UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
December 29, 2005 (December 22, 2005)
AMERICAN RETIREMENT CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Tennessee 01-13031 62-1674303
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
111 Westwood Place, Suite 200
Brentwood, Tennessee 37027
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(Address of Principal Executive Offices) (Zip Code)
(615) 221-2250
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
On December 22, 2005, we obtained three loans from Guaranty Bank to
facilitate the expansion of our Brandywine, Pennsylvania entrance fee continuing
care retirement community. The aggregate principal amount of the loans is $25.8
million.
First, we obtained a $9.4 million construction loan in order to finance the
development of 28 independent living units to be known as the Terrace Homes at
Brandywine, which will be integrated as part of the community's campus. The loan
matures on December 22, 2008. The loan bears interest, at our election, at a
variable rate equal to either LIBOR plus 2.75% or the lender's base rate plus
1.0%. Under this loan, we are required to make monthly payments of interest only
through the scheduled maturity date. The loan will primarily be repaid with the
proceeds from the sale of the entrance fee independent units. Accordingly, the
loan will be substantially retired as the units are sold.
Second, we obtained an $11.4 million construction loan in order to finance
a 57-unit expansion of the healthcare center at the community. The loan matures
on December 22, 2008 and we have two one-year extension options (subject to the
satisfaction of certain conditions, including the payment of an extension fee).
The loan bears interest, at our election, at a variable rate equal to either
LIBOR plus 2.75% or the lender's base rate plus 1.0%. Under this loan, we are
required to make monthly payments of interest only through the scheduled
maturity date. If we exercise our extension options, we will also be required to
make monthly principal payments of $9,670.51 during the first extension period
and $10,369.59 during the second extension period.
Finally, we obtained a $5.0 million term loan which replaces a $4.5 million
term loan repaid during March 2005. The loan matures on December 22, 2008 and we
have two one-year extension options (subject to the satisfaction of certain
conditions, including the payment of an extension fee). The loan bears interest,
at our election, at a variable rate equal to either LIBOR plus 2.5% or the
lender's base rate plus 1.0%. Under this loan, we are required to make monthly
payments of interest only through the scheduled maturity date. If we exercise
our extension options, we will also be required to make monthly principal
payments of $4,232.54 during the first extension period and $4,538.51 during the
second extension period.
Each loan is evidenced by a loan agreement and promissory note and is
secured by a mortgage on a portion of the community, each of which contains
customary terms and provisions. We have guaranteed the payment and performance
of the loans.
Risks Associated with Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of the federal securities laws, which are intended to be
covered by the safe harbors created thereby. Those forward-looking statements
include all statements that are not historical statements of fact and those
regarding the intent, belief or expectations of us or our management, including,
but not limited to, all statements regarding our expectations concerning the
development and expansion projects, the repayment of loans and the projects'
effect on our financial performance. All forward-looking statements may be
affected by certain risks and uncertainties, including without limitation the
following: (i) our ability to successfully complete the development, expansion,
lease up and unit sales of the projects, (ii) the risk that we may experience
adverse changes in operating results and cash flow, (iii) the risks associated
with adverse market conditions of the senior housing industry and the United
States economy in general, (iv) the risk associated with our debt and lease
obligations, and (v) the risk factors described in our Annual Report on Form
10-K/A for the year ended December 31, 2004 under the caption "Risk Factors" and
in our other filings with the SEC.
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Should one or more of those risks materialize, actual results could differ
materially from those forecasted or expected. Although we believe that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of these assumptions could prove to be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Form 8-K will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our forecasts, expectations, objectives or plans will
be achieved. We undertake no obligation to publicly release any revisions to any
forward-looking statements contained herein to reflect events and circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.
Item 7.01. Regulation FD Disclosure
On December 29, 2005, we issued a press release describing the foregoing
transaction. A copy of the press release is furnished herewith as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
99.1 Press Release dated December 29, 2005
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
AMERICAN RETIREMENT CORPORATION
By: /s/ Bryan D. Richardson
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Bryan D. Richardson
Executive Vice President - Finance
and Chief Financial Officer
Date: December 29, 2005
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EXHIBIT INDEX
Exhibit
Number Description
99.1 Press Release dated December 29, 2005
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