term Care
Facilities
24. For decades, long-term care facilities in Arkansas have been
subject to myriad federal and state regulatory requirements whose purpose
is to protect the health, safety and well-being of residents of such
facilities. Even though nothing before the Legislature suggests in anyway
that this existing regulatory scheme was not effective, the Beverly Act
purports to be intended to protect patients in Arkansas long-term care
facilities. It does not do so.
25. The Beverly Act does not even apply to more than 90% of the
long-term care facilities in Arkansas that are not owned by Beverly. Nor
does it necessarily even apply to the facilities owned by Beverly. A
unanimous vote of Beverly's board of a potential change of control of
Beverly would exempt a transaction from scrutiny by the Director of DHS.
And, the Beverly Act would not apply to any sale by Beverly of one or more
(or even all) of its long-term care facilities in the State (such as its
sale last summer of ten facilities to an undisclosed buyer). Under these
circumstances, the Beverly Act's claim that it is for the "protection of
the health, safety, and well-being of residents . . . in long-term care
facilities and to promote, assure, and maintain the continuity of the
health, safety, and well-being of the citizens of the State of Arkansas" is
wholly pretextual.
The Beverly Act Imposes Unique Burdens and Penalties
26. The Beverly Act also requires that, at the time of the Beverly
Act's enactment, any person who was engaged in conduct that would have
required approval from the Director of DHS had it been commenced after the
statute's enactment to discontinue such conduct. Beverly Act ss.
20-10-2004. The only persons arguably carrying out any such activity with
respect to Beverly (the only entity protected by the statute) are
Plaintiffs and the other Consortium members. They are thus uniquely singled
out by the statute and effectively punished for having failed to comply in
advance with a statute that had not yet been enacted and, indeed, had not
even been introduced at the time they commenced the activity which might
arguably be covered by the statute. By contrast, any other person
considering a potential change of control of Beverly would at least be on
notice of the Beverly Act and its provisions when deciding whether to
pursue such a transaction.
The Beverly Act Imposes Significant Barriers and Unreasonable Delay on Any
Proposal Involving Beverly
27. Any person wishing to pursue a change of control (as defined in
the Beverly Act) of Beverly must first notify the Director of DHS as well
as Beverly of that intention, and provide detailed written information to
them. The Director of DHS is then required to hold a public hearing (a
requirement waivable only in his own sole discretion or that of his
designee) and render a written decision as to whether the proposed change
of control should be allowed to proceed, evaluating both the proposed
acquirer and the substantive terms of the proposed transaction. Beverly is
allowed to participate in the hearing, and to appeal a decision permitting
the proposed change of control to proceed, with the party who wishes to
pursue the change of control precluded from doing so until all appeals have
been exhausted.
28. The Director of DHS is not required to hold the hearing or render
his decision within any specified time period.
FIRST CAUSE OF ACTION
(VIOLATION OF COMMERCE CLAUSE)
------------------------------
29. Plaintiffs repeat the allegations of paragraphs 1 through 28 above
as if fully set forth herein.
30. Article I, section 8 of the United States Constitution grants
Congress the authority to regulate commerce among the several states and
bars the states from imposing undue burdens on interstate commerce (the
"Commerce Clause"). The Beverly Act violates the Commerce Clause.
31. The Act both facially against interstate commerce. It does not
treat in-state and out-of-state entities equally.
32. The Beverly Act also unduly burdens interstate commerce by
allowing the Director of DHS to block a potential change of control
transaction involving a Delaware corporation that conducts more than 90% of
its business outside of Arkansas and whose shareholders predominantly
reside outside of Arkansas where such a transaction complies with all other
federal and state laws. No legitimate state interest is raised by the
Beverly Act that comes anywhere close to justifying the burden it imposes
on commerce.
33. The Beverly Act also illegitimately burdens interstate commerce
because it conflicts with the internal affairs doctrine, whereby only the
state of incorporation (subject to federal law) may regulate the relations
between a company's shareholders and its management. If Arkansas could
regulate Beverly's internal affairs in a way inconsistent with Delaware
law, so could any of the 22 other states where Beverly owns long-term care
facilities, leading to regulatory chaos that would make interstate commerce
impossible.
34. If enforced, the Beverly Act would cause irreparable injury to
Plaintiffs. Plaintiffs have no adequate remedy at law.
SECOND CAUSE OF ACTION
(VIOLATION OF SUPREMACY CLAUSE / WILLIAMS ACT AND EXCHANGE ACT PREEMPTION)
--------------------------------------------------------------------------
35. Plaintiffs repeat the allegations of paragraphs 1 through 34 above
as if fully set forth herein.
36. Article VI of the United States Constitution makes laws duly
enacted by Congress the supreme law of the land, notwithstanding any
contrary state laws. State laws are accordingly unconstitutional to the
extent they are preempted by valid federal statutes, including without
limitation the Williams Act (codified at 15 U.S.C. ss.ss. 78m(d) and
78n(d)) and section 14(a) of the Securities & Exchange Act of 1934
(codified at 15 U.S.C. ss. 78n(a)).
37. The Williams Act reflects the federal policy of providing a level
playing field between incumbent management and an outside bidder in
contests for corporate control, so that stockholders may make an
independent and informed decision with respect to any potential tender
offer. The Beverly Act is fatally inconsistent with that federal policy
(and thus unconstitutional) for at least four reasons:
a. it requires any outside bidder to notify the Director of DHS and
Beverly of the intent to propose a change of control transaction
in advance of actually making an offer to Beverly's shareholders,
giving the incumbent board and management an unfair ability to
respond to the potential offer before the bidder is free to make
it to the shareholders;
b. it allows Beverly's board to exempt any potential change in
control transaction which it approves from the hearing
requirements of the Beverly Act, giving the incumbent board and
management an unfair ability to influence the process;
c. it imposes a process for a public hearing and appeals therefrom
that has no fixed completion date;
d. it requires the Director of DHS to review the substantive terms
of the proposed transaction, rather than allowing the
shareholders to evaluate it.
38. To the extent the Beverly Act were interpreted to apply to the
Plaintiff's proxy solicitation, it would be preempted by section 14(a) of
the Exchange Act, which reflects policies similar to those of the Williams
Act in the context of proxy contests, and therefore unconstitutional by
virtue of the Supremacy Clause.
39. If enforced, the Beverly Act would cause irreparable injury to
Plaintiffs.
THIRD CAUSE OF ACTION
(DENIAL OF THE EQUAL PROTECTION OF THE LAWS)
--------------------------------------------
40. Plaintiffs repeat the allegations of paragraphs 1 through 39 above
as if fully set forth herein.
41. The Fourteenth Amendment to the United States Constitution bars
Arkansas from denying any person within its jurisdiction the equal
protection of the laws.
42. The Beverly Act invidiously discriminates against parties
interested in acquiring "control" (as defined therein) of Beverly without
the unanimous consent of Beverly's directors by subjecting them to
burdensome and time-consuming requirements not applicable to parties
interested in acquiring such control of any other entity, including any
other entity which now or in the future owns or controls long-term care
facilities in the Arkansas, and likewise inapplicable to a party acquiring
control of Beverly with the approval of its board or acquiring control of
specific individual long-term care facilities in Arkansas from Beverly.
Since any or all other such potential change of control transactions would
pose identical potential risks to the residents of other long-term care
facilities, the Beverly Act is not rationally related to advancing the
purported goal of the statute.
43. Accordingly, the Beverly Act denies Plaintiffs the equal
protection of the laws.
44. If enforced, the Beverly Act would cause irreparable injury to
Plaintiffs.
FOURTH CAUSE OF ACTION
(BILL OF ATTAINDER)
-------------------
45. Plaintiffs repeat the allegations of paragraphs 1 through 44 above
as if fully set forth herein.
46. Article I, section 10 of the United States Constitution bars
Arkansas from enacting any bill of attainder.
47. The Beverly Act singles out named or described persons or groups,
namely potential acquirers of Beverly, as well as the even more specific
group of Mr. Whitman and the Consortium (the only persons to whom the
restrictions of section 20-10-2004(b) could potentially be applied). The
Beverly Act inflicts on that uniquely identified group a deprivation of
rights which is punitive in nature without a judicial trial and, in terms
of the type and severity of the burdens imposed, cannot reasonably be said
to further any nonpunitive legislative purposes.
48. The Beverly Act is accordingly an unconstitutional bill of
attainder.
49. If enforced, the Beverly Act would cause irreparable injury to
Plaintiffs.
FIFTH CAUSE OF ACTION
(VIOLATION OF ARKANSAS CONSTITUTION)
------------------------------------
50. Plaintiffs repeat the allegations of paragraphs 1 through 49 above
as if fully set forth herein.
51. For the reasons already set forth, the Beverly Act violates the
Arkansas Constitution's prohibition against bills of attainder and against
statutes which infringe the right to equality before the laws.
52. The Beverly Act is also a special bill which violates the
applicable provisions of article V, sections 25 and 26, of the Arkansas
Constitution.
53. If enforced, the Beverly Act would cause irreparable injury to
Plaintiffs.
WHEREFORE, Plaintiffs demand judgment against Defendant as follows:
A. Declaring and adjudging that the Beverly Act is unconstitutional
under the United States Constitution and preliminarily and permanently
enjoining defendant Director of DHS, his successors, agents, servants,
employees, attorneys, and all persons acting in concert or participation
with them from taking any actions to enforce the Beverly Act.
B. Declaring and adjudging that the Beverly Act violates the Arkansas
Constitution and preliminarily and permanently enjoining defendant Director
of DHS, his successors, agents, servants, employees, attorneys, and all
persons acting in concert or participation with them from taking any
actions to enforce the Beverly Act.
C. Awarding such other and further relief as the Court deems just and
proper.
Dated: March 14, 2005
Respectfully submitted,
Wilson, Engstrom, Corum & Coulter
Attorneys for Plaintiffs Formation
Capital, LLC and Arnold M. Whitman
200 South Commerce, Suite 600,
Post Office Box 71
Little Rock, Arkansas 72203
(501) 375-6453
By: /s/ Nate Coulter
--------------------------
Nate Coulter
Arkansas Bar No. 85034
OF COUNSEL:
(motions for admission pro hac vice to be submitted)
Stephanie J. Goldstein
Gregg L. Weiner
John W. Brewer
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
(212) 859-8000
EXHIBIT A TO COMPLAINT
----------------------
State of Arkansas As Engrossed: H3/11/05
85th General Assembly A Bill
Regular Session, 2005 HOUSE BILL 2593
By: Representatives Verkamp, Abernathy, Berry, Blair, Bradford, Bright,
Clemons, Davis, Dobbins, Dunn, Everett, Glidewell, Hardy, J. Hutchinson, J.
Johnson, Key, Kidd, Mack, Matayo, McDaniel, Medley, Pyle, Ragland, Roebuck,
Rogers, Scroggin, Walters, WillisBy: Senators Wilkinson, Altes, Baker,
Bisbee, J. Bookout, Broadway, Brown, Bryles, Capps, Critcher, Faris,
Glover, Hendren, Higginbothom, Hill, Holt, Horn, G. Jeffress, J. Jeffress,
B. Johnson, Laverty, Luker, Madison, Malone, Miller, Salmon, T. Smith,
Steele, J. Taylor, Trusty, Whitaker, Womack, Wooldridge
FOR AN ACT TO BE ENTITLED
AN ACT CONCERNING THE PROTECTION OF THE HEALTH AND
WELLBEING OF RESIDENTS IN LONG TERM CARE
FACILITIES; AND FOR OTHER PURPOSES.
SUBTITLE
LONG TERM CARE RESIDENT PROTECTION ACT
OF 2005.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
SECTION 1. Arkansas Code Title 20, Chapter 10, is amended to add an
additional subchapter to read as follows:
20-10-2001. Title.
This act is known and may be cited as the "Long-Term Care Resident
Protection Act of 2005".
20-10-2002. Purpose.
The purpose of this subchapter is to provide for the protection of the
health, safety, and well-being of residents, including residents who are
Medicaid recipients, in long-term care facilities and to promote, assure,
and maintain the continuity of the health, safety, and well-being of the
citizens of the State of Arkansas by:
(1) Requiring disclosure of pertinent information relating to
changes in control of a long-term care facility;
(2) Providing standards governing review of any proposed change
in control of a long-term care facility by the Director of the Department of
Human Services or the director's designee; and
(3) Requiring the written approval of the director or the
director's designee prior to a change of control of certain long-term care
facility owners.
20-10-2003. Definitions.
As used in this subchapter:
(1) "Acquiring party" means a person by whom or on whose behalf
a merger or other acquisition of control of a long-term care facility owner
is to be effected;
(2) "Affiliate" or "person affiliated with" means any person,
who, directly or indirectly, through one (1) or more intermediaries,
controls, is controlled by, or is under common control with a specified
person;
(3) "Beneficial owner" or "beneficial ownership" means any
person, who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, has or shares:
(A) Voting power that includes the power to vote, or to
direct the voting of, a voting security; or
(B) Investment power that includes the power to dispose, or
to direct the disposition of, a voting security;
(4)(A) "Control", "controlling", "controlled by", or "under
common control with" means the direct or indirect possession of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by control, or
otherwise, unless the power is the result of an official position with or
corporate office held by the person.
(B)(i) "Control" shall be presumed to exist if any person
together with all affiliates, directly or indirectly, beneficially owns,
controls, holds with the power to vote, or holds proxies representing ten
percent (10%) or more of the voting securities of any other person.
(ii) After furnishing all persons in interest with
notice and opportunity to be heard, the Director of the Department of Human
Services or the director's designee may determine that control exists in
fact, notwithstanding the absence of a presumption to that effect;
(5) "Long-term care facility" means a nursing home, residential
care facility, or any other facility located within the State of Arkansas
that provides long-term medical or personal care;
(6) "Long-term care facility owner" means a person who directly
or indirectly owns or controls more than one (1) long-term care facility and
that:
(A) Is a company whose shares are traded in the national
securities markets; and
(B) As of December 31, 2004, was licensed to operate a
minimum of two thousand (2,000) beds within the State of Arkansas;
(7) "Person" means an individual, corporation, limited liability
corporation, partnership, association, joint-stock company, business trust,
unincorporated organization, or any similar entity or any combination of the
foregoing acting in concert;
(8) "Resident" means an individual person residing in a
long-term care facility in the State of Arkansas; and
(9) "Voting security" means any security convertible into or
evidencing a right to acquire a voting security.
20-10-2004. Applicability.
(a) This subchapter applies only to the change of control of a
long-term care facility owner that as of December 31, 2004:
(1) Had assets in excess of one billion dollars ($1,000,000,000);
(2) Maintained at least seventy percent (70%) of its total
resident census in the United States and greater than seventy percent (70%)
of its Arkansas resident census as Medicaid-covered residents; and
(3) Employed in excess of two thousand (2,000) full-time
employees in the State of Arkansas.
(b) If, as of the effective date of this subchapter, any person has
initiated any activity that would have required a filing under this
subchapter if the subchapter was in effect when the activity began, the
person is prohibited from proceeding further without complying with all the
provisions of this subchapter as though the subchapter was in effect at the
time the activity began.
20-10-2005. Control of long-term care facility owner - Filing
requirements.
(a) No person shall enter into or attempt to consummate an agreement
to merge with or otherwise to acquire control of a long-term care facility
owner unless, at the time any offer, request, or invitation is made or any
agreement is entered into, and prior to the acquisition of any voting
securities involved, the person has:
(1) Filed with the Director of the Department of Human Services
or the director's designee and has sent to the long-term care facility owner
a statement containing the information required by ss. 20-10-2006; and
(2) The offer, request, invitation, agreement, or acquisition
has been approved by the director or the director's designee in the manner
prescribed in ss. 20-10-2007.
(b) The provisions of this subchapter shall not apply if, prior to the
change of control described under subsection (a) of this section, the board
of directors of the long-term care facility owner files with the director a
written statement signed by all members of the board of directors
representing that the criteria prescribed in ss. 20-10-2007(c)(1) - (7) have
been considered in connection with the proposed change of control.
20-10-2006. Control of long-term care facility owner - Content of
statement.
(a) The statement to be filed with the Director of the Department of
Human Services or the director's designee under this section shall be made
under oath or affirmation and shall contain the following information for
each acquiring party:
(1)(A) The name and address of the acquiring party.
(B) If the acquiring party is an individual, the statement
shall contain information regarding his or her principal occupation and all
offices and positions held during the past five (5) years and any conviction
of crimes other than minor traffic violations during the past ten (10) years.
(C) If the acquiring party is not an individual, the
statement shall contain:
(i) A report of the nature of the acquiring party's
business operations during the past five (5) years or for such lesser period
as the acquiring party and any predecessors of the acquiring party have been
in existence;
(ii) An informative description of the business
intended to be conducted by the acquiring party and the acquiring party's
subsidiaries; and
(iii)(a) A list of all individuals who are or who have
been selected to become directors or executive officers of the acquiring
party, or who perform or will perform functions appropriate to the positions.
(b) The list prepared under subdivision
(a)(1)(C)(iii)(a) of this section shall include for each individual the
information required by subdivision (a)(1)(B) of this section;
(2)(A) The source, nature, and amount of the consideration used
or to be used in effecting the merger or other acquisition of control, a
description of any transaction wherein funds were or are to be obtained for
the merger or other acquisition of control, and the identity of persons
furnishing the consideration.
(B) When a source of the consideration is a loan made in
the lender's ordinary course of business, the identity of the lender shall
remain confidential if the person filing the statement so requests;
(3) Fully audited financial information as to the earnings and
financial condition of each acquiring party for the preceding five (5)
fiscal years of each acquiring party, or for such lesser period as the
acquiring party and any predecessors of the acquiring party have been in
existence, and similar unaudited information as of a date not earlier than
ninety (90) days prior to the filing of the statement;
(4)(A) A statement describing any plans or proposals that each
acquiring party may have to liquidate the long-term care facility owner, to
sell its assets or merge or consolidate the long-term care facility owner
with any person, or to make any other material change in the long-term care
facility owner's business or corporate structure or management.
(B) The statement shall include information necessary to
determine whether:
(i) Following the change of control, the long-term
care facility will continue to be able to meet the long-term care needs of
the locale or area;
(ii) The long-term care facility can be adequately
staffed and operated when the change of control is completed;
(iii) The proposed operation of the long-term care
facility following the change of control is economically feasible;
(iv) Following the change of control, the acquiring
party can be expected to provide a substantially consistent high level of
care at the long-term care facility based on:
(a) The acquiring party's past history;
(b) Whether the acquiring party intends to
effectuate any change in the board of directors of the long-term care
facility owner;
(c) Whether the acquiring party intends to
terminate, lay off, or otherwise discharge, during the twenty-four-month
period immediately following the acquisition, in excess of fifteen percent
(15%) of the employees of the long-term care facility owner as of the date
of the acquisition;
(d) Whether the acquiring party has terminated
general liability insurance or professional liability insurance, or both,
covering any long-term care facility that the acquiring party has previously
acquired and, if more than one (1) long-term care facility was previously
acquired, which long-term care facilities had general liability insurance or
professional liability insurance coverage in effect at the time of the
acquisition; and
(e) The assessment of the director or the
director's designee regarding the acquiring party's character and competence
to operate the long-term care facility, which shall include a review of the
acquiring party's experience, past performance in operating a long-term care
facility, if any, and compliance with applicable laws and practices
pertinent to the acquiring party's professional experience; and
(v) Following change of control, the acquiring party
shall obtain and maintain general liability insurance coverage and
professional liability insurance coverage in an amount not less than that
maintained by the current long-term care facility owner at the time the
statement required by ss. 20-10-2005 is filed;
(5)(A) A full description of any contracts, arrangements, or
understandings with respect to any matter referred to in ss. 20-10-2005 in
which any acquiring party is involved, including, without limitation,
transfer of any of the voting securities, joint ventures, loans or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
guarantees of profits, division of losses or profits, or the giving or
withholding of proxies.
(B) The description shall identify the persons with whom
the contracts, arrangements, or understandings described under subdivision
(a)(5)(A) of this section have been entered;
(6) A description of the purchase of any voting security
referred to in ss. 20-10-2005 during the twelve (12) calendar months preceding
the filing of the statement by any acquiring party, including the dates of
purchase, names of the purchasers, and consideration paid or agreed to be
paid for the purchase;
(7) Copies of all tender offers for, requests or invitations for
tenders of, exchange offers for, and agreements to acquire or exchange any
voting securities referred to in ss. 20-10-2005 and, if distributed, any
additional soliciting material relating to any tender offers for, requests
or invitations for tenders of, exchange offers for, or agreements to acquire
or exchange any voting securities referred to in ss. 20-10-2005;
(8) The terms of any agreement, contract, or understanding made
with any broker-dealer or other person as to solicitation of voting
securities referred to in ss. 20-10-2005, and the amount of any fees,
commissions, or other compensation to be paid to broker-dealers or other
persons with regard to any agreement, contract, or understanding made with
any broker-dealer or other person as to solicitation of voting securities
referred to in ss. 20-10-2005; and
(9) Any additional information that the director or the
director's designee may request as necessary or appropriate for the
protection of residents of the long-term care facility or the best interests
of the public, or both.
(b) If any material change occurs in the facts set forth in the
statement filed with the director and sent to the long-term care facility
owner under ss. 20-10-2005, an amendment setting forth the change, together
with copies of all documents and other material relevant to the change,
shall be filed with the director and sent to the long-term care facility
owner within two (2) business days after the person learns of the change.
20-10-2007. Control of long-term care facility owner - Approval by
director.
(a) Prior to holding the public hearing described in subsection (b) of
this section, the Director of the Department of Human Services or the
director's designee may appoint a special master whose fees and other costs
shall be paid by the acquiring party and who shall perform the following
tasks on behalf of the director or the director's designee:
(1) Review quality of care provided to residents by the
long-term care facility owner as established by records of surveys conducted
by Office of Long-Term Care of the Division of Medical Services of the
Department of Human Services and any related enforcement actions over the
past five (5) years;
(2) Review the quality of care provided by the acquiring party
as evidenced by records of surveys by state survey agencies in any
jurisdiction and any related enforcement actions over the past five (5)
years; and
(3)(A) Prepare a written report based on the reviews performed
under subdivisions (a)(1) and (2) of this section regarding whether the
proposed merger or acquisition of control provides adequate protection for
the health, safety, and well-being of residents, including residents who are
Medicaid recipients, who may be affected by a proposed merger or acquisition
of control, and will promote, assure, and maintain the continuity of the
health, safety, and well being of the citizens of the State of Arkansas.
(B) The written report shall include specific findings of
fact and conclusions.
(b)(1)(A) The director or the director's designee shall hold a public
hearing on any merger or other acquisition of control described in ss.
20-10-2005 unless the public hearing is waived by the director or the
director's designee. The public hearing may be waived only at the sole
discretion of the director or the director's designee.
(B) The director or the director's designee shall give at
least twenty (20) days' notice of the hearing to the person filing the
statement, the long-term care facility owner, any person to whom notice of
hearing was sent, and any other person whose interests may be affected by
the proposed merger or acquisition of control.
(C) The acquiring party shall pay the costs of the public
hearing.
(2)(A) In connection with the public hearing, the person filing
the statement, the long-term care facility owner, any person to whom notice
of hearing was sent, and any other person whose interests may be affected by
the proposed merger or acquisition of control shall be entitled to conduct
discovery proceedings in the same manner as is presently allowed in the
courts of this state.
(B) All discovery proceedings shall be concluded not later
than three (3) days prior to the date scheduled for the commencement of the
public hearing.
(3) At the public hearing, the person filing the statement, the
long-term care facility owner, any person to whom notice of hearing was
sent, and any other person whose interests may be affected by the proposed
merger or acquisition of control shall have the right to present evidence,
examine and cross-examine witnesses, and offer oral and written arguments.
(4) The acquiring party or the long-term care facility owner may
appeal any final decision of the director under this subchapter in
accordance with the Arkansas Administrative Procedure Act, ss. 25-15-201 et
seq.
(5) The consummation of an agreement to merge or otherwise
acquire control of a long-term care facility owner shall be stayed until all
appeal rights under this section have been exhausted.
(c) After the conclusion of the public hearing and in order to approve
any merger or other acquisition of control described in ss. 20-10-2005, the
director must find that:
(1) After change of control, the long-term care facility owned
by the acquiring party would be able to continue to satisfy the requirements
for the issuance of the license it presently holds in this state;
(2) The financial condition of any acquiring party is not such
as might jeopardize the financial stability of the long-term care facility
owner or prejudice the interest of residents of the long-term care facility;
(3) The terms of the offer, request, invitation, agreement, or
acquisition described in ss. 20-10-2005 are fair and reasonable to the
residents of the long-term care facility;
(4) The plans or proposals which the acquiring party has to
liquidate the long-term care facility owner, sell its assets, or consolidate
or merge it with any person or to make any other material change in its
business or corporate structure or management are fair and reasonable to
residents and protect the public health, safety, and wellbeing of the
citizens of the State of Arkansas;
(5) The competence, experience, and integrity of those persons
who would control the operation of the long-term care facility owner and its
long-term care facilities are such that it would be in the best interest of
residents and of the public to permit the merger or other acquisition of
control;
(6) Following change of control, the acquiring party shall
obtain and maintain for as long as the acquiring party is in control general
liability insurance coverage and professional liability insurance coverage
in an amount not less than that maintained by the current long-term care
facility owner at the time the statement required by ss. 20-10-2005 is filed;
(7) The proposed merger or acquisition of control provides
adequate protection for the health, safety, and well-being of residents,
including residents who are Medicaid recipients, who may be affected by the
proposed merger or acquisition of control and will promote, assure and
maintain the continuity of the health, safety, and well-being of the
citizens of the State of Arkansas.
(d) The director or the director's designee shall not approve any
merger or other acquisition of control described in ss. 20-10-2005 unless he
or she makes the findings described in subsection (c) of this section.
20-10-2008. Control of long-term care facility owner - Jurisdiction of
courts - Service of process.
(a) The courts of this state are vested with jurisdiction over every
person not a resident, domiciled, or authorized to do business in this state
who files a statement with the Director of the Department of Human Services
or the director's designee under ss. 20-10-2005 and ss. 20-20-2006 and over all
actions involving that person arising out of violations of ss. 20-10-2005 -- ss.
20-20-2007.
(b)(1) Each person shall be deemed to have performed acts equivalent
to and constituting an appointment by the person of the Secretary of State
to be his or her true and lawful attorney upon whom may be served all lawful
process in any action, suit, or proceeding arising out of violations of ss.
20-10-2005 -- ss. 20-20-2007.
(2) Copies of all lawful process shall be served on the
Secretary of State and transmitted by registered or certified mail by the
Secretary of State to the person at the person's last known address.
20-10-2009. Control of long-term care facility owner -
Violations.
(a) The following shall be violations of ss. 20-10-2005 and ss.
20-20-2006:
(1) The failure to file any statement, amendment, or other
materials required to be filed under ss. 20-10-2005 and ss. 20-20-2006; or
(2) The effectuation or any attempt to effectuate an
acquisition of control of, or merger with, a long-term care facility owner
unless the director has given his or her approval under ss. ###-##-####.
(b) Nothing in this subchapter is intended to, and shall not,
create any private cause of action.
20-10-2010. Enforcement.
(a) If a long-term care facility owner or the Director of the
Department of Human Services or the director's designee has reason to
believe that any voting security of the long-term care facility owner has
been or is about to be acquired in contravention of this subchapter or that
any order has been or is about to be issued by the director or the
director's designee in contravention of this subchapter, the long-term care
facility owner or the director, as applicable, may apply to the Pulaski
County Circuit Court to enjoin any offer, request, invitation, agreement, or
acquisition made in contravention of this subchapter, or any related order
issued by the director or the director's designee, to enjoin the voting of
any voting security so acquired, to void any vote of a voting security
already cast at any meeting of shareholders, and for such other equitable
relief as the nature of the case and the interests of residents or the
public health, safety, and welfare may require.
(b) No lawsuit may be brought or maintained against the
Department of Human Services or any employee of the department in connection
with or related to the transfer of any long-term care facility.
20-10-2011. Reports.
At the time of any filing made under ss. 20-10-2005, and every
thirty (30) days after each filing made under ss. 20-10-2005, the Director of
the Department of Human Services shall provide to the Governor and to the
Attorney General a written report summarizing the status of the pending
application.
SECTION 2.Emergency Clause.
It is found and determined by the General Assembly of the State
of Arkansas that the change in ownership of long-term care facilities which
represent a significant number of long-term care Medicaid facility beds in
Arkansas should be subject to prior review and approval by the Director of
the Department of Human Services as it could directly affect the health,
safety, and welfare of long-term care facility residents and the public and
that no law of this state presently provides for such review and approval.
Therefore, an emergency is declared to exist and this act being immediately
necessary for the preservation of the public peace, health, and safety shall
become effective on:
(1) The date of its approval by the Governor;
(2) If the bill is neither approved nor vetoed by the
Governor, the expiration of the period of time during which the Governor may
veto the bill; or
(3) If the bill is vetoed by the Governor and the veto is
overridden, the date the last house overrides the veto.
/s/ Verkamp, et al
EXHIBIT B TO COMPLAINT
----------------------