UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
i June 15, 2023
i ATI Physical Therapy, Inc.
(Exact name of registrant as specified in its charter)
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i Delaware
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i 85-1408039
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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i 790 Remington Boulevard
i Bolingbrook, i Illinois i 60440
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(Address of Principal Executive Offices, including Zip Code)
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Registrant’s telephone number, including area code: ( i 630) i 296-2223
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the
following provisions (see General Instruction A.2 below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange
on which registered
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i Class A Common Stock, $0.0001 par value
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i ATIP
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i New York Stock Exchange
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i Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share
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i ATIP WS
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i New York Stock Exchange
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Indicate by check mark whether
the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company i ☐
If an emerging growth company, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 |
Entry into a Material Definitive Agreement
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On
June 15, 2023 (the
“Closing Date”), ATI Physical Therapy, Inc. (the
“Company”) completed a transaction (the
“Transaction”) to enhance
the Company’s liquidity, as
previously described in the Current Report on Form 8-K filed by
the Company with the U.S. Securities and Exchange Commission on
April 21, 2023 (the
“Signing Date 8-K”), and as approved by
the Company’s stockholders at
the Company’s annual meeting of
stockholders held on
June 13, 2023.
Signing Date Definitive Documents
On the Closing Date, certain previously executed agreements became effective, including (i) Amendment No. 2 to Credit Agreement (the
“Credit Agreement Amendment”), by,
among others, ATI Holdings Acquisition, Inc., as borrower (
“Opco”), Wilco Intermediate Holdings, Inc. (
“Holdings”), Barclays Bank PLC, as administrative agent and issuing bank (the
“Administrative Agent”), and the lenders party thereto, which amends
that certain Credit Agreement, dated as of
February 24, 2022 (the
“2022 Credit Agreement” and together with the Credit Agreement Amendment, the
“Credit Agreement”), by, among others, Opco, Holdings, the Administrative Agent and the lenders party
thereto, (ii) a Second Lien Note Purchase Agreement (the
“Original Note Purchase Agreement”), by, among others,
the Company, Wilco Holdco, Inc. (
“Wilco”), Holdings, Opco, the purchasers from time to time party thereto (the
“Purchasers”) and
Wilmington Savings Fund Society, FSB, as purchaser representative (the
“Purchaser Representative”) and (iii) certain other definitive agreements relating to the Transaction (such documents referred to collectively as the
“Signing Date Definitive
Documents”).
Closing Date Definitive Documents
In addition, on the Closing Date,
the Company entered into or filed with the Secretary of State of the State of Delaware, as applicable, certain other agreements
(collectively, the
“Closing Date Definitive Documents”) to implement certain terms of the previously described Amended and Restated Transaction Support Agreement (the
“A&R TSA”), dated as of
April 17, 2023, by and among
the Company and certain of
the Company’s affiliates, certain of its first lien lenders under the 2022 Credit Agreement, the Administrative Agent, holders of its Series A Senior Preferred Stock (the
“Preferred Equityholders”) and holders of the majority of its Class A common
stock, par value $0.0001 per share (the
“Common Stock”). The Closing Date Definitive Documents include (i) the First Amendment to Note Purchase Agreement (together with the Original Note Purchase Agreement, the
“Note Purchase Agreement”), dated as of
the Closing Date, by and among
the Company, Wilco, Holdings, Opco, the Purchasers party thereto (in such capacity, the
“First Amendment Purchasers”) and the Purchaser Representative, pursuant to which the First Amendment Purchasers agreed to
purchase, and
the Company agreed to issue, an additional $3,243,302.02 aggregate principal amount of Notes, (ii) the Consent to Amendment No. 2 to Credit Agreement, dated as of the Closing Date, by, among others, Opco, Holdings, the lenders party
thereto and the Administrative Agent, which amends the Credit Agreement Amendment, (iii) the First Amended and Restated Certificate of Designation of Series A Senior Preferred Stock of
the Company, dated as of
June 15, 2023 (the
“A&R Series A
COD”), which, as agreed under the A&R TSA, (A) revised the Preferred Equityholders’ preexisting rights to designate and elect one director to
the Company’s board of directors (the
“Board”) to provide that the Preferred Equityholders have the
right to appoint three additional directors to the Board (resulting in the right of the Preferred Equityholders to appoint a total of four directors to the Board) until such time after the Closing Date that the Lead Purchaser (in each case, as
defined in certain of the transaction agreements entered into in connection with the original issuance of the Series A Senior Preferred Stock) ceases to hold at least 50.1% of the Series A Preferred Senior Stock held by it as of the Closing Date, and
(B) removed the provision that eliminated the Preferred Equityholders’ director designation rights upon
the Company’s achievement of certain amounts of EBITDA; (iv) the First Amendment to that certain Investors’
Rights Agreement, dated as of
February
24, 2022, by and among
the Company and the Preferred Equityholders listed therein (the
“Investors’ Rights Agreement Amendment”), which made changes similar to those under the A&R Series A COD and further provided that (A) all designee directors
of the Preferred Equityholders will be subject to consideration by the Board (acting in good faith and consistent with their review of other Board candidates) and (B) at least one director appointed in accordance with the A&R Series A COD be
unaffiliated with (and independent of) the Preferred Equityholders and meet the definition of
“independent” under the listing standards of the New York Stock Exchange, and by the Securities and Exchange Commission; (v) the Certificate of Designation
of Series B Preferred Stock of
the Company, dated as of
June 15, 2023 (the
“Series B COD”), which Series B Preferred Stock is further described below, (vi) the Registration
Rights Agreement, dated as of
June 15, 2023, by and among
the Company and the
Purchasers with respect to the resale of shares of Common Stock into which such notes are convertible; and (vii) such other related documents and ancillary agreements required to implement the Transaction.
Issuance of New Second Lien PIK Convertible Notes and Series B Preferred Stock
On the Closing Date, pursuant to the Note Purchase Agreement and the other Signing Date Definitive Documents,
the Company (i) exchanged $100.0 million of the aggregate
principal amount of the term loans under the 2022 Credit Agreement held by certain of the Preferred Equityholders
for $100.0 million aggregate principal amount of a new stapled security, comprised of (A)
second lien PIK convertible notes (the
“Notes”) and (B) shares of Series B Preferred Stock, par value $0.0001 per share (the
“Series B Preferred Stock”), which provide the holder thereof with voting rights such that the holders thereof have the right
to vote on corporate matters on an as-converted basis as if the conversion occurred at an initial price per share equal to $12.87, and (ii) issued to the First Amendment Purchasers, and the First Amendment Purchases purchased from
the Company, an
aggregate principal amount of $3,243,302.02 million in Notes and shares of stapled Series B Preferred Stock.
Holders of the Notes will also receive additional Notes upon the in-kind payment of interest on any outstanding Notes. The Notes are convertible into shares of Common
Stock at a fixed conversion price of $12.50 (which reflects the 1-for-50 reverse stock split effective as of
June 14, 2023), subject to adjustment.
This discussion of the Transaction does not purport to be complete and is qualified in its entirety by reference to the Signing Date Definitive Documents, which are
further described in and certain of which are filed as exhibits to, the Signing Date 8-K, and the Closing Date Definitive Documents, which are filed with this Current Report on Form 8-K and
incorporated herein by reference. You should read the
Signing Date 8-K, including the exhibits thereto, carefully and in its entirety, in addition to this Current Report on Form 8-K.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
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The information required by this Item 2.03 is set forth under Item 1.01 above and is hereby
incorporated by reference in response to this Item.
| Item 3.02 |
Unregistered Sales of Equity Securities
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The information required by this Item 3.02 is set forth under Item 1.01 above and is hereby
incorporated by reference in response to this Item.
| Item 3.03 |
Material Modification to Rights of Security Holders
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The information required by this Item 3.03 is set forth under Item 1.01 above and is hereby
incorporated by reference in response to this Item.
| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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As previously described, pursuant to the terms of the A&R TSA, on the Closing Date, certain corporate governance changes were made, including that John Maldonado, an
affiliate of Advent International Corporation, resigned from
the Company’s Board and all committees of the Board of which he was a member, effective as of the Closing Date. Andrew McKnight also notified the Board of his intent to resign from the
Company’s Board and all committees of the Board of which he was a member, effective as of the Closing Date. Messrs. Maldonado’s and McKnight’s decisions to resign were not a result of any disagreement with
the Company or the Board on any matter
relating to
the Company’s operations, policies or practices.
Effective as of the Closing Date, pursuant to the terms of the A&R TSA and as approved by the Board, Andrew Shannahan and Randy Raisman were appointed to the Board
to serve as independent directors with terms expiring at
the Company’s 2024 annual meeting of stockholders.
The newly appointed directors were elected pursuant to the rights granted to the Preferred Equityholders, in addition to Daniel Dourney, who is an independent director
previously designated by the Preferred Equityholders. The Preferred Equityholders anticipate that they will designate a third director at a later date. There are no other arrangements or understandings between the directors and any other persons
pursuant to which they were elected as a director. Other than with regard to the Transaction and rights granted to the Preferred Equityholders, there are no transactions or proposed transactions between the newly appointed directors and
the Company
that would be required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The newly appointed directors will not receive any compensation for their Board service. In connection with their appointments, the directors will enter into standard
indemnification agreements with
the Company.
The information required by this Item 5.03 set forth under Item 1.01 above related to the A&R Series A COD and Series B COD is hereby
incorporated by reference in
response to this Item.
| Item 7.01 |
Regulation FD Disclosure
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The information in this Item 7.01, including
Exhibit 99.1, is being furnished and shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the
“Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act or the Exchange Act, regardless of any general incorporation
language in such filing.
| Item 9.01 |
Financial Statements and Exhibits
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(d) Exhibits:
3.1 First Amended and
Restated Certificate of Designation of Series A Senior Preferred Stock of ATI Physical Therapy, Inc., filed on June 15, 2023.
3.2 Certificate of
Designation of Series B Preferred Stock of ATI Physical Therapy, Inc., filed on June 15, 2023.
10.2 Amendment No. 2 to Credit Agreement,
dated April 17, 2023, by and among ATI Holdings Acquisition, Inc., Wilco Intermediate Holdings, Inc., HPS Investment Partners, LLC, as Lender Representative and Barclays Bank PLC, as Administrative Agent (incorporated by reference to Exhibit 10.2
to the Company’s Form 8-K filed on April 21, 2023).
10.3 Consent to Amendment
No. 2 to Credit Agreement, dated June 15, 2023, by and among ATI Holdings Acquisition, Inc., Wilco Intermediate Holdings, Inc., HPS Investment Partners, LLC, as Lender Representative and Barclays Bank PLC as Administrative Agent.
10.4 Second Lien Note Purchase Agreement,
dated April 17, 2023, by and among ATI Physical Therapy, Inc., Wilco Holdco, Inc., Wilco Intermediate Holdings, Inc., ATI Holdings Acquisition, Inc., the Purchasers party thereto and Wilmington Savings Fund Society, FSB (incorporated by reference
to Exhibit 10.3 to the Company’s Form 8-K filed on April 21, 2023).
10.7 First Amendment to
Note Purchase Agreement, dated June 15, 2023, by and among ATI Physical Therapy, Inc., Wilco Holdco, Inc., Wilco Intermediate Holdings, Inc., ATI Holdings Acquisition, Inc., the Subsidiary Guarantors party thereto, the other Purchasers party
thereto and Wilmington Savings Fund Society, FSB.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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ATI PHYSICAL THERAPY, INC.
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By:
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/s/ Joseph Jordan
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Name:
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Title:
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Chief Financial Officer
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