UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): November 28, 2006
SERVICE CORPORATION INTERNATIONAL
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(Exact name of registrant as specified in its charter)
Texas 1-6402-1 74-1488375
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
1929 Allen Parkway, Houston, TX 77019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 522-5141
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 240.13.e-4(c))
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On November 28, 2006, Service Corporation International ("SCI") completed its
acquisition of Alderwoods Group, Inc. ("Alderwoods"). Pursuant to the Agreement
and Plan of Merger, by and among Alderwoods, SCI and Coronado Acquisition
Corporation, a wholly owned subsidiary of SCI ("Merger Sub"), dated as of April
2, 2006 (the "Merger Agreement"), Merger Sub merged with and into Alderwoods and
Alderwoods became a wholly owned subsidiary of SCI (the "Merger").
At the effective time of the Merger, all of the outstanding shares of Alderwoods
common stock and restricted stock units were converted into the right to receive
$20.00 per share in cash, without interest. Each outstanding option or warrant
to purchase Alderwoods common stock was converted into the right to receive, for
each share of common stock issuable upon exercise of such option or warrant,
cash in the amount of the excess, if any, of $20.00 over the exercise price per
share of such option or warrant. The aggregate equity consideration payable as a
result of the Merger was approximately $809 million.
As a result of the acquisition, Alderwoods ceased to be publicly traded and,
accordingly, will no longer be listed on The Nasdaq Stock Market, Inc.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On November 28, 2006, pursuant to a Purchase Agreement dated as of November 28,
2006 (the "Purchase Agreement") among SCI and the initial purchasers named in
Schedule 1 thereto (collectively, the "Purchasers"), SCI sold $200 million
aggregate principal amount of unsecured senior notes, consisting of $50 million
of Floating Rate Series A Senior Notes due 2011 (the "Series A Notes") and $150
million of Floating Rate Series B Senior Notes due 2011 (the "Series B Notes"
and, together with the Series A Notes, the "Notes") to the Purchasers (the
"Offering"). The Notes rank equally with SCI's new Credit Agreement discussed
below and are unconditionally guaranteed by each of SCI's existing and
subsequently acquired or organized domestic subsidiaries and, in certain
circumstances, SCI's foreign subsidiaries. Interest on the Notes will accrue at
the rate of LIBOR plus 2.00% and will be payable quarterly in arrears. The
Series A Notes may be prepaid, in whole or in part, at any time without any
premium or penalty, other than customary LIBOR "breakage" costs. The Series B
Notes may be prepaid on the same terms after the first anniversary of the
issuance thereof. The Purchase Agreement evidencing the Notes contains customary
affirmative and negative covenants, and also requires SCI to maintain a maximum
total leverage ratio and a minimum interest coverage ratio. The Purchase
Agreement also specifies certain customary events of default. A copy of the
Purchase Agreement is filed as Exhibit 4.1 to this report and is incorporated
herein by reference. The Notes have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and may not be offered or sold in
the United States absent registration or an applicable exemption from the
registration requirements of the Securities Act.
In addition, on November 28, 2006, SCI entered into a Credit Agreement, by and
among SCI, the Lenders specified therein, JPMorgan Chase Bank, N.A., as
Administrative Agent, Bank of America, N.A. and the Bank of Nova Scotia, as
Syndication Agents for the Revolving Loans, J.P. Morgan Securities Inc. and Banc
of America Securities LLC, as Joint Bookrunners and Joint Lead Arrangers for the
Revolving Loans and J.P. Morgan Securities Inc. and Merrill Lynch Capital
Corporation, as Joint Bookrunners and Joint Lead Arrangers for the Term Loan
(the "Credit Agreement"). Pursuant to the Credit Agreement, SCI borrowed an
aggregate of $150 million of term loans due November 28, 2009 (the "Borrowing").
Borrowings under the Credit Agreement bear interest at a rate equal to, at SCI's
option, either (a) a LIBOR rate adjusted for certain additional costs, plus an
applicable margin (initially 2.00%) or (b) a base rate determined by reference
to the higher of (1) the prime rate of JPMorgan Chase Bank, N.A. and (2) the
federal funds rate plus 1/2 of 1%, plus an applicable margin (initially 1.00%).
The applicable margin for borrowings under the Credit Agreement may be reduced
subject to SCI attaining certain leverage ratios. In addition to paying interest
on outstanding principal under the Revolving Credit Agreement, SCI will pay a
commitment fee (initially 0.50% per annum) in respect of the average daily
unutilized commitments thereunder. With respect to outstanding letters of
credit, SCI will pay customary fees equal to the applicable margin for LIBOR
borrowings under the Revolving Credit Agreement, plus fronting fees of 0.125%
per annum. SCI is required to prepay outstanding term loans, subject to certain
exceptions, with 50% of annual excess cash flow (as defined in the Credit
Agreement) and 100% of the net cash proceeds of non-ordinary course asset sales
and equity issuances. SCI may voluntarily prepay outstanding term loans at any
time, in whole or in part, subject to a prepayment premium (initially 0.5%) and
customary LIBOR "breakage" costs. All obligations under the Credit Agreement are
unconditionally guaranteed to the same extent contemplated by the Purchase
Agreement for the Notes. The Credit Agreement contains customary affirmative and
negative covenants and events of default that are substantially identical to the
covenants and events of default in the Purchase Agreement for the Notes. A copy
of the Credit Agreement is filed as Exhibit 4.2 to this report and is
incorporated herein by reference.
SCI is using the net proceeds from the Offering and the Borrowing, together with
available cash and other financings, to consummate the acquisition of Alderwoods
and refinance certain other indebtedness.
ITEM 8.01. OTHER EVENTS.
On November 28, 2006, SCI issued a press release disclosing certain of the
events set forth in Items 2.01 and 2.03 of this report. The information
contained in this Item 8.01 is qualified in its entirety by the press release,
which is filed as exhibit 99.1 to this report and incorporated herein by
reference.
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The financial statements required by Item 9.01(a) of Form 8-K will be filed by
amendment to this Form 8-K no later than 71 days after the date this initial
report on Form 8-K must be filed.
(b) Pro Forma Financial Information.
The pro forma financial statements required by Item 9.01(b) of Form 8-K will be
filed by amendment to this Form 8-K no later than 71 days after the date this
initial report on Form 8-K must be filed.
(d) Exhibits.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2.1 Certificate of Merger of Alderwoods Group, Inc., dated
November 28, 2006, merging Coronado Acquisition
Corporation with and into Alderwoods Group, Inc.
4.1 Note Purchase Agreement, dated November 28, 2006 among
Service Corporation International and Purchasers
identified therein.
4.2 Credit Agreement, dated November 28, 2006 among Service
Corporation International, the lenders party thereto,
and JPMorgan Chase Bank, N.A., as Administrative Agent.
99.1 Service Corporation International press release, dated
November 28, 2006.
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.
SERVICE CORPORATION INTERNATIONAL
Date: November 28, 2006
By: /s/ James M. Shelger
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Name: James M. Shelger
Title: Senior Vice President, General
Counsel and Secretary
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2.1 Certificate of Merger of Alderwoods Group, Inc., dated
November 28, 2006, merging Coronado Acquisition
Corporation with and into Alderwoods Group, Inc.
4.1 Note Purchase Agreement, dated November 28, 2006 among
Service Corporation International and Purchasers
identified therein.
4.2 Credit Agreement, dated November 28, 2006 among Service
Corporation International, the lenders party thereto,
and JPMorgan Chase Bank, N.A., as Administrative Agent.
99.1 Service Corporation International press release, dated
November 28, 2006.