ResCare, Inc. (Nasdaq:RSCR) announced today that it has entered into a definitive agreement with an entity sponsored by Onex Partners III, L.P. ("Onex"), an affiliate of Onex Corporation. Under the terms of the agreement, Onex would acquire all of the outstanding shares of ResCare common stock not owned by Onex affiliates or participating members of ResCare's management for $13.25 per share in cash, which represents a 30.7% premium to the closing price on August 13, 2010, the last trading day before Onex made its initial proposal. Affiliates of Onex currently own common and preferred stock representing approximately 24.9% of the Company's outstanding common stock, assuming conversion of the preferred stock.
The agreement permits ResCare to solicit superior proposals from third parties during a 40-day "go shop" period ending October 16, 2010, 61 days after the public announcement of the initial proposal by Onex. The Special Committee of independent directors of ResCare, with the assistance of its independent advisors, intends to solicit superior proposals during this period. If a superior proposal solicited during this period leads to the execution of a definitive agreement for an alternative transaction, ResCare would be obligated to pay a break-up fee to Onex equal to 2% of the equity value of the Onex transaction on a fully diluted basis. ResCare advises that there can be no assurance that the solicitation of superior proposals will result in an alternative transaction.
The definitive agreement provides that Onex will conduct a tender offer to purchase shares of ResCare common stock. The tender offer is subject to a non-waivable condition that a majority of the public, non-Onex shares be tendered. There is no financing condition to consummate the transaction. The transaction is also subject to the satisfaction of other customary closing conditions.
Ronald G. Geary, Chairman of the Board and the Special Committee, said, "After a thorough and extensive evaluation process, the Special Committee and our Board have endorsed this transaction with Onex as being in the best interests of our company, its shareholders and the people who depend on our services. The tender offer by Onex requires that a majority of the public shares be tendered, which gives individual shareholders the opportunity to make their own evaluation of the transaction."
The tender offer is scheduled to commence on September 22, 2010, and to expire at midnight on October 20, 2010, unless extended in accordance with the terms of the definitive agreement and applicable law. Following the consummation of the tender offer, Onex would acquire any remaining public shares for $13.25 per share in cash through a statutory share exchange.
Officers of the Company, who together currently own in the aggregate approximately 1% of its outstanding shares, have agreed to exchange their shares for equity interests in the sponsored purchasing entity in lieu of receiving cash consideration for their shares. These shares are not included in the public, non-Onex shares. The officer agreements will terminate if the definitive agreements terminate.
The Special Committee has retained Goldman, Sachs & Co. as its financial advisor and Frost Brown Todd LLC as its legal counsel.