Item 1.01 Entry into a Material Definitive Agreement.
The information set forth in Item 2.03 of this report is incorporated herein by
reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of the Registrant.
Notes Offering
On January 4, 2021, AdaptHealth LLC ("AdaptHealth"), a wholly owned subsidiary
of AdaptHealth Corp. (the "Company"), completed its previously announced
offering of $500,000,000 aggregate principal amount of its 4.625% Senior Notes
due 2029 (the "Notes"). The Notes were issued under an indenture (the
"Indenture"), dated January 4, 2021, among AdaptHealth, the guarantors party
thereto and The Bank of New York Mellon Trust Company, N.A., as trustee.
The gross proceeds from the offering, along with the amount of interest that
will accrue on the Notes from January 4, 2021 to, but excluding, June 10, 2021
(representing the latest possible special mandatory redemption date based on a
Merger Agreement Termination Date (as defined below) of May 31, 2021), were
deposited into a segregated escrow account pending completion of the Company's
previously announced acquisition of AeroCare Holdings, Inc. ("AeroCare"),
pursuant to an Agreement and Plan of Merger, dated December 1, 2020 (the "Merger
Agreement"), among AeroCare, the Company, AH Apollo Merger Sub Inc., AH Apollo
Merger Sub II Inc. and Peloton Equity, LLC, as stockholder representative. At
the closing of the AeroCare acquisition, the net proceeds from the offering,
together with the deposited interest amount, will be released from escrow and,
together with secured term loan borrowings, proceeds from an equity issuance and
cash on hand, will be used to finance the cash portion of the consideration for
the AeroCare acquisition and to pay related fees and expenses. The gross
proceeds from the offering replace the bridge commitment received from Jefferies
Finance LLC in connection with funding the AeroCare acquisition.
If (i) the escrow release conditions, including the consummation of the AeroCare
acquisition, have not been satisfied on or prior to the later of (a) May 31,
2021 and (b) any date to which the "Outside Date" under the Merger Agreement has
been extended (such later date, the "Merger Agreement Termination Date"), or
(ii) the Company has determined, in its reasonable judgment, that the escrow
release conditions will not be satisfied by the Merger Agreement Termination
Date, the Notes will be subject to a special mandatory redemption at a
redemption price equal to 100% of the issue price of the Notes, plus accrued and
unpaid interest to, but excluding, the special mandatory redemption date.
The Notes are unsecured senior obligations of AdaptHealth and rank equally in
right of payment to all of its existing and future senior debt, including its
existing $350,000,000 aggregate principal amount of 6.125% senior notes due
2028, and senior in right of payment to all of its future subordinated debt. The
Notes are effectively subordinated to any of AdaptHealth's existing and future
secured debt, including (i) its credit agreement, dated as of July 29, 2020
("Credit Agreement"), by and among AdaptHealth, the guarantors party thereto and
Regions Bank, as administrative agent, providing for a $200 million revolving
credit line and $250 million in term loans and (ii) any additional secured term
loans (including to finance the AeroCare acquisition) (together with the Credit
Agreement, the "Credit Facilities"), to the extent of the value of the assets
securing such debt.
The Notes are guaranteed by each of AdaptHealth's existing and future
subsidiaries (including AeroCare and its subsidiaries after the consummation of
the AeroCare acquisition) that is a borrower or that guarantees its obligations
under its Credit Facilities or certain other indebtedness, and by AdaptHealth's
direct parent, AdaptHealth Intermediate Holdco LLC ("AdaptHealth Intermediate"),
which also guarantees its obligations under its Credit Facilities. The Notes
will mature on August 1, 2029. Interest on the Notes will be payable on February
1 and August 1 of each year, beginning on August 1, 2021.
The Notes will be redeemable, in whole or in part, at any time on or after
February 1, 2024, and the redemption price for the Notes if redeemed during the
12 months beginning (i) February 1, 2024 is 102.313%, (ii) February 1, 2025 is
101.156% and (iii) February 1, 2026 and thereafter is 100.000%, in each case
together with accrued and unpaid interest, if any, to, but excluding, the
redemption date. AdaptHealth may also redeem some or all of the Notes before
February 1, 2024 at a redemption price of 100% of the principal amount, plus a
"make-whole" premium, plus accrued and unpaid interest, if any, to, but not
including, the redemption date. In addition, AdaptHealth may redeem up to 40% of
the aggregate principal amount of the Notes before February 1, 2024 with the net
cash proceeds from certain equity offerings at a price equal to 104.625% of the
principal amount of the Notes, plus accrued but unpaid interest, if any, to, but
not including, the redemption date. Furthermore, AdaptHealth may be required to
make an offer to purchase the Notes upon the sale of certain assets or upon
specific kinds of changes of control.
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The offering of the Notes was not registered under the Securities Act of 1933,
as amended (the "Securities Act"), or any state securities laws, and the Notes
may not be offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the Securities Act
and applicable state securities laws. The Notes were sold to persons reasonably
believed to be "qualified institutional buyers," as defined in Rule 144A under
the Securities Act, and non-U.S. persons outside the United States under
Regulation S under the Securities Act.
The foregoing description of the Indenture does not purport to be complete and
is subject to, and qualified in its entirety by, the full text of the Indenture.
A copy of the Indenture is attached as Exhibit 4.1 hereto and is incorporated by
reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
4.1 Indenture, dated as of January 4, 2021, by and among AdaptHealth LLC,
the guarantors party thereto and The Bank of New York Mellon Trust
Company, N.A., as trustee.
104 The cover page from this Current Report on Form 8-K, formatted in Inline
XBRL
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