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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 21, 2006
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Dynacq Healthcare, Inc.
(Exact name of registrant as specified in its charter)
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Delaware 000-21574 76-0375477
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
10304 Interstate 10 East, Suite 369
Houston, Texas 77029
(Address of principal executive offices and zip code)
(713) 378-2000
(Registrant's telephone number, including area code)
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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:
[ ] 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))
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Item 1.01. Entry into a Material Definitive Agreement
On February 21, 2006 (the "Effective Date"), Vista Hospital of Baton Rouge, LLC
dba Vista Surgical Hospital, and Vista Holdings, LLC (collectively, "Sellers"),
each an affiliate majority owned and controlled by Dynacq Healthcare, Inc.
("Registrant"), entered into a Purchase and Sale Agreement (the "Agreement")
with Physicians Medical Centre of Baton Rouge, LLC, a limited liability company
of East Baton Rouge Parish, Louisiana ("Buyer"), to sell the hospital owned by
Sellers at 9032 Perkins Road in Baton Rouge, Louisiana, the facility in which it
is located, the equipment used therein, a 6,900 square foot office building
located nearby and the 20 acres of land on which the facilities are located
(collectively, the "Assets"). Excluded from the Assets agreed to be sold were
the accounts receivable for services provided by Sellers prior to the Closing
Date, employee benefit plans, cash and investments held by the Sellers. The
Buyer agreed to assume certain liabilities of Sellers in the operation of the
hospital and to pay to Sellers cash in the amount of $26.5 million.
In the Agreement, the Sellers made customary representations and warranties
regarding the Assets and agreed to indemnify the Buyer from any loss incurred by
it as a result of the breach of any of those representations and warranties, the
operation of the hospital prior to the closing of the sale, or the failure of
any covenant or agreement of Sellers in the Agreement. Sellers have agreed to
operate the hospital in the ordinary course of business until the closing of the
transaction contemplated by the Agreement. Sellers also received customary
representations and warranties from the Buyer as well as indemnification in the
event of breach.
Among the conditions to the closing of the Agreement are the receipt of third
party consents, including regulatory approvals, the execution of a
noncompetition agreement by the Sellers, and the expiration of a 90 day period
after the Effective Date (the "Inspection and Financing Period"). The closing is
projected to occur on or before May 20, 2006, but may be postponed at the option
of the Sellers to no later than June 20, 2006. The Inspection and Financing
Period may be extended only by mutual written consent of the Buyer and Sellers.
Buyer has agreed to provide, within ten days of the Effective Date, an
irrevocable letter of credit in the amount of $100,000, and within 40 days of
the Effective Date an additional letter of credit in the amount of $250,000,
each conditioned only on the terms of the Agreement. Only if the Agreement is
terminated because of Sellers' failure to meet its contingencies, e.g. obtaining
a title commitment or survey or satisfying Buyer's environmental concerns and
physical inspection of the property, by the end of the Inspection and Financing
Period, would the deposits made up to the date of termination be refunded to the
Buyer. If the Agreement is terminated for any other reason, including a
determination by the Buyer that the Assets are not in good condition, feasible
for their intended use or the failure by Buyer to obtain financing, the deposits
made up to the date of termination shall be retained by the Sellers. In such
event, the amount paid to the Sellers would be zero if termination of the
Agreement occurs before the first deposit is made, $100,000 if termination
occurs after the first and before the second deposit is made, and $350,000 if
termination occurs after the second deposit is made. Buyer is obligated to
notify Sellers at the end of the Inspection and Financing Period whether any
contingencies to the closing have not been satisfied or waived. Payment of the
deposit is in addition to any other remedies available at law to the parties for
the termination of the Agreement. If the Agreement is terminated by a party
because of the breach by the other party or because a condition to the
terminating party's obligations under the Agreement is not satisfied as a result
of the other party's failure to comply with its obligations under the Agreement,
the terminating party has the right to pursue all legal remedies and to be
reimbursed for its expenses incurred prior to the date of such termination.
The Chairman of the Buyer is a minority investor in Vista Hospital of Baton
Rouge, LLC.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The Purchase and Sale Agreement will be filed as an exhibit to the next regular
periodic report filed by the Registrant under the Securities Exchange Act of
1934.
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.
Dynacq Healthcare, Inc.
By: /s/ Philip S. Chan
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Philip S. Chan,
Chief Financial Officer
Date: February 22, 2006