SEC Filings

AMSURG CORP filed this Form 10-12G/A on 11/03/1997
Entire Document
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                                THE DISTRIBUTION
     This section of the Information Statement describes certain aspects of the
Recapitalization, Exchange and Distribution. The following description does not
purport to be complete and is qualified in its entirety by reference to the
Distribution Agreement which is attached as Appendix A to this Information
     AmSurg was formed in April 1992 with AHC owning an initial 25% equity
interest. The business strategy of AmSurg was to develop, acquire and operate
practice-based ambulatory surgery centers, in partnerships with physician
practice groups, throughout the United States. The implementation of this
strategy required significant capital resources beyond that which AmSurg could
generate internally and, from 1992 through 1995, AHC provided substantially all
of the needed capital through direct equity investment and guaranties of AmSurg
bank debt. As a result of its investments in AmSurg, as of September 30, 1997,
AHC owned 58% of the outstanding AmSurg common stock. The remaining AmSurg
common stock is owned by physicians who are partners in AmSurg surgery centers
(who collectively owned 32% of the AmSurg common stock) and management and
certain other investors (who collectively owned 10% of the AmSurg common stock).
     During 1994, AHC through its wholly-owned subsidiary DTCA began to
implement a business strategy to develop and market new comprehensive diabetes
disease management products for the managed care industry. The development and
marketing of these products have required significant capital and have reduced
the capability of AHC to fund the capital needs of AmSurg. As a result of the
diminished capability of AHC to fund the capital needs of AmSurg, in early 1996,
management of AHC began to consider alternative ways to facilitate AmSurg's
access to capital from sources other than AHC.
     As a first step, management of AHC recommended to the AmSurg management
that it address its short-term capital needs by engaging an investment bank to
seek additional capital through a private placement of equity or debt. AmSurg
accepted this recommendation and engaged J.C. Bradford to raise the capital
necessary to meet its short-term needs. As a result of this process, on November
20, 1996, AmSurg raised a net of approximately $5.0 million of additional
capital by issuing to unaffiliated institutional investors a combination of
AmSurg redeemable and convertible preferred stock. Following this transaction,
AmSurg believes that it is adequately funded for its short-term needs but
believes it will need additional debt or equity capital to fund its long-term
growth. See "MANAGEMENT'S DISCUSSION AND ANALYSIS -- Liquidity and Capital
     Recognizing the need of AmSurg for additional capital, management of AHC
determined that the long-term needs of AmSurg required that AmSurg have access
to the public equity and debt markets and that a public trading market in AmSurg
common stock could be created either through a public offering of a portion of
the AmSurg common stock owned by AHC or through the distribution of the AmSurg
common stock it owned to the stockholders of AHC. In September 1996, management
of AHC determined that it was in the best interests of the stockholders of AHC
to create the public market opportunity for AmSurg through a substantially tax
free spin-off of the AmSurg common stock held by AHC. Management of AHC was
advised that in order for such a spin-off transaction to be substantially tax
free, a recapitalization of AmSurg was necessary to give AHC common stock with
sufficient voting power to be able to distribute "control" of AmSurg in the
Distribution as required for substantially tax free treatment under Section 355
of the Code. See "-- Certain Federal Income Tax Consequences." As a result of
this determination, in September 1996, AHC presented to AmSurg a proposed
Distribution and a related proposed Recapitalization and Exchange (the "Original
Proposed Distribution") which was structured identically in all material
respects to the Distribution and the related Recapitalization and Exchange
except that in the Original Proposed Distribution only shares of Class B Common
Stock were being distributed to AHC stockholders and a share of Class B Common
Stock converted automatically into a share of Class A Common Stock upon any
     On October 3, 1996, the AmSurg Board of Directors created the Special
Committee to consider whether the Original Proposed Distribution would be in the
best interests of AmSurg and its stockholders, including the minority
stockholders, and to negotiate the terms and conditions of any such transaction
on behalf of AmSurg. Ken P. McDonald, the President of AmSurg, as well as a
director, and William C. Weaver, III and