AAC HOLDINGS, INC. (NYSE:AAC) Files An 8-K Completion of Acquisition or Disposition of Assets
Item 2.01 Completion of Acquisition or Disposition of Assets.

As previously disclosed, on September13, 2017, AAC Healthcare Network, Inc., a Delaware corporation (“Buyer”) and wholly owned subsidiary of AAC Holdings, Inc., a Nevada corporation (“Holdings”), entered into a Securities Purchase Agreement (the “Purchase Agreement”), by and among Buyer, Holdings, AdCare, Inc., a Massachusetts corporation (“AdCare”), and AdCare Holding Trust, a Massachusetts business trust. AdCare and its subsidiaries offer treatment of drug and alcohol addiction and own, among other things, a114-bedhospital and five outpatient centers in Massachusetts and a59-bedresidential treatment center and two outpatient centers in Rhode Island.

On March1, 2018 (the “Closing Date”), Buyer and Holdings completed the acquisition of AdCare and its subsidiaries (the “AdCare Acquisition”) for aggregate consideration of $85.0 million, subject to adjustments as set forth in the Purchase Agreement, comprised of (i)approximately $67.5 million in cash, excluding expenses and other adjustments, (ii)approximately $4.8 million in shares of Holdings’ common stock (the “Common Shares”) (or 562,051 shares at an average closing stock price of $8.57), (iii)a promissory note in the aggregate principal amount of approximately $9.6 million (the “Promissory Note”), and (iv)contingent consideration of up to $3.1 million based on a specified adjusted EBITDA target over the 12 months following closing.

The foregoing summary of the transactions contemplated by the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, which was filed as Exhibit 2.1 to Holdings’ Form8-K filed with the Securities and Exchange Commission (the “SEC”) on September13, 2017, which is incorporated herein by reference.

The information set forth under Item 2.01 of this Current Report on Form 8-K related to the Promissory Note is incorporated by reference into this Item 2.01.

As previously disclosed, on October6, 2017, in conjunction with the AdCare Acquisition, Holdings secured a $65.0 million incremental term loan commitment in conjunction with its senior secured credit agreement with Credit Suisse AG, as administrative agent and collateral agent (“Credit Suisse”) and the lenders party thereto (the “2017 Credit Facility”), subject to customary closing conditions and regulatory provisions. In connection with the financing, Holdings committed to a ticking fee that commenced on October23, 2017, at a rate of LIBOR plus 3.375%, and increased to LIBOR plus 6.75% for November22, 2017 through the Closing Date.

On the Closing Date, Holdings and Credit Suisse entered into the Incremental Loan Assumption Agreement (the “ILAA”) with the other loan parties thereto, the incremental term lenders party thereto (the “Incremental Term Lenders”) and the required lenders party thereto. to the ILAA, the Incremental Term Lenders extended to Holdings on the Closing Date the Incremental Term Loans (as defined in the ILAA) in the principal amount of $65.0 million for the purpose of providing financing for the AdCare Acquisition. The Incremental Term Loans will bear interest at the same rates available to the existing Term Loans (as such term is defined in the 2017 Credit Facility) and will mature on the same date as the existing Term Loans, June30, 2023, subject to customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain ERISA events, invalidity of loan documents and certain changes of control. The existing Term Loans and the Incremental Term Loans will require aggregate principal payments of approximately $1.7 million on quarterly repayment dates beginning March31, 2018 and continuing through June30, 2019, and payments of approximately $3.4 million on quarterly repayment dates beginning September30, 2019 and continuing through March31, 2023.

The ILAA also amends the 2017 Credit Facility to, among other things, permit Holdings to elect for the relevant ratios and baskets applicable upon the incurrence of indebtedness and other certain actions in connection with acquisitions not conditioned on the availability of third party financing to be determined at the time such definitive acquisition agreements are entered into rather than at the closing of such acquisition.

Borrowings under the 2017 Credit Facility, as amended by the ILAA, are guaranteed by Holdings’ wholly owned subsidiary, American Addiction Centers, Inc., and certain of its other subsidiaries, including AdCare and certain of its wholly owned subsidiaries, to that certain Guarantee and Collateral Agreement, dated as of June30, 2017, by and among Holdings, each of the subsidiary guarantors party thereto and Credit Suisse and joinders executed in connection therewith. The obligations are secured by a lien on substantially all of Holdings’ and each subsidiary guarantor’s assets.

The foregoing summary of the transactions contemplated by the ILAA does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the ILAA, which is filed herewith Exhibit 10.1 and incorporated herein by reference.

The information set forth under Item 2.01 of this Current Report on Form8-Krelated to the issuance of Common Shares is incorporated by reference into this Item 2.01.The issuance of Common Shares to the Purchase Agreement was consummated without registration with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration in Section4(a)(2) of the Securities Act as transactions not involving any public offering. No sales commission or other consideration was paid in connection with such sale.

(a) Financial Statements of Business Acquired.

The financial statements required by this Item are not being filed with this Current Report on Form 8-K. Such financial statements will be filed by an amendment to this Current Report on Form 8-K not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed.

(b) Pro Forma Financial Information.

The pro forma financial information required by this Item is not being filed with this Current Report on Form 8-K. Such pro forma financial information will be filed by an amendment to this Current Report on Form 8-K not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed.

(d) Exhibits.

AAC Holdings, Inc. Exhibit
EX-10.1 2 d545864dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 INCREMENTAL LOAN ASSUMPTION AGREEMENT,…
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About AAC HOLDINGS, INC. (NYSE:AAC)

AAC Holdings, Inc. is a provider of inpatient and outpatient substance abuse treatment services for individuals with drug and alcohol addiction. The Company performs drug testing and diagnostics laboratory services and provides physician services to its clients. As of June 30, 2016, the Company operated 12 residential substance abuse treatment facilities located throughout the United States, focused on delivering clinical care and treatment solutions across 1,139 beds, which includes 636 licensed detoxification beds, and 18 standalone outpatient centers. In addition, the Company focuses on expanding The Oxford Centre facility. As of June 30, 2016, the Company’s capacity at its Forterus treatment facility was 14 beds. The Company is engaged in deploying research-based treatment programs with structured curricula for detoxification, residential treatment, partial hospitalization and intensive outpatient care. The Company is also an Internet marketer in the addiction treatment industry.