Acquisition would create the most
comprehensive radiology and oncology solutions provider in the
U.S. and be a catalyst for continued innovative
growth in the industry
PLANTATION, Fla., June 25, 2021 /CNW/ - Akumin Inc. (NASDAQ: AKU)
(TSX: AKU) ("Akumin"), a premier provider of freestanding
outpatient radiology services in the U.S., announced today that it
has entered into an agreement to acquire Alliance HealthCare
Services, Inc. ("Alliance"), a leading national provider of
radiology and oncology solutions to hospitals, health systems and
physician groups. The transaction, which has an enterprise value of
US$820 million, is expected to close in the third quarter of
2021 subject to clearance under the Hart-Scott-Rodino Antitrust
Improvements Act and other customary closing conditions. The
combined company is expected to have pro forma revenue in excess of
US$730 million and pro forma adjusted EBITDA in excess of
US$210 million, including expected cost synergies, based on
the last twelve months ended March 31,
2021.
Upon the closing of the transaction (the "Closing"), the
combined company will offer the most comprehensive radiology and
oncology solutions to patients in the U.S., operating in 46 states,
with more than 1,000 hospital and health system customers, 154
independent outpatient radiology centers and 34 radiation therapy
centers. The combined company expects to have over 4,000 team
members serving more than two million radiology and oncology
patient visits annually.
"We have always said Akumin's vision is to drive
patient-centered innovation, service delivery standardization, and
exceptional healthcare value, all in an outpatient care setting,"
said Riadh Zine, President and CEO
of Akumin. "The acquisition of Alliance is transformative in a
changing healthcare ecosystem that continues to shift toward
outpatient, price-transparent, value-based care. There's no other
organization that has the complement of attributes we will offer
together as outpatient healthcare services experts, in particular
with Alliance's longstanding hospital and health system
relationships and Akumin's freestanding operational expertise."
"Bringing together the best of both organizations for the
benefit of our patients, partners and customers is truly exciting,"
said Rhonda Longmore-Grund,
President and CEO of Alliance. "Alliance brings an over 30-year
history of successful radiology and oncology partnerships with
hospitals and health systems; and Akumin has built and continues to
grow its premier outpatient imaging practice. Together we will
offer patients and customers profound value unlike any other
healthcare solutions company – and we can't wait to get
started."
"We thank the Alliance team for five years of partnership, and
we look forward to the success we know Akumin and Alliance will
achieve as a combined organization," said Qisen Huang, Chairman and
Founder of Tahoe Investment Group. Tahoe has been majority owner of
Alliance since 2016 and will on closing transition to a minority
ownership position in the newly combined, publicly traded
entity.
An affiliate of Stonepeak, a leading alternative investment
firm, has provided a debt and equity financing commitment to Akumin
in connection with the acquisition. "We are thrilled to partner
with Akumin in this transformative transaction in an effort to help
accelerate the company's growth in the years ahead," said
James Wyper, Senior Managing
Director at Stonepeak. "We believe the combined company is well
positioned to deliver high-quality, efficient, tech-enabled and
patient-centric solutions through its ownership and operation of
radiology and oncology infrastructure critical to the healthcare
industry."
Summary of the Acquisition
On June 25, 2021, Akumin, through
its wholly-owned indirect subsidiary, Akumin Corp., entered into a
share purchase agreement (the "Share Purchase Agreement") to
acquire all of the issued and outstanding common stock of Thaihot
Investment Company US Limited ("Holdings"), which owns 100% of the
common stock of Alliance, from Thaihot Investment Co., LTD (the
"Seller"). The aggregate purchase price payable to the Seller on
Closing is US$820 million (the
"Purchase Price"), which will include the issuance to the Seller of
14,223,570 common shares of Akumin (the "Share
Consideration"), such Share Consideration representing 19.99% of
the currently issued and outstanding common shares of
Akumin (the "Akumin Common Shares") at a price of US$2.98 per Akumin Common Share (the "Issue
Price"), being the volume-weighted average trading price of the
Akumin Common Shares on the NASDAQ Capital Market for the five
trading days ending on June 24, 2021.
The Purchase Price will be satisfied by way of a combination of
cash on hand, the issuance of the Share Consideration as well as
certain financing arrangements, including a debt and equity
financing commitment with Stonepeak, as described below under the
heading "Summary of the Financings".
The transaction is an arm's length transaction and is subject to
the receipt of certain regulatory approvals, including the expiry
or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act (the "HSR Clearance"), together with the
satisfaction or waiver of other customary closing conditions,
including the absence of a "Material Adverse Effect" (as defined in
the Share Purchase Agreement) in respect of Alliance and its
subsidiaries. Akumin has obtained representations and warranties
insurance on customary terms in connection with the transaction.
The Share Purchase Agreement provides for the payment by Akumin of
a reverse break fee to the Seller equal to: (a) 5.0% of the
Purchase Price in connection with the termination of the Share
Purchase Agreement under certain circumstances, including a
material breach by Akumin Corp. of any covenant, representation or
warranty contained in the Share Purchase Agreement; and (b) 2.5% of
the Purchase Price in connection with the termination of the Share
Purchase Agreement because of a failure to obtain the HSR Clearance
by an agreed upon date. The Share Purchase Agreement also provides
the Seller with the right to nominate a single representative (the
"Seller's Nominee") to the board of directors of Akumin (the
"Board") for so long as Seller owns at least 50% of the Share
Consideration, subject to certain conditions, including applicable
securities law and stock exchange rules. The Seller will also
receive certain customary registration rights in connection with
the transaction.
Subject to the satisfaction of all closing conditions, the
Closing is expected to occur in the third quarter of 2021, with an
outside date of October 23, 2021,
being 120 days from the date of the execution of the Share Purchase
Agreement (which outside date may be extended by mutual agreement
of the parties for an additional 90 days).
Summary of the Financings
In connection with the acquisition, Akumin and Stonepeak have
executed commitment documentation, pursuant to which, on
Closing:
- Stonepeak will subscribe for a minimum of US$200,000,000 (the "Base Commitment") and a
maximum of US$689,570,000 (the
"Maximum Commitment") principal amount of unsecured notes of Akumin
Corp. (the "Financing Notes", and the initial subscription of such
Financing Notes at Closing, the "Initial Financing Notes"), such
Financing Notes bearing interest at 11.0% per annum, payable
quarterly in cash, with 50% due in 2032 and 50% due in 2033;
provided, however, that, subject to certain conditions,
Akumin Corp. will have the option for a two-year period following
Closing to satisfy the payment of interest on any Financing Notes
through a combination of cash and/or via payment in kind in
additional Financing Notes ("PIK"). Any interest payment made in
kind would be based on an interest rate equal to 13% per
annum;
- Akumin will issue to Stonepeak 3,500,000 Akumin Common Shares
(the "Financing Common Shares") at the Issue Price, such Financing
Common Shares representing approximately 4.9% of the currently
issued and outstanding Akumin Common Shares and having a value of
approximately US$10,430,000; and
- Akumin will issue to Stonepeak such number of warrants to
purchase Akumin Common Shares (the "Financing Warrants", together
with the Financing Notes and the Financing Common Shares, the
"Capital Commitment") equal to 15% of the principal amount of the
Initial Financing Notes, divided by the Issue Price, such Financing
Warrants having an exercise price equal to the Issue Price and an
expiry term of ten years from the date of issuance.
It is anticipated that an alternative debt financing (the
"Alternative Financing") will be completed by Akumin on or prior to
Closing, the proceeds of which will reduce dollar-for-dollar the
Capital Commitment by Stonepeak at the time of Closing to a minimum
of US$200,000,000 principal amount of
Financing Notes. If, for any reason, the Alternative Financing is
not feasible or viable, or results in net proceeds consisting of an
amount which is less than approximately US$489,570,000, then Akumin Corp. will issue to
Stonepeak on Closing such principal amount of Financing Notes as is
required to complete the acquisition, up to the Maximum Commitment.
In the event the Alternative Financing is not fully subscribed,
Stonepeak may elect to fund up to 50% of any amount of its
investment in excess of the Base Commitment as part of the
Alternative Financing.
To the extent the principal amount of the Initial Financing
Notes is less than the maximum US$689,570,000 principal amount of Financing
Notes available for subscription at Closing, such unused portion
will remain available to be drawn by Akumin Corp. for a three-year
period following the Closing, provided certain conditions are met.
Any such future subscription by Stonepeak will involve a further
issuance of Financing Notes and Financing Warrants, in each case,
on the same terms described above; provided, however, that
the number of additional Financing Warrants will equal 20% of the
dollar amount drawn by Akumin Corp. divided by 120% of the 10-day
volume weighted average price of the Akumin Common Shares ending on
the trading day immediately prior to the earlier of the
announcement or issuance of such Financing Warrants (the "Growth
Equity Warrant Strike Price"), and the exercise price for such
additional Financing Warrants will be equal to the Growth Equity
Warrant Strike Price, subject to regulatory approval. The proceeds
relating to any such future subscription will be used to finance
Akumin's organic growth as well as future M&A opportunities
(unrelated to the subject acquisition of Alliance) that are agreed
to between Akumin and Stonepeak.
At any time after seven years from the issuance date of the
Financing Notes, Akumin Corp. may redeem such Financing Notes, in
whole or in part, by paying in cash the principal amount and any
accrued but unpaid interest, in each case, plus 5%. To the extent
that Akumin Corp. has not redeemed any Financing Notes by the
eleventh anniversary of the issuance date of such Financing Notes,
Akumin Corp. will be required to redeem: (a) 50% of such Financing
Notes on the eleventh anniversary of such issuance date by paying
in cash the principal amount and any accrued but unpaid interest,
in each case, plus 5%; and (b) the remaining balance by the twelfth
anniversary of such issuance date by paying in cash the principal
amount and any accrued but unpaid interest, in each case, plus
5%.
Stonepeak will be granted certain investor rights in connection
with the foregoing financing arrangements, including: (a) the right
to nominate a single representative for election to the Board (the
"Stonepeak Nominee") for so long as Stonepeak owns Financing Notes
with an aggregate outstanding principal amount of at least
$100,000,000, and subject to certain
other conditions, including applicable securities law and stock
exchange rules; (b) certain consent rights as holder of the
Financing Notes; and (c) customary registration rights with respect
to the Financing Common Shares and the Akumin Common Shares
issuable upon exercise of the Financing Warrants.
A cash fee equal to 2.0% of the total Capital Commitment
(approximately US$14 million) will be
paid in full to Stonepeak in the form of original issue discount on
the Initial Financing Notes.
On Closing, the Akumin board of directors will exercise its
right in accordance with applicable corporate laws to increase the
size of the board and appoint the Seller's Nominee to fill the
vacancy. Following Closing, Akumin will within 90 days convene a
special meeting of its shareholders in order to obtain the approval
of its shareholders for the appointment of three additional
nominees in connection with the acquisition and the financing, such
nominees consisting of: (i) the Stonepeak Nominee; (ii) an
executive director from Alliance; and (iii) an independent director
of Alliance. Pursuant to a special resolution previously adopted by
the shareholders of Akumin, the board is empowered to determine the
number of directors to be elected, which may vary from time to
time, within the stated minimum and maximum number set out in
Akumin's articles of amalgamation, being between three and ten.
When aggregated with the Financing Common Shares and the Share
Consideration, the exercise of the Financing Warrants and the
resulting issuance of Akumin Common Shares (the "Financing Warrant
Shares") will result in dilution in excess of 25% of Akumin's
current issued and outstanding Akumin Common Shares, which requires
shareholder approval pursuant to section 611(c) and (g) of the TSX
Company Manual. In addition, the exercise of the Financing Warrants
by Stonepeak and the Financing Warrant Shares could result in the
creation of a new control person (as such term is defined in the
TSX Company Manual) and/or could materially affect control (as such
term is defined in the TSX Company Manual) of Akumin, requiring
shareholder approval pursuant to section 604(a)(i) of the TSX
Company Manual. Akumin has received written shareholder consent
from disinterested shareholders representing a majority of the
Akumin Common Shares currently issued and outstanding relating to
the foregoing approvals in accordance with Section 604(d) of the
TSX Company Manual.
As of the date hereof, Akumin has 71,153,427 Akumin Common
Shares issued and outstanding. Upon Closing, it is expected that
14,223,570 Akumin Common Shares will be issued to the Seller and
3,500,000 Akumin Common Shares will be issued to Stonepeak, for a
total of 17,723,570 Akumin Common Shares, representing,
collectively, 24.91% of Akumin's current issued and outstanding
Common Shares before giving effect to the acquisition (or 19.94%
after giving effect to the acquisition).
In accordance with applicable TSX policies, the Company is
required to show hypothetical scenarios of issuances of Akumin
Common Shares that could theoretically become issuable in the event
that the Financing Warrants are exercised. Assuming a subscription
by Stonepeak on Closing of: (a) the Base Commitment, the number of
Financing Warrants to be issued to Stonepeak on Closing will be
approximately 10,067,114 Financing Warrants; and (b) the Maximum
Commitment, the number of Financing Warrants to be issued to
Stonepeak on Closing will be approximately 34,709,899 Financing
Warrants. In the event the Maximum Commitment is issued on Closing,
the number of Financing Warrant Shares, together with number of
Akumin Common Shares to be issued to the Seller and Stonepeak in
connection with the Transaction, would amount to a total of
52,433,469 Akumin Common Shares, representing approximately 73.69%
of Akumin's current issued and outstanding Common Shares before
giving effect to the acquisition, the Financing and the exercise of
the Financing Warrants (or 40.27% after giving effect to the
acquisition, the Financing and the exercise of the Financing
Warrants).
Upon Closing, to the knowledge of Akumin, the only shareholders
of Akumin that would hold in excess of 10% of the then-outstanding
Akumin Common Shares are set out below:
With an Alternative Financing and the Base
Commitment:
Investor
|
Akumin Common
Shares
and Convertible
Securities Held
|
Pro Forma
Ownership(Basic,
Non-Diluted)
|
Pro Forma
Ownership (Partially
Diluted(1))
|
Pro Forma %
Ownership (Fully
Diluted(2))
|
Seller
|
Akumin Common Shares
to
be issued as Share
Consideration on Closing:
14,223,570
|
16.00%
|
16.00%
|
13.48%
|
Stonepeak
|
Akumin Common Shares
to
be issued on Closing (in the
form of the Financing
Common Shares):
3,500,000
Common shares
issuable
upon conversion of all
convertible securities
currently held by the holder:
10,067,114(3)
|
3.94%
|
13.71%
|
12.85%
|
SCW Capital
Management,
LP(4)
|
Akumin Common
Shares
currently held: 11,437,308
|
12.87%
|
12.87%
|
10.84%
|
Without any Alternative Financing and the Maximum
Commitment:
Investor
|
Akumin Common
Shares
and Convertible
Securities Held
|
Pro Forma
Ownership (Basic,
Non-Diluted)
|
Pro Forma
Ownership (Partially
Diluted(1))
|
Pro Forma %
Ownership (Fully
Diluted(2))
|
Seller
|
Akumin Common Shares
to
be Issued as Share
Consideration on Closing:
14,223,570
|
16.00%
|
16.00%
|
10.92%
|
Stonepeak
|
Akumin Common Shares
to
be issued on Closing (in the
form of the Financing
Common Shares):
3,500,000
Common shares
issuable
upon conversion of all convertible securities currently held by the holder: 34,709,899(3)
|
3.94%
|
30.92%
|
29.35%
|
SCW Capital
Management,
LP(4)
|
Akumin Common
Shares
currently held: 11,437,308
|
12.87%
|
12.87%
|
8.78%
|
Notes:
|
(1) "Partially Diluted" means the
holder's ownership interest calculated assuming the exercise or
conversion of all securities held by such holder that are
exercisable for or convertible into Akumin Common Shares and
excluding the exercise or conversion of all securities held by any
other person that are exercisable for or convertible into Akumin
Common Shares.
|
(2) "Fully Diluted" means the
holder's ownership interest calculated assuming the exercise or
conversion of all securities that are exercisable for or
convertible into Akumin Common Shares.
|
(3) With the Alternative Financing
assumes US$200,000,000 principal amount of Financing Notes, being
the Base Commitment, is issued to Stonepeak on Closing. Without the
Alternative Financing assumes the full US$689,570,000 principal
amount of Financing Notes, being the Maximum Commitment, is issued
to Stonepeak on Closing.
|
(4) Includes Akumin Common Shares
held by each of SCW Capital Management, LP, SCW Capital, LP, SCW
Capital QP, LP, SCW Single-Asset Partnership, LP, SCW Single-Asset
Partnership QP, LP, Trinity Investment Group, LLC, Robert N.
Cathey, G. Stacy Smith and John R. Wagner. In making this
disclosure, Akumin has relied exclusively upon disclosure by
Nantahala Capital Management, LLC on Schedule 13G/A dated February
12, 2021 available at www.sec.gov.
|
Research Analyst Update Call
Akumin would like to invite interested parties to a Research
Analyst Update Call, to be held today, June
25, 2021, at 8:30 a.m. Eastern
Time. To access the conference call, dial toll-free in
Canada or the U.S. 888-231-8191
or, for international callers, 647-427-7450. A related presentation
will be available for download on Akumin's website (www.akumin.com)
and at https://akum.in/06252021. Participants are asked to connect
at least 10 minutes prior to the beginning of the call to ensure
participation. The webcast archive will be available for 90 days. A
replay of the conference call will also be available until
Thursday, July 1, 2021 by calling
416-849-0833 or toll-free 1-855-859-2056, using passcode number
9697252.
Advisors
Stikeman Elliott LLP and McDermott
Will & Emery LLP acted as legal advisors, and
PricewaterhouseCoopers LLP as financial advisors, to Akumin.
Citigroup Global Markets, Inc. and SVB Leerink LLC acted as
financial advisors, and Ropes & Gray LLP and Osler, Hoskin & Harcourt LLP acted as
legal advisors, to Alliance. Sidley Austin LLP and McCarthy
Tétrault LLP acted as legal advisors to Stonepeak.
About Akumin Inc.
Akumin Inc. is a leading provider of freestanding, fixed-site
outpatient diagnostic imaging services in the United States with a network of 137 owned
and/or operated imaging centers located in Florida, Texas, Pennsylvania, Delaware, Illinois, Kansas, Georgia, and Massachusetts. By combining our clinical
expertise with the latest advances in technology and information
systems, our centers provide physicians with imaging capabilities
to facilitate the diagnosis and treatment of diseases and disorders
and may reduce unnecessary invasive procedures, minimizing the cost
and amount of care for patients. Our imaging procedures include
MRI, CT, positron emission tomography (PET), ultrasound, diagnostic
radiology (X-ray), mammography, and other interventional
procedures, performed with the help of over 1,500 team members. For
more information, visit www.akumin.com.
About Alliance HealthCare Services
Alliance HealthCare Services is a leading national provider of
outsourced advanced radiology and radiation therapy services across
45 states in the U.S. Alliance partners with more than 1,000
hospitals, health systems and physician practices to provide a full
continuum of solutions, including onsite outpatient services and
comprehensive service line management. Alliance's ~2,500 Team
Members deliver exceptional customer and patient care via more than
600 diagnostic radiology and radiation therapy systems. For more
information, visit www.alliancehealthcareservices-us.com.
About Stonepeak
Stonepeak is a leading alternative investment firm specializing
in infrastructure and real assets with approximately $37 billion of assets under management. Through
its investment in defensive, hard-asset businesses globally,
Stonepeak aims to create value for its investors and portfolio
companies, and to have a positive impact on the communities in
which it operates. Stonepeak sponsors investment vehicles focused
on private equity and credit. The firm provides capital,
operational support, and committed partnership to sustainably grow
investments in its target sectors, which include transport and
logistics, communications, water, energy transition, and power and
renewable energy. Stonepeak is headquartered in New York with offices in Houston, Austin and Hong
Kong. For more information, please visit
www.stonepeakpartners.com.
Forward-Looking Information
Certain information in this press release constitutes
forward-looking information. In some cases, but not necessarily in
all cases, forward-looking information can be identified by the use
of forward-looking terminology such as "plans", "targets",
"expects" or "does not expect", "is expected", "is positioned",
"estimates", "intends", "assumes", "anticipates" or "does not
anticipate" or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might", "will" or "will be taken", "occur" or "be
achieved". In addition, any statements that refer to expectations,
projections or other characterizations of future events or
circumstances contain forward-looking information. Forward-looking
statements contained in this press release include, without
limitation, statements regarding the transaction and the terms
thereof, the expected date of the Closing, the anticipated benefits
of the transaction, the terms of the financings and the
satisfaction of closing conditions, including but not limited to
receipt of necessary regulatory approvals. Statements
containing forward-looking information are not historical facts but
instead represent management's expectations, estimates and
projections regarding future events.
Forward-looking information is necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by Akumin as of the date of this press release, are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information,
including, but not limited to: the transaction will be completed on
the terms currently contemplated; the transaction will be completed
in accordance with the timing currently expected; all conditions to
Closing will be satisfied or waived; the Acquisition Agreement will
not be terminated prior to completion of the Transaction; financing
will be obtained on the conditions currently contemplated; and
other factors described in greater detail in the "Risk Factors"
section of Akumin's Annual Information Form dated March 31, 2021, which is available at
www.sedar.com and www.sec.gov. These factors are not intended to
represent a complete list of the factors that could affect Akumin;
however, these factors should be considered carefully. There can be
no assurance that such estimates and assumptions will prove to be
correct. The forward-looking statements contained in this press
release are made as of the date of this press release, and Akumin
expressly disclaims any obligation to update or alter statements
containing any forward-looking information, or the factors or
assumptions underlying them, whether as a result of new
information, future events or otherwise, except as required by
law.
Non-GAAP Measures
This press release refers to certain non-GAAP measures. These
non-GAAP measures are not recognized measures under United States generally accepted accounting
principles ("GAAP") and do not have a standardized meaning
prescribed by GAAP. There is unlikely to be comparable or similar
measures presented by other companies. Rather, these non-GAAP
measures are provided as additional information to complement those
GAAP measures by providing further understanding of our results of
operations from management's perspective. Accordingly, these
non-GAAP measures should not be considered in isolation nor as a
substitute for analysis of our financial information reported under
GAAP. These non-GAAP measures are used to provide investors with
supplemental measures of our operating performance and thus
highlight trends in our core business that may not otherwise be
apparent when relying solely on GAAP measures. We believe the use
of these non-GAAP measures, along with GAAP financial measures,
enhances the reader's understanding of our operating results and is
useful to us and to investors in comparing performance with
competitors, estimating enterprise value, and making investment
decisions. We also believe that securities analysts, investors, and
other interested parties frequently use non-GAAP measures in the
evaluation of issuers. Our management uses non-GAAP measures to
facilitate operating performance comparisons from period to period,
to prepare annual operating budgets and forecasts and to determine
components of management compensation.
We define such non-GAAP measures as follows:
"EBITDA" means net income
(loss) attributable to Shareholders before interest expense (net),
income tax expense (recovery) and depreciation and
amortization.
"adjusted EBITDA" means
EBITDA, as further adjusted for stock-based compensation,
impairment of property and equipment, provisions for certain credit
losses, settlement costs, provisions, acquisition-related and
public offering costs, gains (losses) in the period, deferred rent
expense (credit) and one-time adjustments.
SOURCE Akumin Inc.