Item 1.01. Entry into a Material Definitive Agreement.
On January 27, 2022, certain subsidiaries of AlerisLife Inc., formerly known as
Five Star Senior Living Inc., as described further in Item 5.03 below (together
with its applicable subsidiaries, the "Company"), entered into a credit and
security agreement (the "Credit Agreement") with MidCap Funding VIII Trust, as
administrative agent and a lender ("MidCap"). Under the terms of the Credit
Agreement, the Company closed on a $95.0 million senior secured term loan (the
"Loan"), $63.0 million of which was funded upon effectiveness of the Credit
Agreement, including approximately $3.2 million in closing costs, while the
remaining proceeds are subject to a $12.0 million capital improvements holdback
and $20 million available upon achieving certain financial thresholds.
The maturity date of the Loan is January 27, 2025. Subject to the payment of an
extension fee and meeting certain other conditions, the Company may elect to
extend the stated maturity date of the Loan for two, one-year periods. The
Company is required to pay interest on outstanding amounts at a base rate of the
Secured Overnight Financing Rate ("SOFR") (subject to a minimum base rate of 50
basis points) plus 450 basis points. The Credit Agreement requires customary
mandatory prepayment of the Loan on account of certain events of default.
Voluntary prepayments made within 18-months of the effective date of the Loan
will be subject to a prepayment fee, but the Loan may thereafter be voluntarily
prepaid without premium or penalty. The Company will be required to pay an exit
fee upon any prepayment of the Loan, which would be in addition to any
prepayment fee that may be payable.
Certain subsidiaries of the Company are borrowers under the Credit Agreement and
the Company and one of its subsidiaries provided a payment guarantee of up to
$40.0 million of the obligations under the Credit Agreement as well as standard
non-recourse carve-outs. The guaranty is evidenced by a Guaranty and Security
Agreement (the "Guaranty Agreement") made by the Company and one of its
subsidiaries in favor of MidCap. Pursuant to the Guaranty Agreement, the
Company's subsidiary granted MidCap a security interest on all of the assets of
the subsidiary. The Guaranty Agreement requires the Company and its subsidiary
to comply with various covenants, including restricting the Company's ability to
make distributions to shareholders.
The Loan is secured by real estate mortgages on 14 senior living communities
owned by the borrowers, the borrowers' assets and certain related collateral.
The Loan provides for acceleration of payment of all amounts outstanding upon
the occurrence and continuation of certain events of default, including a change
of control of the Company, as defined in the Credit Agreement. The Credit
Agreement also contains a number of financial and other covenants, including
covenants that restrict the borrowers' ability to incur indebtedness or to pay
or make distributions under certain circumstances and require the Company to
maintain certain financial ratios. The Credit Agreement also contains certain
customary representations and warranties and reporting obligations.
The foregoing descriptions of the Credit Agreement and Guaranty Agreement are
not complete and are qualified in their entirety by reference to the full text
of the Credit Agreement and the Guaranty Agreement, copies of which are attached
hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by
reference.
Item 1.02. Termination of a Material Definitive Agreement.
In connection with entering into the Loan, the Company terminated Company's
secured revolving credit facility with Citibank, N.A, the Guarantors thereto and
the other parties thereto and the related Second Amended and Restated Credit
Agreement, dated as of June 12, 2019, among the Company, the Guarantors party
thereto, Citibank N.A. and the other parties thereto (together, the "Citibank
Credit Facility"). No borrowings were outstanding under the Citibank Credit
Facility at the time the Company entered into the Credit Agreement. The
information about the termination of the Citibank Credit Facility set forth
under Item 1.01 of this Current Report on Form 8-K is incorporated by reference
into this Item 1.02.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth above under Item 1.01 of this Current Report on Form
8-K is incorporated by reference into this Item 2.03.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Effective on January 25, 2022, Five Star Senior Living Inc. changed its name to
"AlerisLife Inc." pursuant to Articles of Amendment to its Articles of Amendment
and Restatement filed with the Maryland State Department of Assessments and
Taxation. Effective as of the opening of trading on January 28, 2022, the
Company's shares of common stock began trading on The Nasdaq Stock Market LLC
under the ticker symbol "ALR".
Also effective January 25, 2022, the Company adopted Amended and Restated Bylaws
reflecting the change of its name described above.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The Company hereby furnishes the following exhibit:
3.1 Articles of Amendment, dated January 25, 2022.
3.2 Composite Copy of Articles of Amendment and Restatement, dated
December 5, 2001, as amended to date.
3.3 Composite Copy of Articles of Amendment and Restatement, dated
December 5, 2001, as amended to date (marked copy).
3.4 Amended and Restated Bylaws of the Company, adopted January 25,
2022.
3.5 Amended and Restated Bylaws of the Company, adopted January 25, 2022
(marked copy).
3.6 Form of Common Stock Certificate.
10.1 Credit and Security Agreement, dated January 27, 2022, among certain
subsidiaries of AlerisLife Inc., MidCap Funding VIII Trust, as
administrative agent, the lenders from time to time party thereto.*
10.2 Guaranty and Security Agreement, dated January 27, 2022, by AlerisLife
Inc. and Five Star Senior Rehabilitation and Wellness Services, LLC in
favor of MidCap Funding VIII Trust.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
*Schedules and similar attachments have been omitted from this exhibit pursuant
to Item 601(a)(5) of Regulation S-K. The registrant hereby agrees to furnish a
copy of any omitted schedule or attachment to the U.S. Securities and Exchange
Commission upon request.
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