Manor Care, Inc., of Silver Spring, Md., and National Medical Enterprises Inc., of Los Angeles, jointly announced an agreement intended to resolve their contest for control of Hillhaven Corp., a Washington state firm.
Richard K. Eamer, chairman and president of National Medical, and Stewart Bainum, chairman would be subject to the approval of Hillhaven's shareholders. Pending implementation of the agreement, neither National Medical Enterprises nor Manor Care will purchase any additional shares of Hillhaven common stock.
The agreement provides that Manor Care will submit to Hillhaven a proposal for an exchange of the Hillhaven common shares presently owned by Manor Care for certain Hillhaven assets.
Such assets include Hillhaven's interest in 63 skilled nursing facilities and one specially hospital containing approximately 7,900 beds. Thirty-one of these facilities-with 3,000 beds-are located in California and the remainder are located in the midwestern and southeastern states.
It is expected that National Medical will propose a merger or other business combination involving Hillhaven whereby Hillhaven-with its remaining assets-will be held by a wholly-owned subsidiary of National Medical and Hillhaven shareholders other than Manor Care will receive $25 cash for each of their Hillhaven common shares.
Each of the transactions contemplated by today's agreement is subject to the receipt by Hillhaven of an opinion of an independent investment baker that the transaction is fair to Hillhaven and its shareholders other than National Medical and Manor Care.
Of the 1,370,624 shares of Hillhaven common stock presently outstanding, Manor Care owns 833,000 and National Medical 287,920 shares.
In addition, National Medical owns 400,000 shares of Hillhaven's series B voting preferred stock, $3,500,000 principal amount of Hillhaven's 8 percent debentures convertible into 225,800 shares and a warrant to purchase 175,000 shares of Hillhaven's common.
Hospital Affiliates Inc. owns 400,000 shares of Hillhaven's voting series A preferred stock and has an option to exchange such shares for two Hillhaven facilities.
Last week National Medical announced it was considering a tender offer to purchase additional shares of Hillhaven common stock at $25 a share. Under the terms of today's agreement, that tender offer will not be made.