Sec Form 13D Filing - KKR Credit Advisors (US) LLC filing for Quorum Health Corp (QHC) - 2020-04-07

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

1	NAMES OF REPORTING PERSONS
	KKR & Co. GP LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP			(a)	☐
				(b)	☐
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)				☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			2,988,781
		8	SHARED VOTING POWER
			0
		9	SOLE DISPOSITIVE POWER
			2,988,781
		10	SHARED DISPOSITIVE POWER
			0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	2,988,781
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)				☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	9.1%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	OO

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

1	NAMES OF REPORTING PERSONS
	Powell Investors II Limited Partnership
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP			(a)	☐
				(b)	☐
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)				☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			2,513,651
		8	SHARED VOTING POWER
			0
		9	SOLE DISPOSITIVE POWER
			2,513,651
		10	SHARED DISPOSITIVE POWER
			0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	2,513,651
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)				☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	7.6%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	PN

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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SCHEDULE 13D

CUSIP No.  74909E106

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Item 4.

Purpose of the Transaction

As described by the Issuer in its Current Report on Form 8-K filed on April 7, 2020 (the “Issuer’s 8-K”), on April 7, 2020, the Issuer and certain of its subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to implement the financial restructuring of the Issuer (the “Restructuring”).  In connection with the Restructuring, on April 6, 2020, the Issuer and certain of its subsidiaries entered into a restructuring support agreement (the “Restructuring Support Agreement”) with (i) the lenders, including certain Client Accounts of KCA, (a) who constitute more than a majority in number of the lenders under the outstanding term loans (the “Term Loans”) and the outstanding revolving loans (the “Revolving Loans”, together with the Term Loans, the “First Lien Loans”) under that certain credit agreement (the “Senior Secured Credit Agreement”), dated as of April 29, 2016, by and among the Issuer, as borrower, each of the guarantors named therein, the lenders from time to time party thereto and Credit Suisse AG, as administrative agent for the lenders under the Senior Secured Credit Agreement, and (b) who hold at least two-thirds of the aggregate outstanding principal amount of the First Lien Loans (the “Consenting First Lien Lenders”), and (ii) the holders, including certain Client Accounts of KCA, (x) who constitute a majority in number of the holders of the Issuer’s $400,000,000 aggregate outstanding principal amount of 11.625% senior notes due 2023 issued by the Issuer (the “Senior Notes”) and (y) who hold at least two-thirds of the aggregate outstanding principal amount of the Senior Notes (the “Consenting Noteholders”, and collectively with the Consenting First Lien Lenders, the “Consenting Stakeholders”).

 

Pursuant to the Restructuring Support Agreement, the Consenting Stakeholders have agreed to support a financing reorganization of the Issuer consistent with the terms and conditions set forth in the Restructuring Support Agreement. The Issuer’s 8-K describes material terms of the Restructuring Support Agreement, including that, upon successful completion of the Restructuring, holders of the Senior Notes will receive, in exchange for the discharge, termination and release of the Senior Notes, (i) 100% of the new common stock (the “New Common Stock”) of the Issuer as reorganized (the “Reorganized QHC”) after the conclusion of its Chapter 11 bankruptcy cases, subject to dilution for certain issuances of New Common Stock, including, without limitation, a new capital equity raise involving the issuance of no less than $200 million (which amount may be increased to $250 million under certain circumstances) of new common stock of the Reorganized QHC, as well as an additional issuance to such investors of shares of New Common Stock in an amount equal to 7.5% of the total number of shares of New Common Stock being purchased by such investors (collectively, the “New Common Equity Raise”) and (ii) certain benefits under a new litigation trust established for the benefit of holders of claims under Senior Notes. Further, each lender of Term Loans will receive its pro rata share of: (i) $50 million to $100 million in cash proceeds, as determined by the holders of at least 50% of the aggregate commitment amounts of all commitment parties party to an equity commitment agreement (the “Equity Commitment Agreement”); and (ii) the proceeds of a senior secured term loan facility, as further described in the Issuer’s 8-K.

 

Client Accounts of KCA currently hold $150.4 million principal amount of the $400,000,000 aggregate principal amount of Senior Notes and $125,412,994 principal amount of Term Loans. Client Accounts of KCA do not currently intend on participating in the New Common Equity Raise and are not parties to the Equity Commitment Agreement.

 

Pursuant to the Restructuring, if the Restructuring is approved by the Bankruptcy Court, all common stock of the Issuer, including the common stock currently beneficially owned by the Reporting Persons, will be cancelled.

 

The terms of the Restructuring Support Agreement contain certain additional covenants, conditions and milestones and remains subject to approval of the Bankruptcy Court. The Restructuring Support Agreement may also be terminated by each party upon the occurrence of certain events as discussed in further detail in the Issuer’s 8-K, including relief being granted by the Bankruptcy Court that is inconsistent with any definitive restructuring document or the failure to satisfy any milestones set forth in the Restructuring Support Agreement.  The Restructuring has not been approved by the Bankruptcy Court.  The summary of the Restructuring, therefore, may not reflect the definitive versions of these agreements and transactions and are qualified in their entirety by reference to the definitive agreements and transactions, as approved by the Bankruptcy Court.

 

The description of the Restructuring Support Agreement set forth above in this Item 4 does not purport to be complete and is qualified in its entirety by reference to the full text of the Restructuring Support Agreement, which has been filed as Exhibit E and is incorporated herein by reference.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Item 7.

Materials to be Filed as Exhibits.

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