NEW SENIOR INVESTMENT GROUP INC. Item 8.01 Other Events.
As previously disclosed, onJune 28, 2021 ,New Senior Investment Group Inc. , aDelaware corporation ("New Senior"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Ventas, Inc., aDelaware corporation ("Ventas"), andCadence Merger Sub LLC , aDelaware limited liability company and a subsidiary of Ventas ("Merger Sub"), pursuant to which, subject to the satisfaction or waiver of certain conditions, Merger Sub will merge with and into New Senior, with New Senior surviving the merger as a subsidiary of Ventas (the "Merger"). OnAugust 11, 2021 , New Senior filed a definitive proxy statement with theSecurities and Exchange Commission ("SEC") in connection with the Merger which also constitutes a prospectus of Ventas (the "Proxy Statement/Prospectus"). Since the initial filing of the Proxy Statement/Prospectus, ten complaints have been filed in federal courts inNew York ,Colorado andPennsylvania and a state court inNew York by purported New Senior stockholders against New Senior and the members of the New Senior board of directors in connection with the Merger: Wang v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-06426 (filedJuly 28, 2021 ) (S.D.N.Y.); Morris v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-04354 (filedAugust 3, 2021 ) (E.D.N.Y.); Hopkins v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-06630 (filedAugust 5, 2021 ) (S.D.N.Y.); Langlois v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-06774 (filedAugust 11, 2021 ) (S.D.N.Y.); Anderson v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-02307 (filedAugust 26, 2021 ) (D. Colo .); Ryan v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-02313 (filedAugust 26, 2021 ) (D. Colo .); Whitfield v.New Senior Investment Group Inc. , et al., Case No. 2:21-cv-03832 (filedAugust 27, 2021 ) (E.D. Pa.); Troughton v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-07361 (filedSeptember 1, 2021 ) (S.D.N.Y.); and Johnson v.New Senior Investment Group Inc. , et al., Case No. 1:21-cv-07373 (filedSeptember 1, 2021 ) (S.D.N.Y.) (collectively, the "Federal Stockholder Litigation") and Garfield v. Givens, et al., Case No. 157665/2021 (N.Y. Sup. Ct., N. Y. Cty.) (the "State Court Litigation" and, collectively with the Federal Stockholder Litigation, the "Stockholder Litigation"). Each of the complaints in the Federal Stockholder Litigation includes allegations that, among other things, the registration statement filed in connection with the Merger onJuly 26, 2021 omitted certain material information in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14a-9 promulgated under the Exchange Act, rendering the registration statement false and misleading. The State Court Litigation purports to allege misrepresentations claims underNew York common law relating to the Proxy Statement/Prospectus. The plaintiffs in the Stockholder Litigation seek various remedies, including an order enjoining the defendants from proceeding with the Merger, requiring the defendants to disclose allegedly material information that was allegedly omitted from the registration statement, rescinding the Merger in the event that it is consummated or awarding rescissory damages, declaring that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act and the related rules and regulations thereunder, awarding costs, including attorneys' fees, and granting such other and further relief as the court may deem just and proper. New Senior believes that the claims asserted in the Stockholder Litigation are without merit and no additional disclosures are required under applicable law. However, in order to avoid the risk of the Stockholder Litigation delaying or adversely affecting the Merger and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, New Senior has determined to voluntarily make the following supplemental disclosures to the Proxy Statement/Prospectus, as described in this Current Report on Form 8-K. Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth herein. To the contrary, New Senior specifically denies all allegations in the Stockholder Litigation that any additional disclosure was or is required. These supplemental disclosures will not change the consideration to be paid to stockholders of New Senior in connection with the Merger or the timing of the Special Meeting of Stockholders (the "Special Meeting") of New Senior, which is scheduled to be held virtually, via live webcast, onSeptember 14, 2021 , at9:00 a.m., Eastern Time . The Special Meeting can be accessed by visiting www.virtualshareholdermeeting.com/SNR2021SM. The New Senior board of directors continues to unanimously recommend that you vote "FOR" the proposals to be voted on at the Special Meeting described in the Proxy Statement/Prospectus.
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Supplemental Disclosures to the Proxy Statement/Prospectus in Connection with
the Stockholder Litigation
The following disclosures in this Current Report on Form 8-K supplement the
disclosures contained in the Proxy Statement/Prospectus and should be read in
conjunction with the disclosures contained in the Proxy Statement/Prospectus,
which in turn should be read in its entirety. All page references are to the
Proxy Statement/Prospectus and terms used below, unless otherwise defined, shall
have the meanings ascribed to such terms in the Proxy Statement/Prospectus.
The disclosure in the section entitled "The Merger-Background of the Merger",
beginning on page 32 of the Proxy Statement/Prospectus, is hereby amended as
follows:
The third paragraph on page 32 is amended and supplemented as follows:
In addition, from time to time since the Internalization, New Senior has received non-binding proposals or other inquiries from various parties (directly or through their financial advisors) relating to acquisitions of or other strategic transactions involving New Senior. Each of the proposals or inquiries either did not propose any indicative value or was speculative and represented value below that ultimately proposed by Ventas. While New Senior has not engaged in a sale process since the Internalization nor engaged a financial advisor to pursue a sale, the New Senior Board considered these proposals and inquiries along with management as part of its strategic reviews. These reviews included, among other things, the value proposition of the proposal or inquiry, an assessment of the overall strength of the counterparty, its strategic fit with New Senior, its financial position and ability to execute a transaction with New Senior and the track record and strength of its management team.
The third full paragraph on page 34 is amended and supplemented as follows:
The representatives of Morgan Stanley also reviewed other strategic alternatives available to New Senior, including remaining as a standalone company and various sale alternatives (including a sale of the company or a combination or strategic partnership with a smaller company), and the relative benefits, risks and other considerations for each of these alternatives. The representatives of Morgan Stanley reviewed the healthcare REIT and operator landscape, including companies that were focused in the senior housing industry with scale and capabilities that may allow them to acquire New Senior. The New Senior Board asked questions and discussed the potential level of interest of such companies and concluded that it was unlikely that any would be interested in a transaction at the price level of the Ventas proposal. A discussion ensued regarding the status of discussions with "Party A," which was a non-publicly traded REIT that first engaged New Senior in discussions regarding a potential all-stock business combination beginning inDecember 2020 . OnMarch 29, 2021 , New Senior and Party A had entered into a mutual confidentiality agreement (which contains a mutual standstill provision that includes a "don't ask, don't waive" provision), following which Party A shared a presentation with New Senior prepared by its financial advisor, which outlined a proposal for an "at market" (i.e., no or low premium) transaction, which would result in Party A's stockholders holding a significant majority of the stock of the combined company. New Senior notified Party A shortly thereafter that New Senior would not enter into a transaction for an acquisition of New Senior without being paid an appropriate control premium, but that New Senior would be willing to facilitate Party A's preparation of a revised proposal by exchanging limited non-public due diligence information. From that time throughJune 6, 2021 , New Senior and Party A had engaged in various discussions directly and through their respective financial advisors regarding a potential transaction, although no revised written proposal was submitted by Party A during that period.
The second full paragraph on page 35 is amended and supplemented as follows:
The discussion then turned to a review of the forecasts that had been made available to the New Senior Board prior to the meeting, including the key underlying assumptions. These forecasts, which are updated at least on a monthly basis, reflected the latest version of the forecasts maintained and periodically updated by New Senior management for use in discussions and reviews with the New Senior Board regarding New Senior's strategic plan, are referred to as the "Forecasts" (as defined and further discussed in the section entitled "The Merger - Certain New Senior Forecasts" beginning on page 53 of this proxy statement / prospectus). The Forecasts were also provided to and approved for use by Morgan Stanley for purposes of its financial analyses. Representatives of New Senior management reviewed with the New Senior Board the key assumptions -------------------------------------------------------------------------------- underlying the Forecasts, including assumptions regarding occupancy rates, leverage profile and operator relationships. The representatives of Morgan Stanley then reviewed preliminary financial analyses based upon the Forecasts, and discussion ensued regarding the analyses and the drivers and assumptions underlying them.
The third full paragraph on page 35 is amended and supplemented as follows:
A discussion ensued regarding granting exclusivity and the relatively short duration of the requested exclusivity period, the credibility of Ventas's proposal and the potential for topping bids, including the New Senior Board's belief, based on discussions with its advisors and management, that a potential break-up fee based on New Senior's equity value (were Ventas to agree to such a break-up fee) would not unreasonably deter other potential bidders, among other reasons because the enterprise value of New Senior was substantially in excess of its equity value. The New Senior Board also discussed whether New Senior should ask Ventas to introduce a collar mechanism on the exchange ratio, discussing with management and the advisors the pros and cons of introducing a collar mechanism, including that, while a collar could protect from downward movement with respect to Ventas' stock price, it also would cap the upside. The New Senior Board also discussed that as New Senior's stockholders would become stockholders in Ventas as part of the Transaction due to the stock consideration, those stockholders post-closing would also be subject to fluctuations in Ventas' stock price going forward.
The last sentence of the fourth full paragraph on page 35 is amended and supplemented as follows:
After management and the advisors were excused from the meeting, the independent members of the New Senior Board further discussed Ventas's proposal and the conclusions reached during the meeting, which discussion covered a number of the same considerations that were discussed by the New Senior Board in its meeting, and expressed support for those conclusions.
The fourth full paragraph on page 36 is amended and supplemented as follows:
OnJune 11, 2021 , the New Senior Board held a meeting via video conference with members of management and representatives of Cravath in attendance. Representatives of Cravath reviewed the relationship disclosure memorandum provided by Morgan Stanley, which described certain relationships between Morgan Stanley and certain of its affiliates, on the one hand, and New Senior and Ventas and certain of their respective affiliates, on the other hand, including disclosure regarding fees that Morgan Stanley and its affiliates had received from Ventas in the two years prior toJune 3, 2021 . The fees earned by Morgan Stanley from Ventas for the two years prior toJune 28, 2021 are disclosed in the section entitled "The Merger-Opinion of New Senior's Financial Advisor-General", beginning on page 52 of this proxy statement/prospectus. The New Senior Board confirmed that it did not believe these relationships would impair Morgan Stanley from acting as New Senior's financial advisor in connection with a potential transaction with Ventas. The New Senior Board provided direction to management on acceptable terms for the engagement of Morgan Stanley. Representatives of Morgan Stanley then joined the meeting.Ms. Givens provided an overview of the discussions with Ventas since theJune 6 meeting, noting that she had consulted withMr. Savage and New Senior's management and advisors during the negotiations.Ms. Givens also shared her assessment that Ventas's insistence on conditioning its proposal on New Senior granting exclusivity was credible. The New Senior Board considered that Ventas had rejected the request to provide a collar to the exchange ratio and, after discussion with Morgan Stanley and Cravath regarding the pros and cons of collars in all-stock transactions and Ventas's recent trading history and dynamics, the New Senior Board concluded that it was better to focus on the per share price and the break-up fee during their consideration of Ventas's proposal and not push for a collar mechanism.
The second full paragraph on page 39 is amended and supplemented as follows:
OnJune 23, 2021 , the New Senior Board held a meeting via video conference with members of New Senior management and representatives of Morgan Stanley and Cravath in attendance for an update on the status of the transaction.Ms. Givens provided an overview of Ventas's due diligence process to date as well as her discussions withMs. Cafaro regarding the Other Senior Housing Transactions. Representatives of Morgan -------------------------------------------------------------------------------- Stanley reported on the reverse due diligence on Ventas that had been conducted by the executive management team and advisors. The representatives of Morgan Stanley reported that, while Ventas was not providing the non-public forecasts that New Senior requested as part of its due diligence, Ventas's Chief Financial Officer responded to questions regarding Ventas's forecasted performance relative to analyst consensus forecasts, which Morgan Stanley reviewed with the New Senior Board. New Senior management reviewed with the New Senior Board an update regarding the Other Senior Housing Transactions and discussed how the implied pricing for the assets in that transaction likely related to the nature of those assets. The representatives of Morgan Stanley also reviewed certain business and financial information regarding theOther Senior Housing Transactions, concurring with the assessment of New Senior's management that assets in New Senior's portfolio were younger, with higher occupancy and margins, lower COVID-19 impact, and higher revenue than those in the Other Senior Housing Transactions. and a discussion ensued regarding The New Senior Board discussed the implications of the Other Senior Housing Transactions and appropriate next steps, if any. Following this discussion, the New Senior Board determined that management and the advisors should continue to advance the documentation and due diligence workstreams. Representatives of Cravath reviewed the key terms of the initial draft merger agreement provided by Wachtell early in the morning onJune 21, 2021 , including (1) the structure and economic terms of the transaction, including providing for the payment of New Senior's quarterly dividends on dates typically used by Ventas; (2) the key closing conditions for the transaction; (3) the terms relating to the New Senior Board's ability to respond to unsolicited competing acquisition proposals and change its recommendation to New Senior stockholders (including the draft's inclusion of a "force the vote" provision which would not permit New Senior to terminate the merger agreement to accept an alternative acquisition proposal the New Senior Board determined constituted a superior proposal); (4) the termination rights of each party; (5) the amount of, and triggers for, the fees payable by New Senior in certain circumstances following the termination of the merger agreement; and (6) the proposed treatment of certain employee compensation and benefits matters, and a discussion ensued. Throughout these discussions, representatives of Cravath noted the key points that remained subject to negotiation, the parties' current positions on each of these points and the range of potential outcomes, and received direction from the New Senior Board on acceptable resolutions for these points. Next, the New Senior Board excused management and the advisors (other than representatives of Cravath), and the independent members of the New Senior Board continued to discuss the information that had been shared during the meeting and reviewed the topics that had been discussed at the Compensation Committee meeting onJune 19, 2021 , including the manner in which such topics were reflected in the draft merger agreement, and the New Senior Board expressed support for the positions adopted by the Compensation Committee.
The last paragraph on page 39 and carry over paragraph on page 40 is amended and supplemented as follows:
OnJune 26, 2021 , the New Senior Board held a meeting via video conference with members of New Senior management and representatives of Morgan Stanley and Cravath in attendance for an update on the status of the transaction. The representatives of Cravath reviewed for the New Senior Board the "force the vote" provision. A discussion ensued during which the New Senior Board considered the effect that a "force the vote" provision might have on potential competing bidders, noting that the provision might result in a competing bidder being required to wait until after the New Senior special meeting was held to enter into an alternative transaction with New Senior. After the discussion, after which the New Senior Board determined that it would ultimately be willing to agree to the "force the vote" provision in the merger agreement so long as the rest of the key open points in the merger agreement were resolved in a manner that was satisfactory, taken together. Representatives of Cravath provided the New Senior Board with an update on the course of merger agreement negotiations and reviewed the other key open points and the New Senior Board provided perspective on those points. After representatives of Morgan Stanley were excused from the meeting, the representatives of Cravath andMs. Givens reviewed the terms of the engagement letter that had been negotiated with Morgan Stanley and the updated relationship disclosure memorandum provided by Morgan Stanley, which contained no updates of note, and the New Senior Board unanimously approved the execution of the Morgan Stanley engagement letter.
The second full paragraph on page 40 is amended and supplemented as follows:
On
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Cravath reviewed information relating to the transaction that had been previously discussed with the Compensation Committee during itsJune 19, 2021 meeting and the New Senior Board during itsJune 23, 2021 meeting regarding the interests of New Senior's directors and executive officers in the transaction, as set forth in the section entitled "The Merger - Interests of New Senior Directors and Executive Officers in the Merger" beginning on page 56 of this proxy statement/prospectus. They noted that the merger agreement negotiations were nearing completion and reviewed the key terms that had been agreed, including how the key open points reviewed with the New Senior Board at the prior meetings had been resolved and which points remained open, and received direction from the New Senior Board on acceptable resolutions for those points. Representatives of Morgan Stanley next provided an updated preliminary financial analysis with respect to Ventas's proposal. A discussion ensued regarding next steps, and that the New Senior Board directed management and the advisors to attempt to resolve the open points with Ventas to facilitate a pre-market announcement onJune 28, 2021 , although the New Senior Board was amenable to announcing the transaction later if management needed more time to reach acceptable resolutions on the open points.
The disclosure in the section entitled "The Merger-Opinion of New Senior's Financial Advisor-Dividend Discount Analysis", beginning on page 49 of the Proxy Statement/Prospectus, is hereby amended as follows:
The third paragraph on page 49 is amended and supplemented as follow:
Morgan Stanley based its analysis on a range of terminal NFFO (as defined in the section entitled "The Merger - Certain New Senior Forecasts" beginning on page 52 of this proxy statement/prospectus) multiples of 10.0x to 12.0x, which Morgan Stanley selected based on its professional judgment and experience, to New Senior's NFFO per share of$0.96 for the fiscal year endingDecember 31, 2025 from the Forecasts and a range of discount rates of 9.7% to 11.7%, which Morgan Stanley estimated based on the capital asset pricing model. Utilizing the range of discount rates and terminal NFFO multiples, Morgan Stanley derived a range of estimated implied values per share of New Senior Common Stock of$7.27 to$9.11 , as compared to the implied value of the Merger Consideration of$9.10 per share.
The disclosure in the section entitled "The Merger-Opinion of New Senior's Financial Advisor-Other Information", beginning on page 50 of the Proxy Statement/Prospectus, is hereby amended as follows:
The second, third, fourth and fifth paragraphs on page 51 are amended and supplemented as follow:
Broker Price Targets Analysis for New Senior
Morgan Stanley reviewed the price targets for shares of New Senior Common Stock based on information obtained fromWall Street researchS&P Capital IQ as ofJune 25, 2021 . The mean of broker price targets for New Senior Common Stock was$7.94 per share, and the high and low price targets per share were$9.00 per share and$7.00 per share.
Broker Price NAV per Share Analysis for New Senior
Morgan Stanley reviewed the NAV per share estimates for New Senior based on information obtained fromWall Street researchS&P Capital IQ as ofJune 25, 2021 . The mean of NAV per share estimates for New Senior was$7.40 per share, and the high and low NAV per share estimates for New Senior were$7.79 per share and$7.20 per share.
Broker Price Targets Analysis for Ventas
Morgan Stanley reviewed the price targets for shares of Ventas Common Stock based on information obtained fromWall Street researchS&P Capital IQ as ofJune 25, 2021 . The mean of broker price targets for Ventas Common Stock was$59.05 per share, and the high and low price targets per share were$68.00 per share and$45.00 per share.
Broker Price NAV per Share Analysis for Ventas
Morgan Stanley reviewed the NAV per share estimates for Ventas based on information obtained fromWall Street researchS&P Capital IQ as ofJune 25, 2021 . The mean of NAV per share estimates for Ventas was$46.06 per share, and the high and low NAV per share estimates for Ventas were$56.56 per share and$38.00 per share.
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The disclosure in the section entitled "The Merger-Opinion of New Senior's Financial Advisor-General", beginning on page 52 of the Proxy Statement, is hereby amended as follows:
The first paragraph on page 53 is amended and supplemented as follows:
Under the terms of its engagement letter, as compensation for its services relating to the Merger, New Senior has agreed to pay Morgan Stanley a fee of approximately$17 million in the aggregate,$3 million of which was payable upon the rendering of its opinion and the remainder of which is contingent upon the consummation of the Merger, as well as an additional discretionary fee of up to approximately$6 million , that was intended to be considered if Morgan Stanley was requested to provide additional services subsequent to the announcement of the transaction, and in such case payable, if at all, at the New Senior Board's sole discretion on or before the closing. New Senior has also agreed to reimburse Morgan Stanley for certain of its reasonable out-of-pocket expenses incurred in performing its services. In addition, New Senior has agreed to indemnify Morgan Stanley and its affiliates, their respective directors, officers, agents and employees and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses related to or arising out of Morgan Stanley's engagement. During the two years preceding the date of delivery of Morgan Stanley's written opinion, Morgan Stanley and its affiliates have provided financing services to Ventas for which Morgan Stanley and its affiliates have received fees in connection with such services in the amounts of approximately$2 - 5 million. In the two years prior to the date of its opinion, except for its current engagement as financial advisor to New Senior, Morgan Stanley has not provided financial advisory or financing services to New Senior or its affiliates and has not received any fee for such services during such time. Morgan Stanley may also seek to provide financial advisory and financing services to New Senior, Ventas and their respective affiliates in the future and would expect to receive fees for the rendering of these services.
The disclosure in the section entitled "The Merger-Certain New Senior Forecasts", beginning on page 53 of the Proxy Statement/Prospectus, is hereby amended as follows:
The third full paragraph on page 54 are amended and supplemented as follows:
The Forecasts were developed for New Senior on a standalone basis without giving effect to the Transaction or entry into the Merger Agreement, including any potential synergies that may be achieved by the combined company as a result of the Transaction, any changes to New Senior's strategy or operations that may be implemented after the consummation of the Transaction or any costs incurred in connection with the Transaction. The New Senior Board did not quantify synergies that may be achieved by the combined company as a result of the Transaction because of the relative sizes of the companies and percentage of stock New Senior stockholders would ultimately own in the combined company. Furthermore, the Forecasts do not take into account the effect of any failure of the Transaction to be completed and should not be viewed as relevant or continuing in that context.
The table and related footnotes beginning on page 55 are amended and supplemented as follows:
Forecasts of New Senior Management
($ in millions, except per share data)
Fiscal Year Ending December 31,(1)
2021 E (1) 2022 E 2023 E 2024 E 2025 E
Total Cash Revenue (2) $ 321.6 $ 348.8 $ 374.8 $ 396.8 $ 415.5
Cash NOI (3) $ 118.2 $ 134.6 $ 147.5 $ 159.7 $ 171.6
Normalized Funds From Operations (NFFO) (4) $ 35.4 $ 58.0 $ 70.6 $ 78.8 $ 88.1
NFFO Per Share $ 0.41 $ 0.66 Adjusted Funds From Operations (AFFO) (5)$ 45.9 $ 67.3 $ 80.2 $ 88.6 $ 96.9 Dividends Per Share$ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 0.26
(1) Actual results through
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