-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FXT+iXq2Ncu3gkb8iSaeZ1cYLlRGdAu7LNNlVKXuBuXoWg1BOVJUpzxQd7llfIw/ P8NOEhzvLJWQgRP1F8d3TQ== 0000950129-95-001330.txt : 19951019 0000950129-95-001330.hdr.sgml : 19951019 ACCESSION NUMBER: 0000950129-95-001330 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19951017 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FORUM RETIREMENT PARTNERS L P CENTRAL INDEX KEY: 0000804752 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SOCIAL SERVICES [8300] IRS NUMBER: 351686799 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-41402 FILM NUMBER: 95581319 BUSINESS ADDRESS: STREET 1: 8900 KEYSTONE CROSSING STE 200 STREET 2: PO BOX 40498 CITY: INDIANAPOLIS STATE: IN ZIP: 46240 BUSINESS PHONE: 3178460700 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FORUM GROUP INC CENTRAL INDEX KEY: 0000033939 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SOCIAL SERVICES [8300] IRS NUMBER: 610703072 STATE OF INCORPORATION: IN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 8900 KEYSTONE CROSSING STE 200 STREET 2: P O BOX 40498 CITY: INDIANAPOLIS STATE: IN ZIP: 46240-0498 BUSINESS PHONE: 3178460700 MAIL ADDRESS: STREET 1: 8900 KEYSTONE CROSSING STE 200 STREET 2: PO BOX 40498 CITY: INDIANAPOLIS STATE: IN ZIP: 46240-0498 FORMER COMPANY: FORMER CONFORMED NAME: EXCEPTICON INC DATE OF NAME CHANGE: 19810909 FORMER COMPANY: FORMER CONFORMED NAME: GUARDIAN CARE CORP DATE OF NAME CHANGE: 19720615 SC 14D9/A 1 FORUM RETIREMENT PARTNERS, L.P. - AMEND #1 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO. 1 TO SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d) of the Securities Exchange Act of 1934 --------------- FORUM RETIREMENT PARTNERS, L.P. (Name of Subject Company) FORUM RETIREMENT, INC. FORUM RETIREMENT PARTNERS, L.P. (Name of Persons Filing Statement) PREFERRED DEPOSITARY UNITS REPRESENTING PREFERRED LIMITED PARTNERS' INTERESTS (Title of Class of Securities) 349 851 105 (CUSIP Number of Class of Securities) RICHARD A. HUBER SECRETARY FORUM RETIREMENT, INC. 11320 RANDOM HILLS ROAD SUITE 400 FAIRFAX, VIRGINIA 22030 (703) 277-7000 (Name, address and telephone number of person authorized to receive notice and communications on behalf of person filing statement) With a copy to: Jeffery B. Floyd, Esq. Vinson & Elkins L.L.P. 1001 Fannin, Suite 2300 Houston, Texas 77002 (713) 758-2222 2 AMENDMENT NO. 1 TO SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 This Amendment No. 1 to Solicitation/Recommendation Statement on Schedule 14D-9 (this "Amendment") is an amendment of the Solicitation/Recommendation Statement on Schedule 14D-9 filed October 16, 1995 (the "Schedule 14D-9), by Forum Retirement Partners, L.P., a Delaware limited partnership (the "Partnership"), and Forum Retirement, Inc., the sole general partner of the Partnership and a Delaware corporation (the "General Partner"), relating to the tender offer made by Forum Group, Inc., an Indiana corporation ("Forum Group"), to purchase any and all of the issued and outstanding Units not beneficially owned by it. All capitalized terms used in this Amendment and not defined herein have the meanings set forth in the Schedule 14D-9. Certain portions of Exhibit 19 previously filed with the Commission were inadvertently omitted. A complete copy of such exhibit is filed herewith. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. 1. - Offer to Purchase (incorporated by reference to Exhibit (a)(1) to Forum Group's Schedule 14D-1 dated October 2, 1995). 2. - Supplement to Offer to Purchase (incorporated by reference to Exhibit (a)(9) to Forum Group's Amendment No. 1 to Schedule 14D-1 dated October 16, 1995). 3. - Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to Forum Group's Schedule 14D-1 dated October 2, 1995). 4. - Letter to Unitholders dated October 16, 1995. 5. - Press release dated October 16, 1995 (incorporated by reference to Exhibit (a)(10) to Forum Group's Amendment No. 1 to Schedule 14D-1 dated October 16, 1995). 6. - Fairness opinion of Robert A. Innamorati & Co. dated October 13, 1995 (attached as Annex A hereto). 7. - Form of Indemnification Agreement between Forum Group and the directors and officers of the General Partner. 8. - Form of Indemnification Agreement between Forum Retirement, Inc .and its directors. 9. - Amended and Restated Agreement of Limited Partnership, dated as of December 29, 1986, of the Partnership, as amended (incorporated by reference to Exhibit 4(1) to the Partnership's Registration Statement on Form S-2 (Registration No. 33-71498), dated November 10, 1993 (the "Form S-2")). 10. - Depositary Agreement, dated as of December 29, 1986, by and among the Partnership, Forum Retirement, Inc., the general partner of the Partnership, as general partner and attorney-in-fact of the limited partners, Manufacturers Hanover Trust Company (which subsequently assigned its interests thereunder to American Stock Transfer & Trust Company) and all holders from time to time of depositary receipts (incorporated by reference to Exhibit 10(6) to the Form S-2). -2- 3 11. - Recapitalization Agreement, dated as of October 6, 1994, by and between Forum Group and the Partnership (incorporated by reference to Exhibit 10(1) to the Partnership's Current Report on Form 8-K dated October 12, 1993). 12. - Letter Agreement, dated December 14, 1993, by and among Forum Group, Forum A/H, Inc. and the Partnership (incorporated by reference to Exhibit 2(3) of Amendment No. 1 to the Form S-2, dated December 21, 1993). 13. - Management Agreement, dated as of December 29, 1986 (the "Management Agreement"), by and among the Partnership, Forum Retirement Operations, L.P. ("Operations"), Forum Health Partners 1-A, L.P., Foulk Manor Painters, L.P., and Forum Group (incorporated by reference to Exhibit 10(1) to the Form S-2). 14. - First Amendment to the Management Agreement, dated as of September 20, 1986 (incorporated by reference to Exhibit 10(2) to the Form S-2). 15. - Second Amendment to the Management Agreement, dated as of September 20, 1989 (incorporated by reference to Exhibit 10(3) to the Form S-2). 16. - Third Amendment to the Management Agreement, dated as of May 27, 1992 (incorporated by reference to Exhibit 10(4) to the Form S-2). 17. - Fourth Amendment to the Management Agreement, dated as of November 9, 1993 (incorporated by reference to Exhibit 10(5) to the Form S-2). 18. - Option Agreement, dated as of December 29, 1986, by and among Forum Group, Inc., the Partnership, and Operations (incorporated by reference to Exhibit 2(1) to the Form S-2). * 19. - Presentation to the Special Committee of the Board of Directors of the General Partner of the Partnership delivered by Robert A. Innamorati & Co. on October 13, 1995. - ------------------ * Filed herewith -3- 4 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 17, 1995 FORUM RETIREMENT PARTNERS, L.P. By: Forum Retirement, Inc. its General Partner By: /s/ Richard A. Huber ------------------------------ Richard A. Huber Secretary FORUM RETIREMENT, INC. By: /s/ Richard A. Huber ------------------------------ Richard A. Huber Secretary -4- 5 EXHIBIT INDEX 1. - Offer to Purchase (incorporated by reference to Exhibit (a)(1) to Forum Group's Schedule 14D-1 dated October 2, 1995). 2. - Supplement to Offer to Purchase (incorporated by reference to Exhibit (a)(9) to Forum Group's Amendment No. 1 to Schedule 14D-1 dated October 16, 1995). 3. - Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to Forum Group's Schedule 14D-1 dated October 2, 1995). 4. - Letter to Unitholders dated October 16, 1995. 5. - Press release dated October 16, 1995 (incorporated by reference to Exhibit (a)(10) to Forum Group's Amendment No. 1 to Schedule 14D-1 dated October 16, 1995). 6. - Fairness opinion of Robert A. Innamorati & Co. dated October 13, 1995 (attached as Annex A hereto). 7. - Form of Indemnification Agreement between Forum Group and the directors and officers of the General Partner. 8. - Form of Indemnification Agreement between Forum Retirement, Inc .and its directors. 9. - Amended and Restated Agreement of Limited Partnership, dated as of December 29, 1986, of the Partnership, as amended (incorporated by reference to Exhibit 4(1) to the Partnership's Registration Statement on Form S-2 (Registration No. 33-71498), dated November 10, 1993 (the "Form S-2")). 10. - Depositary Agreement, dated as of December 29, 1986, by and among the Partnership, Forum Retirement, Inc., the general partner of the Partnership, as general partner and attorney-in-fact of the limited partners, Manufacturers Hanover Trust Company (which subsequently assigned its interests thereunder to American Stock Transfer & Trust Company) and all holders from time to time of depositary receipts (incorporated by reference to Exhibit 10(6) to the Form S-2). 6 11. - Recapitalization Agreement, dated as of October 6, 1994, by and between Forum Group and the Partnership (incorporated by reference to Exhibit 10(1) to the Partnership's Current Report on Form 8-K dated October 12, 1993). 12. - Letter Agreement, dated December 14, 1993, by and among Forum Group, Forum A/H, Inc. and the Partnership (incorporated by reference to Exhibit 2(3) of Amendment No. 1 to the Form S-2, dated December 21, 1993). 13. - Management Agreement, dated as of December 29, 1986 (the "Management Agreement"), by and among the Partnership, Forum Retirement Operations, L.P. ("Operations"), Forum Health Partners 1-A, L.P., Foulk Manor Painters, L.P., and Forum Group (incorporated by reference to Exhibit 10(1) to the Form S-2). 14. - First Amendment to the Management Agreement, dated as of September 20, 1986 (incorporated by reference to Exhibit 10(2) to the Form S-2). 15. - Second Amendment to the Management Agreement, dated as of September 20, 1989 (incorporated by reference to Exhibit 10(3) to the Form S-2). 16. - Third Amendment to the Management Agreement, dated as of May 27, 1992 (incorporated by reference to Exhibit 10(4) to the Form S-2). 17. - Fourth Amendment to the Management Agreement, dated as of November 9, 1993 (incorporated by reference to Exhibit 10(5) to the Form S-2). 18. - Option Agreement, dated as of December 29, 1986, by and among Forum Group, Inc., the Partnership, and Operations (incorporated by reference to Exhibit 2(1) to the Form S-2). * 19. - Presentation to the Special Committee of the Board of Directors of the General Partner of the Partnership delivered by Robert A. Innamorati & Co. on October 13, 1995. - ------------------ * Filed herewith EX-19 2 PRESENTATION TO SPECIAL COMMITTEE 1 FORUM RETIREMENT PARTNERS, L.P. PRESENTATION TO THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS ROBERT A. INNAMORATI & CO. INVESTMENT & MERCHANT BANKERS OCTOBER 13, 1995 2 FORUM RETIREMENT PARTNERS, L.P. TABLE OF CONTENTS I. OVERVIEW OF ENGAGEMENT II. VALUATION METHODOLOGIES A. DISCOUNTED CASH FLOW ANALYSIS B. CAPITALIZATION OF NET OPERATING INCOME ANALYSIS C. ANALYSIS OF COMPARABLE PUBLICLY-TRADED COMPANIES D. ACQUISITION PREMIUM ANALYSIS III. ADDITIONAL INFORMATION A. PROPOSED ACQUISITION PRICE VS. HISTORIC TRADING PRICES ROBERT A. INNAMORATI & CO October 13,1995 3 FORUM RETIREMENT PARTNERS, L.P. OVERVIEW OF ENGAGEMENT - - ROBERT A. INNAMORATI & CO. ("RAI&Co") has been retained by the Special Committee of the Board of Directors of Forum Retirement, Inc. ("FRI") for the purpose of rendering a written opinion ("Opinion") as to the fairness, from a financial point of view, to the unit holders of Forum Retirement Partners, L.P. ("FRP") of the consideration to be received by such unit holders in the proposed acquisition by Forum Group, Inc. of units of limited partnership interest of FRP. - - In arriving at its Opinion, RAI&Co relied upon and assumed the accuracy of the following: - Financial and other information concerning the business, operations and prospects of FRP obtained by RAI&Co from FRP and its affiliates. - The terms of the Offer to Purchase as provided by FRP. - Publicly available information with respect to the securities outstanding. - Other information and data obtained by FRP from public sources. - - In arriving at its Opinion, RAI&Co has not done the following: - Made or obtained any independent evaluations or appraisals of the assets or liabilities of FRP. - Conducted any physical inspection of the properties and facilities of FRP. ROBERT A. INNAMORATI & CO. October 13, 1995 4 FORUM RETIREMENT PARTNERS, L.P. DISCOUNTED CASH FLOW ANALYSIS BASED ON MANAGEMENT'S 10 - YEAR PROJECTIONS
($'s in millions, except per unit and per room data) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Average Price Per Room $89 $92 $95 $98 $101 $104 $107 $110 $113 $117 Average Occupancy 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% Units in Place 1,617 1,617 1,617 1,617 1,617 1,617 1,617 1,617 1,617 1,617 Expansion Units 5 100 105 173 195 304 304 304 304 304 Total Revenues $49.1 $52.0 $55.1 $57.9 $60.8 $65.5 $68.7 $71.2 $73.3 $75.5 Net Operating Income $5.4 $5.3 $7.3 $7.5 $8.3 $11.9 $14.8 $15.4 $15.9 $16.4 Net Cash Flow Available For Distributions $0.0 $0.0 $1.5 $1.7 $2.5 $6.1 $9.0 $9.6 $10.1 $10.5 Percentage of Net Cash Flow Distributed 0.0% 0.0% 0.0% 0.0% 0.0% 61.2% 72.8% 73.9% 74.3% 74.8%
Partnership Value Assuming Capitalization Rate of 10% NOI Debt Cash in Terminal Year - ----------------------------------- --- ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $54.4 $3.56 $16.4 $35.4 $6.7 $127.2 NPV @ 15% $42.9 $2.80 NPV @ 18% $34.0 $2.23 NPV @ 20% $29.3 $1.91
Partnership Value Assuming Capitalization Rate of 11% NOI Debt Cash in Terminal Year - ----------------------------------- --- ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $49.3 $3.22 $16.4 $35.4 $6.7 $112.3 NPV @ 15% $38.9 $2.55 NPV @ 18% $30.9 $2.02 NPV @ 20% $26.6 $1.74
Partnership Value Assuming Capitalization Rate of 12% NOI Debt Cash in Terminal Year - ----------------------------------- --- ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $45.1 $2.95 $16.4 $35.4 $6.7 $99.9 NPV @ 15% $35.6 $2.33 NPV @ 18% $28.3 $1.85 NPV @ 20% $24.4 $1.60
Notes: (1) NPV = Net Present Value (2) Per unit calculation assumes 15,285,248 units outstanding (3) Projections were prepared by the General Partner ROBERT A. INNAMORATI & CO. October 13, 1995 5 FORUM RETIREMENT PARTNERS, L.P. DISCOUNTED CASH FLOW ANALYSIS BASED ON MANAGEMENT'S 7 - YEAR PROJECTIONS
($'s in millions, except per unit and per room data) 1995 1996 1997 1998 1999 2000 2001 ---- ---- ---- ---- ---- ---- ---- Average Price Per Room $89 $92 $95 $98 $101 $104 $107 Average Occupancy 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% Units in Place 1,617 1,617 1,617 1,617 1,617 1,617 1,617 Expansion Units 5 100 105 173 195 304 304 Total Revenues $49.1 $52.0 $55.1 $57.9 $60.8 $65.5 $68.7 Net Operating Income $5.4 $5.3 $7.3 $7.5 $8.3 $11.9 $14.8 Net Cash Flow Available For Distributions $0.0 $0.0 $1.5 $1.7 $2.5 $6.1 $9.0 Percentage of Net Cash Flow Distributed 0.0% 0.0% 0.0% 0.0% 0.0% 61.2% 72.8%
Partnership Value Assuming Capitalization Rate of 10% NOI Debt Cash in Terminal Year - ----------------------------------- --- ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $51.5 $3.37 $14.8 $41.2 $5.8 $103.4 NPV @ 15% $43.4 $2.84 NPV @ 18% $36.8 $2.41 NPV @ 20% $33.0 $2.16
Partnership Value Assuming Capitalization Rate of 11% NOI Debt Cash in Terminal Year - ----------------------------------- --- ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $45.1 $2.95 $14.8 $41.2 $5.8 $90.0 NPV @ 15% $38.0 $2.49 NPV @ 18% $32.2 $2.11 NPV @ 20% $28.9 $1.89
Partnership Value Assuming Capitalization Rate of 12% NOI Debt Cash in Terminal Year - ----------------------------------- --- ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $39.7 $2.60 $14.8 $41.2 $5.8 $78.7 NPV @ 15% $33.5 $2.19 NPV @ 18% $28.4 $1.85 NPV @ 20% $25.4 $1.66
Notes: (1) NPV = Net Present Value (2) Per unit calculation assumes 15,285,248 units outstanding (3) Projections were prepared by the General Partner ROBERT A. INNAMORATI & CO. October 13, 1995 6 FORUM RETIREMENT PARTNERS, L.P. DISCOUNTED CASH FLOW ANALYSIS BASED ON MANAGEMENT'S 5 - YEAR PROJECTIONS
($'s in millions, except per unit and per room data) 1995 1996 1997 1998 1999 ---- ---- ---- ---- ---- Average Price Per Room $89 $92 $95 $98 $101 Average Occupancy 94.0% 94.0% 94.0% 94.0% 94.0% Units in Place 1,617 1,617 1,617 1,617 1,617 Expansion Units 5 100 105 173 195 Total Revenues $49.1 $52.0 $55.1 $57.9 $60.8 Net Operating Income $5.4 $5.3 $7.3 $7.5 $8.3 Net Cash Flow Available For Distributions $0.0 $0.0 $1.5 $1.7 $2.5 Percentage of Net Cash Flow Distributed 0.0% 0.0% 0.0% 0.0% 0.0%
Partnership Value Assuming Capitalization Rate of 10% NOI(1) Debt Cash in Terminal Year - ----------------------------------- ------ ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $39.1 $2.55 $12.0 $44.2 $5.3 $65.0 NPV @ 15% $34.7 $2.27 NPV @ 18% $30.9 $2.02 NPV @ 20% $28.6 $1.87
Partnership Value Assuming Capitalization Rate of 11% NOI(1) Debt Cash in Terminal Year - ----------------------------------- ------ ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $32.5 $2.13 $12.0 $44.2 $5.3 $54.1 NPV @ 15% $28.9 $1.89 NPV @ 18% $25.7 $1.68 NPV @ 20% $23.8 $1.56
Partnership Value Assuming Capitalization Rate of 12% NOI(1) Debt Cash in Terminal Year - ----------------------------------- ------ ---- ---- ----------------- Value Per Unit ----------------- NPV @ 12% $27.1 $1.77 $12.0 $44.2 $5.3 $45.1 NPV @ 15% $24.0 $1.57 NPV @ 18% $21.4 $1.40 NPV @ 20% $19.8 $1.30
Notes: (1) NOI IN 1999 excludes the effect of capital expenditures (2) NPV = Net Present Value (3) Per unit calculation assumes 15,285,248 units outstanding (4) Projections were prepared by the General Partner ROBERT A. INNAMORATI & CO. October 13, 1995 7 FORUM RETIREMENT PARTNERS, L.P. CAPITALIZATION OF NET OPERATING INCOME ANALYSIS LAST 12 MONTHS ENDING JUNE 30, 1995 ($'S IN THOUSANDS, EXCEPT PER UNIT DATA) Net Operating Income (1): $7,574
CAPITALIZATION RATES --------------------------------------------------------------------- 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% --------------------------------------------------------------------- Hypothetical Enterp rise Value $94,675 $84,156 $75,740 $68,855 $63,117 $58,262 Minus LTD as of June 30, 1995 $49,482 $49,482 $49,482 $49,482 $49,482 $49,482 Plus Cash as of June 30, 1995 $6,273 $6,273 $6,273 $6,273 $6,273 $6,273 Hypothetical Equity Value $51,466 $40,947 $32,531 $25,646 $19,908 $15,053 - ------------------------------------------------------------------------------------------------------ Resulting Value Per Unit (2) $3.37 $2.68 $2.13 $1.68 $1.30 $0.98 - ------------------------------------------------------------------------------------------------------
(1) Based on FRP's performance for the 12 months ended June 30, 1995. Net operating income is defined as earnings before interest, taxes, depreciation and amortization, less ordinary annual capital expenditures of $1,000 per unit. (2) Based on 15,285,248 units outstanding. (3) LTD is long term debt including current maturities. ROBERT A. INNAMORATI & CO. October 13, 1995 8 FORUM RETIREMENT PARTNERS, L.P. CAPITALIZATION OF NET OPERATING INCOME ANALYSIS ESTIMATED 12 MONTHS ENDING DECEMBER 31, 1995 ($'S IN THOUSANDS, EXCEPT PER UNIT DATA) Net Operating Income (1): $7,884
CAPITALIZATION RATES ---------------------------------------------------------------- 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% ---------------------------------------------------------------- Hypothetical Enterprise Value $98,550 $87,600 $78,840 $71,673 $65,700 $60,646 Minus LTD as of 12/31/95 (2) $49,007 $49,007 $49,007 $49,007 $49,007 $49,007 Plus Cash as of 12/31/95 (3) $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 ------- ------- ------- ------- ------- ------- Hypothetical Equity Value $55,043 $44,093 $35,333 $28,166 $22,193 $17,139 ------- ------- ------- ------- ------- ------- - ------------------------------------------------------------------------------------------------- Resulting Value Per Unit (4) $3.60 $2.88 $2.31 $1.84 $1.45 $1.12 - -------------------------------------------------------------------------------------------------
(1) Based on FRP's estimated performance for the 12 months ended 12/31/95. Net operating income is defined as earnings before interest, taxes, depreciation and amortization, less ordinary annual capital expenditures of $1,000 per unit. (2) LTD is long term debt including current maturities. (3) Management of FRP verbally estimated cash balance between $5 and $6 million at 12/31/95. (4) Based on 15,285,248 units outstanding. ROBERT A. INNAMORATI & CO. October 13, 1995 9 FORUM RETIREMENT PARTNERS, L.P. ANALYSIS OF COMPARABLE PUBLICLY-TRADED COMPANIES COMPARABLE COMPANY DESCRIPTIONS RAI & Co has prepared a peer comparison of Forum Retirement Partners, L.P. ("FRP") which is enclosed herein. The peer comparison is essentially a comparison of FRP to other companies deemed comparable to FRP. The selection of the comparable companies and certain elements of the comparison model incorporate subjective elements. In addition, FRP values implied by the peer comparison are derived from public trading data which is subject to signigicant change over a short period of time, and do not represent a complete and thorough valuation of FRP. Therefore, the peer comparison should be viewed as a starting point in a valuation process subject to significant revision based on input from FRP and changing trends in the public markets. Comparable companies are used in this section of the analysis to generate multiples used in calculating the per unity value of Forum Retirement Partners, L.P. ("FRP"). The comparables were selected based on a SIC code search through the Disclosure SEC on-line database available through CompuServe in conjunction with comparable companies provided by Forum Group, Inc. and in analyst reports done by Dean Witter Reynolds Inc. and NatWest Securities. Companies falling under the three following SIC Codes were included in the search: 8051 (Skilled nursing care facilities) 8059 (Nursing, personal care facilities) 8052 (Intermediate care facilites) The following eleven companies were selected on one of either two bases: having operations most closely related to those of FRP, and/or the size of the company in relation to FRP. It should be noted that it was difficult to select publicly-traded companies that could be used to establish a close comparison to FRP. BEVERLY ENTERPRISES, INC. Fort Smith, Arkansas-based Beverly Enterprises is the largest nursing home chain in the U.S. The company has a national network of 774 facilities in 34 states and the District of Columbia. It also operates home health care agencies, pharmacies, and retirement homes. The company expects to be a major player in managed care. ADVOCAT INC. Operates nursing homes and retirement centers in southeast U.S. and Canada. It was formed in April 1994 to combine the term care business of Counsel Corp. (Canada), its affiliates and Diversicare Inc. (70% - owned by Counsel). ROBERT A. INNAMORATI & CO. October 13, 1995 10 FORUM RETIREMENT PARTNERS, L.P. ANALYSIS OF COMPARABLE PUBLICLY-TRADED COMPANIES COMPARABLE COMPANY DESCRIPTIONS GENESIS HEALTH VENTURES, INC. Genesis Health Ventures is one of the largest specialty geriatric care companies in the U.S. Although the majority of the company's sales are currently derived from residential care (nursing homes), its goal is to provide its elderly clients with an integrated continuum of care focused on allowing them to remain in their communities for as long as possible. To this end, Genesis provides a wide range of outpatient services (including contract physician services similar to HMOs), home care, and rehabilitation services as well as retirement communities for healthy and active elderly people. It also manages facilities owned by other companies and provides pharmacy and medical supply items. Genesis concentrates its efforts in specific areas on the East Coast: the Hartford/Springfield (Massachusetts) area; the Delaware Valley; Baltimore/Washington, DC; Southern Delaware/Eastern Maryland; central Florida; and North Carolina. It has a smaller presence in Indiana and the Pittsburgh area. THE MULTICARE COMPANIES, INC. Multicare operates 60 long-term care facilities with approximately 6,900 licensed beds in New Jersey, Connecticut, Pennsylvania, Ohio, Illinois, Vermont and Wisconsin. Its services include skilled nursing care, Alzheimer's care, rehabilitation therapies and subacute care. SUMMIT CARE CORPORATION Summit operates 21 nursing care centers in California and Texas, plus 4 retirement centers in California. It also operates a full service pharmacy. In September, 1994, the Company bought a nursing care center in Fort Worth, Texas, for $12 million. GERIATRIC & MEDICAL COMPANIES, INC. Formerly Geriatric & Medical Centers, this company owns and manages long term or intermediate care facilities in the Philadelphia area and south New Jersey. It also provides home care equipment and services, as well as ambulance services. GRANCARE, INC. This diversified health care company offers lower-cost care at its 81 nursing homes. It also provides home and hospice care, rehabilitative therapies, and laboratory and radiological services. In 1993, GranCare acquired CompuPharm, one of the nation's largest independent pharmaceutical services; the company's new CompuPharm division operates 23 institutional pharmacies serving hospitals, prisons, nursing homes, and community clinics. Medicare/Medicaid accounts for over 75% of GranCare's revenues. GranCare grew out of nursing home operator HostMasters, which was started by an investing group in 1988. ROBERT A. INNAMORATI & CO. October 13, 1995 11 FORUM RETIREMENT PARTNERS, L.P. ANALYSIS OF COMPARABLE PUBLICLY-TRADED COMPANIES COMPARABLE COMPANY DESCRIPTIONS COMMUNITY CARE OF AMERICA, INC. The Company is a health care provider that has operations in 7 states. As of July 1995, its facilities included 46 licensed long-term care facilities with 3,700 beds, one 22-bed rural hospital, one physician practice and two associated primary care clinics, one adult day care center, one child care center and one home health care agency. Its strategy is to develop and operate local health care delivery networks in medically under-served rural communities. RETIREMENT CARE ASSOCIATES, INC. Retirement Care operates retirement homes and nursing centers. SUN HEALTHCARE GROUP, INC. Sun Healthcare operates 122 long term care facilities, 119 nursing homes, 11 ambulatory surgery centers and 12 regional pharmacies. In addition, the Company also owns 27 nursing homes in U.K. FORUM GROUP, INC. Forum Group, Inc. provides senior housing and healthcare services in 12 states through the operation of 33 retirement communities. Each retirement community generally provides a continuum of care, including independent living, assisted living and skilled nursing. FORUM RETIREMENT PARTNERS, L.P. This limited partnership operates 9 retirement living centers for affluent elderly in Delaware, Texas, South Carolina, Florida and New Mexico. Its centers offer rental apartments, townhomes or living units providing meals, security, laundry, nursing and emergency health care. Source for all of the pervious company descriptions: Hoover's Company Database through CompuServe ROBERT A. INNAMORATI & CO. October 13, 1995 12 FORUM RETIREMENT PARTNERS, L.P. ANALYSIS OF COMPARABLE PUBLICLY-TRADED COMPANIES COMPARABLE VALUE SUMMARY ($'S IN MILLIONS, EXCEPT PER UNIT DATA)
Based on FRP's Based on FRP's Last 12 Month Based on FRP's Valuation Method 12/31/94 FYE Results Results Ended 6/30/95 12/31/95 FYE Forecast ---------------- -------------------- --------------------- --------------------- Applying Last 12 Months Operating Data of Comparables: Current Market Capitalization (1) $71.8 $72.1 $77.4 12 Month Average Market Capitalization (2) $73.3 $73.7 $79.0 Applying Annual Historical Operating Data of Comparables: Current Market Capitalization (1) $88.1 $88.5 $94.6 12 Month Average Market Capitalization (2) $91.6 $92.0 $98.4 ----- ----- ----- Average Enterprise Value (3) $81.2 $81.6 $87.3 ----- ----- ----- Value Per Unit Calculation: Less Long Term Debt of $48.5 million (as of 6/30/95) (4) $32.7 $33.1 $38.8 Plus Cash and Equivalents (as of 6/30/95) $39.0 $39.3 $45.1 - ---------------------------------------------------------------------------------------------------------------------- Partnership Equity Value per Unit (5) $2.55 $2.57 $2.95 - ----------------------------------------------------------------------------------------------------------------------
(1) Current Market Capitalization is defined as the current number of shares outstanding multiplied by the current market price per share. (2) The Twelve Month Average Market Capitalization is calculated by multiplying the average price for the period by the average shares outstanding for the period. Please note that the 12 Month Average Market Cap. for Community Care is really for a 2 month period, the period since it went public. (3) Enterprise Value is defined as market capitalization plus long term debt less cash and equivalents. (4) Long term debt excludes current maturities. (5) Assuming 15,285,248 partnership units outstanding. ROBERT A. INNAMORATI & CO. October 13, 1995 13 FORUM RETIREMENT PARTNERS, L.P. ANALYSIS OF COMPARABLE PUBLICLY-TRADED COMPANIES SUMMARY FINANCIAL DATA FOR FRP ($ IN MILLIONS)
For the For the For Fiscal Year Last Twelve Months Fiscal Year Ended 12/31/94 Ended 6/30/95 Ended 12/31/95E -------------- ------------- --------------- Net Revenues (1) $47.1 $48.9 $49.4 EBITDA (2) $9.2 $9.2 $9.5 $9.191 EBIT (3) $5.7 $5.7 $5.8 Net Income $0.3 $0.4 $1.4
(1) Other income in 12/31/95E assumed to be $240,000 (2) Earnings before interest, taxes, depreciation and amortization (3) Earnings before interest and taxes ROBERT A. INNAMORATI & CO. October 13, 1995 14 FORUM RETIREMENT PARTNERS, L.P. ACQUISITION PREMIUM ANALYSIS SUMMARY FINANCIAL INFORMATION RELATING TO SELECTED CASH TENDER OFFER TRANSACTIONS (1)
Target Company FRP Alpine Meadows of Tahoe Inc Providence Health Care Inc Acquirer FGI(2) Powdr Corp Multicare Cos Inc -------- ------ ---------- ----------------- Date Announced 09/25/95 01/21/94 02/01/94 Completed/Pending ("C" / "P") P C C Offer Price/Share (Unit) $2.83 $10.67 $7.50 Total Value (mil.) $16.6(3) $37.2 $27.7 Stock Premium: Prior Periods - ---------------------------- 1 Day (%) 41.5% 64.2% 122.2% 1 Week (%) 50.9% 64.2% 130.8% 4 Weeks (%) 41.5% 64.2% 130.8% Offer Price Per Share (Unit) $2.83 $10.67 $7.50 - ---------------------------- to Book Value 1.1 x 1.9 x 4.5 x to EPS 116.6 x 35.5 x - Stock Price 4 Weeks Prior $2.00 $6.50 $3.25 - ------------------------- to Book Value 0.8 x - 1.9 x to EPS 82.4 x 21.7 x - Total Equity Value (mil.) $39.0 $34.1 $31.8 - ------------------------- to Net Income 105.1 x 29.4 x - Long-Term Debt to Stockholder's Equity 1.3 x 0.9 x 4.2 x Total Liabilities to Stockholder's Equity 1.8 x 1.6 x 6.3 x Stockholders' Equity as a% of Total Assets 35.2% 37.9% 13.6% Total Enterprise Value (mil.) $76.7 $49.4 $55.7 - ------------------------------ to Sales 1.6 x 1.5 x 1.6 x to Cash Flow (EBITDA) 8.3 x - - to Operating Income 13.4 x 7.4 x -
- ------------------------------ (1) Data provided by Securities Data Company, Inc. Eighteen transactions were identified for the period 1/1/94 to 10/3/95 in the total value range of $10 to $50 million. (2) Based on LTM data available at 6/30/95. (3) $2.50 x number of units not already owned by Forum Group, Inc. ROBERT A. INNAMORATI & CO. October 13, 1995 15 FORUM RETIREMENT PARTNERS, L.P. ACQUISITION PREMIUM ANALYSIS SUMMARY FINANCIAL INFORMATION RELATING TO SELECTED CASH TENDER OFFER TRANSACTIONS (1)
Target Company Banyan Mortgage Investors LP General Cable(Cie Gen de Eaux) Indianapolis Newspapers Acquirer THSP Inc Wassall PLC Central Newspapers Inc -------- -------- ----------- ---------------------- Date Announced 04/19/94 05/05/94 06/24/94 Completed/Pending ("C" / "P") C C C Offering Price/Share (Unit) $2.50 $6.00 $10,000.00 Total Value (mil.) $24.3 $35.9 $35.9 Stock Premium: Prior Periods - ---------------------------- 1 Day (%) - 17.1% - 1 Week (%) - 21.5% - 4 Weeks (%) - 11.6% - Offer Price Per Share (Unit) $2.50 $6.00 - ---------------------------- to Book Value - 0.6x $10,000.00 to EPS - - - Stock Price 4 Weeks Prior $5.38 - ------------------------- to Book Value - 0.5x - to EPS - - - Total Equity Value (mil.) $28.1 $77.8 $57.7 - ------------------------- to Net Income - - - Long-Term Debt to Stockholder's Equity - 2.1x - Total Liabilities to Stockholder's Equity - 3.4x - Stockholders' Equity as a % of Total Assets - 22.5% - Total Enterpirse Value (mil.) - $357.2 - - ----------------------------- to Sales - 0.5x - to Cash Flow (EBITDA) - 16.2x - to Operating Income - 155.3x -
- -------------------- (1) Data provided by Securities Data Company, Inc. Eighteen transactions were identified for the period 1/1/94 to 10/3/95 in the total value range of $10 to $50 million. ROBERT A. INNAMORATI & CO. October 13, 1995 16 FORUM RETIREMENT PARTNERS, L.P. ACQUISITION PREMIUM ANALYSIS SUMMARY FINANCIAL INFORMATION RELATING TO SELECTED CASH TENDER OFFER TRANSACTIONS (1)
Target Company R2 Medical Systems Inc Service Fracturing Co Samson Energy Co LP Acquirer Cardiotronics Systems Inc Nowsco Well Service Ltd Samson Properties Inc -------- ------------------------- ----------------------- --------------------- Date Announced 08/15/94 08/25/94 09/02/94 Completed/Pending ("C" / "P") C C C Offering Price/Share (Unit) $6.50 $4.55 $11.50 Total Value (mil.) $14.4 $23.4 $41.3 Stock Premium: Prior Periods - ----------------------------- 1 Day (%) 225.0% 51.7% 29.6% 1 Week (%) 188.9% 30.0% 26.0% 4 Weeks (%) 225.0% 30.0% 24.3% Offer Price Per Share (Unit) $6.50 $4.55 $11.50 - ---------------------------- to Book Value 3.8 x 3.9 x 1.5 x to EPS 130.0 x - 2.3 x Stock Price 4 Weeks Prior $2.00 $3.50 $9.25 - ------------------------- to Book Value 1.2 x 2.9 x 1.2 x to EPS 40.0 x -13.0 x 1.9 x Total Equity Value (mil.) $17.2 $24.3 $53.7 - ------------------------- to Net Income 131.5 x - 2.3 x Long-Term Debt to Stockholder's Equity - 0.0 x 0.1 x Total Liabilities to Stockholder's Equity 0.1 x 0.2 x - Stockholders' Equity as a % of Total Assets 93.8% 24.2% 93.5% Total Enterprise Value (mil.) - ----------------------------- to Sales 3.5 x 1.2 x 1.4 x to Cash Flow (EBITDA) 28.9 x 30.3 x 1.7 x to Operating Income 36.8 x - 2.4 x
- --------------------------- (1) Data provided by Securities Data Company, Inc. Eighteen transactions were identified for the period 1/1/94 to 10/3/95 in the total value range of $10 to $50 million. ROBERT A. INNAMORATI & CO. October 13, 1995 17 FORUM RETIREMENT PARTNERS, L.P. ACQUISITION PREMIUM ANALYSIS SUMMARY FINANCIAL INFORMATION RELATING TO SELECTED CASH TENDER OFFER TRANSACTIONS (1)
Information Target Company America Inc Laser Precision Corp Providential Wilmington Acquirer West Publishing Co GN Great Nordic Ltd Svgs Fund Society -------- ------------------ ------------------- ----------------- Date Announced 10/03/94 10/04/94 10/12/94 Completed/Pending ("C" / "P") C C C Offering Price/Share (Unit) $6.00 $8.00 $4.00 Total Value (mil.) $29.3 $38.7 $24.4 Stock Premium: Prior Periods - ---------------------------- 1 Day (%) 54.8% 36.2% 45.5% 1 Week (%) 65.5% 45.5% 60.0% 4 Weeks (%) 84.6% 39.1% 60.0% Offer Price Per Share (Unit) $6.00 $8.00 $4.00 - ---------------------------- to Book Value 1.7 x 1.9 x 9.3 x to EPS - 26.6 x - Stock Price 4 Weeks Prior $3.25 $5.75 $2.50 - ------------------------- to Book Value 0.9 x 1.4 x 6.3 x to EPS -23.2 x 19.2 x -0.4 x Total Equity Value (mil.) $29.5 $39.8 $373.2 - ------------------------- to Net Income - 27.1 x - Long-Term Debt to Stockholder's Equity 0.2 x - - Total Liabilities to Stockholder's Equity 0.6 x 0.1 x 0.0 x Stockholders' Equity as a% of Total Assets 61.1% 88.1% 98.5% Total Enterprise Value (mil.) $27.5 $31.5 $18.9 - ----------------------------- to Sales 1.1 x 1.3 x 66.2 x to Cash Flow (EBITDA) 6.7 x 9.6 x - to Operating Income - 13.2 x -
- --------------- (1) Data provided by Securities Data Company, Inc. Eighteen transactions were identified for the period 1/1/94 to 10/3/95 in the total value range of $10 to $50 million. ROBERT A. INNAMORATI & CO. October 13, 1995 18 FORUM RETIREMENT PARTNERS, L.P. ACQUISITION PREMIUM ANALYSIS SUMMARY FINANCIAL INFORMATION RELATING TO SELECTED CASH TENDER OFFER TRANSACTIONS (1)
Target Company Galveston-Houston Co Pet Products A Pea in the Pod Inc Acquirer GHX Acquisition Co Hartz Mountain Corp(Hartz Grp) Mothers Work Inc ------- ------------------ ------------------------------ ---------------- Date Announced 12/14/94 12/27/94 03/06/95 Completed/Pending ("C" / "P") C C C Offering Price/Share (Unit) $2.25 $5.25 $5.50 Total Value (mil.) $37.0 $17.3 $22.5 Stock Premium: Prior Periods - ---------------------------- 1 Day (%) 28.6% 200.0% 37.5% 1 Week (%) 38.5% 265.2% 83.3% 4 Weeks (%) 28.6% 162.5% 57.1% Offer Price Per Share (Unit) $2.25 $5.25 $5.50 - ---------------------------- to Book Value 0.9 x 2.0 x 2.6 x to EPS 75.0 x 43.7 x - Stock Price 4 Weeks Prior $1.75 $2.00 $3.50 - ------------------------- to Book Value 0.7 x 0.8 x 1.7 x to EPS 58.3 x 16.7 x -14.0 x Total Equity Value (mil.) $38.2 $16.1 $22.5 - ------------------------- to Net Income 101.0 x 43.1 x - Long-Term Debt to Stockholder's Equity 0.1 x 0.2 x - Total Liabilities to Stockholder's Equity 0.4 x 0.6 x 1.0 x Stockholders' Equity as a % of Total Assets 72.9% 64.0% 49.7% Total Enterprise Value (mil.) $42.7 $16.9 $25.3 - ----------------------------- to Sales 0.6 x 1.2 x 0.8 x to Cash Flow (EBITDA) 8.9 x 16.7 x 113.3 x to Operating Income 29.4 x 24.5 x -
- ------------------------- (1) Data provided by Securities Data Company, Inc. Eighteen transactions were identified for the period 1/1/94 to 10/3/95 in the total value range of $10 to $50 million. ROBERT A. INNAMORATI & CO. October 13, 1995 19 FORUM RETIREMENT PARTNERS, L.P. ACQUISITION PREMIUM ANALYSIS SUMMARY FINANCIAL INFORMATION RELATING TO SELECTED CASH TENDER OFFER TRANSACTIONS (1)
Target Company Resource Recycling Techs Inc Paco Pharmaceutical Services NuVision Inc Acquirer Waste Management Inc West Co Inc American Vision Centers Inc -------- -------------------- ----------- --------------------------- Date Announced 03/17/95 03/24/95 04/28/95 Completed/Pending ("C" / "P") C C C Offering Price/Share (Unit) $11.50 $12.25 $7.60 Total Value (mil.) $30.8 $49.0 $20.5 Stock Premium: Prior Periods - ---------------------------- 1 Day (%) 37.3% 66.1% 32.2% 1 Week (%) 50.8% 66.1% 38.2% 4 Weeks (%) 46.0% 58.1% 35.1% Offer Price Per Share (Unit) $11.50 $12.25 $7.60 - ---------------------------- to Book Value 3.4 x 1.1 x 1.5 x to EPS 34.3 x 21.8 x - Stock Price 4 Weeks Prior $7.88 $7.75 $5.63 - ------------------------- to Book Value 2.3 x 0.7 x 1.1 x to EPS 23.5 x 13.8 x -11.9 x Total Equity Value (mil.) $30.3 $49.0 $20.5 - ------------------------- to Net Income 33.8 x 21.4 x - Long-Term Debt to Stockholder's Equity 0.2 x 0.1 x - Total Liabilities to Stockholder's Equity 1.0 x 0.3 x 0.4 x Stockholders' Equity as a % of Total Assets 48.6% 74.7% 70.7% Total Enterprise Value (mil.) $32.2 $49.6 $20.6 - ----------------------------- to Sales 0.8 x 0.8 x 0.4 x to Cash Flow (EBITDA) 17.5 x 6.9 x 11.6 x to Operating Income 33.1 x 15.8 x -
- ----------------------------- (1) Data provided by Securities Data Company, Inc. Eighteen transactions were identified for the period 1/1/94 to 10/3/95 in the total value range of $10 to $50 m illion. ROBERT A. INNAMORATI & CO. October 13, 1995 20 FORUM RETIREMENT PARTNERS, L.P. ACQUISITION PREMIUM ANALYSIS SUMMARY FINANCIAL INFORMATION RELATING TO SELECTED CASH TENDER OFFER TRANSACTIONS (1)
Target Company Bestop Inc Acquirer Douglas & Lomason Co -------- -------------------- Date Announced 05/04/95 Completed/Pending ("C"/"P") C Offering Price/Share (Unit) $12.75 Total Value (mil.) $44.0 Stock Premium: Prior Periods - ---------------------------- 1 Day (%) 22.0% 1 Week (%) 18.6% 4 Weeks (%) 27.5% Offer Price Per Share (Unit) $12.75 - ---------------------------- to Book Value 3.0x to EPS 10.8x Stock Price 4 Weeks Prior $10.00 - ------------------------- to Book Value 2.4x to EPS 8.5x Total Equity Value (mil.) $44.0 - ------------------------- to Net Income 10.9x Long-Term Debt to Stockholder's Equity - Total Liabilities to Stockholder's Equity 0.5x Stockholders' Equity as a % of Total Assets 67.6% Total Enterprise Value (mil.) $44.7 - ----------------------------- to Sales 0.7x to Cash Flow (EBITDA) 5.8x to Operating Income 6.4x
(1) Data provided by Securities Data Company, Inc. Eighteen transactions were identified for the period 1/1/94 to 10/3/95 in the total value range of $10 to $50 million. ROBERT A. INNAMORATI & CO. October 13, 1995 21 FORUM RETIREMENT PARTNERS, L.P. PROPOSED ACQUISITION PRICE VS. HISTORIC TRADING PRICES FRP Prosposed Acquisition Price/Unit: $2.83
Date prior to Historical Information Offer Premium September 25, 1995 FRP Price Offer Premium - ---------------------- ------------- ------------------ --------- ------------- FRP Price over 24 Months(1) High: -1.6% 1 Day $2.00 +41.5% (9/25/93 - 9/25/95) 1 Week $1.88 +50.9% Low: +61.7% 4 Weeks $2.00 +41.5% 6 Weeks $2.06 +37.2%
Selected Ratios (2) FRP @ Proposed Acquisition Price - ------------------- -------------------------------- Price to Book ($2.50/unit): 113.2% Price to EBITDA ($0.60/unit): 471.7% Price to Revenues ($3.22/unit) 87.9%
1992 1993 1994 1995E 1996E ---- ---- ---- ----- ----- Cash Distributions/Unit $0.00 $0.00 $0.00 $0.00 $0.00 Current Yield Based on Acquisition Price ($2.83) 0.0% 0.0% 0.0% 0.0% 0.0%
(1) Based on closing prices (2) Based on last 12 months data available at 6/30/95. ROBERT A. INNAMORATI & CO. October 13, 1995 -----END PRIVACY-ENHANCED MESSAGE-----