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CARECENTRIC, INC.
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FOR IMMEDIATE RELEASE COMPANY CONTACT:
JOHN R. FESTA
PRESIDENT AND CEO
(678) 264-4400
CARECENTRIC ANNOUNCES MERGER
PROPOSAL FROM AN INVESTOR GROUP LED BY ITS MAJORITY STOCKHOLDER
ATLANTA, GA (FEBRUARY 4, 2003) - CARECENTRIC, INC. (OTC BULLETIN BOARD: CURA), a
leading provider of management information systems to the home health care
community, announced today that it has received a merger proposal from an
investor group led by its majority stockholder, John Reed, and his son, Stewart
Reed, that could have the effect of taking the company private.
The proposal features the following key terms:
o A new corporation formed by the investor group, Borden Associates,
Inc., would be merged into CareCentric;
o Smaller stockholders of CareCentric (those holding less than 4,000
shares) would be offered a price of $.55 per share;
o Other CareCentric stockholders' shares would remain outstanding and
continue to represent shares of CareCentric (the surviving company);
o The investor group will pay up to a total of $450,000 to cash out the
small stockholders and pay the transaction expenses of Borden;
o The current stockholders of Borden would receive a total number of
CareCentric shares equal to the total cash consideration invested in
Borden divided by the per share price of $.55.
The proposed transaction would have the following potential effects:
o The number of record holders could be reduced from approximately 5,500
to approximately 200;
o CareCentric would be eligible to terminate the registration of its
common stock under the Securities Exchange Act of 1934, as amended;
o If the termination of the registration of the common stock was
completed, the common stock would no longer be quoted on the OTC
Bulletin Board.
The proposal states that it is conditioned upon the approval of the transaction
by the Board of Directors and stockholders of CareCentric, a special committee
of the Board consisting of independent directors, a fairness opinion, and the
receipt of all necessary regulatory approvals.
The Board has formed a special committee consisting of independent directors to
review the proposal.
CareCentric provides information technology systems and services to over 1,500
customers. CareCentric provides freestanding, hospital-based and multi-office
home health care providers (including skilled nursing, private duty, home
medical equipment and supplies, IV pharmacy and hospice) complete information
solutions that enable these home care operations to generate and utilize
comprehensive and integrated financial, operational and clinical information.
With offices nationwide, CareCentric is headquartered in Atlanta, Georgia.
Note regarding Private Securities Litigation Reform Act: Statements made in this
press release which are not historical facts, including projections, statements
of plans, objectives, expectations, or future economic performance, are forward
looking statements that involve risks and uncertainties and are subject to the
safe harbor created by the Private Securities Litigation Reform Act of 1995. The
CareCentric's future financial performance could differ significantly from that
set forth herein, and from the expectations of management. Important factors
that could cause the CareCentric's financial performance to differ materially
from past results and from those expressed in any forward looking statements
include, without limitation, the inability to obtain additional capital
resources, variability in quarterly operating results, customer concentration,
product performance and acceptance, long sales cycles, long and varying delivery
cycles, the CareCentric's dependence on business partners, emerging
technological standards, risks associated with acquisitions and the risk factors
detailed in the CareCentric's Registration Statement on Form S-4 (File No.
333-96529) and from time to time in the CareCentric's periodic reports filed
with the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of their
dates.
INVESTOR NOTICE
CareCentric will file a proxy statement and other relevant documents concerning
the proposed merger with the SEC. Investors of CareCentric are urged to read the
proxy statement when it becomes available and any other relevant documents filed
with the SEC because they will contain important information. You will be able
to obtain the documents free of charge at the website maintained by the SEC at
www.sec.gov. In addition, you may obtain documents filed with the SEC by
CareCentric free of charge by requesting them in writing from Ana McGary at
CareCentric, Inc., 2625 Cumberland Park, Suite 310, Atlanta, GA 30339 or by
telephone at 678-264-4400.
CareCentric, its directors and executive officers and certain of their employees
and the investor group, may be deemed to be participants in the solicitation of
proxies from the stockholders of CareCentric in connection with the merger.
These participants may have interests in the merger, including interests
resulting from holding options or shares of CareCentric common stock.
Information about the interests of directors and executive officers of
CareCentric, the investor group, and their ownership of securities of
CareCentric will be set forth in the proxy statement.
Investors should read the proxy statement carefully when it becomes available
before making any voting or investment decisions.
1585932v1
January 28, 2003
Board of Directors
CareCentric, Inc.
2625 Cumberland Parkway, Suite 310
Atlanta, Georgia 30339
Gentlemen:
We hereby propose a transaction that would allow CareCentric, Inc., a
Delaware corporation ("CareCentric"), to deregister its common stock, $.001 par
value per share (the "COMMON STOCK"), under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and to terminate its
reporting obligations under Section 13 of the Exchange Act. The principal terms
of our "going private" proposal are as follows:
PROPONENTS: John E. Reed, Stewart B. Reed and James A. Burk (the
"INVESTORS").
STRUCTURE: Statutory merger of Borden Associates, Inc., a Delaware
corporation controlled by the Investors ("BORDEN"), with and
into CareCentric, with CareCentric as the surviving
corporation (the "MERGER"), and pursuant to which the number
of record holders of the Common Stock would be reduced from
approximately 5,500 to approximately 200.
TOTAL CASH An amount (the "TOTAL CASH CONSIDERATION") equal to the
CONSIDERATION: product of (x) $0.55 in cash (the "PER SHARE PRICE"),
multiplied by (y) the aggregate number of shares owned of
record by holders of fewer than 4000 shares of Common Stock
on the record date (the "SMALL STOCKHOLDERS").
FUNDING: The Investors will fund the purchase of shares from the
Small Stockholders by investing in Borden, immediately prior
to the Merger, an amount equal to the Total Cash
Consideration; provided, however, that the Investors shall
not obligated to invest an amount in excess of $450,000,
including amounts needed by Borden for expenses related to
the transaction.
EFFECTS OF THE As a result of the Merger:
MERGER:
o each share of Common Stock owned of record by a Small
Stockholder will be converted into, and will represent
the right to receive the Per Share Price, without
interest;
o each share of Common Stock owned of record by a holder
other than a Small Stockholder will continue to
represent one share of Common Stock after the merger;
and
o the outstanding shares of Borden's capital stock will,
in the aggregate, be converted into the right to
receive that number of shares of Common Stock equal to
the quotient of the Total Cash Consideration divided by
the Per Share Price.
EXPENSES: Each Investor and Borden and CareCentric will be responsible
for and bear all of his or its own costs and expenses
incurred at any time in connection with pursuing or
consummating the proposed transaction.
January 28, 2003
Page 2
We are proposing this going private transaction because we believe that:
o CareCentric incurs substantial direct and indirect costs and expenses
associated with being a publicly held company, including:
o the accounting and legal fees associated with the obligation to file
annual, quarterly and current reports with the SEC, and
o the executive time expended to prepare and review such filings,
and we anticipate that these costs and expenses would increase in the
future;
o CareCentric' status as a public company is impeding possible equity
and debt financing;
o CareCentric's ability to attract and maintain qualified directors and
officers has been, and will likely continue to be constrained by new
duties imposed on such directors and officers by the Sarbanes-Oxley
Act of 2002 and related regulations ("SARBANES-OXLEY");
o costs of CareCentric's director and officer liability insurance is
likely to increase substantially; and
o CareCentric's low market capitalization has made it impractical to use
its stock as acquisition currency.
We believe the offer contemplated by our proposal is fair and generous to
the Small Stockholders based on the following considerations:
o The proposed Per Share Price represents a 22.7% premium over the
average closing price adjusted for volume of $0.4483 from August 29,
2002 through January 2, 2003 during which period approximately 739,700
shares were traded in the public market under the symbol CURA.OB as
reported by Yahoo Finance;
o The Merger will provide them with the opportunity to obtain immediate
liquidity for their interest in CareCentric without incurring any
brokerage commissions or related transaction costs; and
o The proposed Per Share Price represents a substantial premium to our
estimate of the liquidation value of CareCentric's assets after taking
into account reasonable lease buyout reserves, litigation reserves,
employee severance costs, and other related fees and expenses.
We understand that in transactions of this nature, it is typical and
advisable for a special committee of independent directors (the "SPECIAL
COMMITTEE") to be established to review proposals of this nature. We understand
that the Special Committee will hire its own financial and legal advisors to
review, negotiate, and accept or reject our proposal and the terms of the
proposed transaction and that such Special Committee may solicit other
transactions.
Our proposal is conditioned upon the execution of a definitive merger
agreement containing the terms and conditions set forth above and such other
mutually agreeable terms and conditions as are customary in agreements of this
sort, including but not limited to customary representations, warranties,
covenants and conditions. It is also subject to, among other things, (1) the
approval of the transaction by the Special Committee, the Board of Directors and
the stockholders of CareCentric, (2) receipt of a fairness opinion by the Board
of Directors, and (3) the receipt of all necessary regulatory approvals.
January 28, 2003
Page 3
Please advise us at your earliest convenience how you would like to proceed
with this proposal. We reserve the right to modify or withdraw this proposal at
any time prior to the execution and delivery of the definitive merger agreement
in the event that we become aware of any facts or circumstances that we
determine, in our sole discretion, make such action appropriate. We will not
have any obligation to CareCentric or its stockholders with respect to this
proposal unless and until we execute and deliver a definitive merger agreement,
which must be in form and content satisfactory to us in our sole discretion.
We and our advisors are prepared to meet with the Special Committee and
its advisors to answer any questions that may arise regarding our proposal and
the proposed transaction.
Very truly yours,
--------------------------------
John E. Reed
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Stewart B. Reed
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James A. Burk
Borden Associates, Inc.
By:_______________________________
John E. Reed, President