FEDERAL STREET ACQUISITION CORP. TO COMBINE WITH UNIVERSAL HOSPITAL SERVICES

Federal Street Acquisition Corp. (“FSAC”) announced early this morning they have entered into a definitive merger agreement with Universal Hospital Services, Inc. (“UHS”), a leading, nationwide provider of healthcare technology management and service solutions and a portfolio company of Irving Place Capital Management, L.P. (“IPC”).  UHS serves more than 7,000 healthcare providers nationwide with an end-to-end solution called ‘Equipment Value Management’ that helps customers address important clinical, operational and financial objectives.

Under the terms of the agreement, FSAC and UHS will combine under a new holding company to be named Agiliti, Inc.  The purchase price for the acquisition implies an initial enterprise value for the combined company of approximately $1.74 billion:

• 11.6x UHS’s forecasted 2018 Adjusted EBITDA of approximately $150 million
• 10.2x UHS’s forecasted 2019 Adjusted EBITDA of approximately $170 million

(In each case, based on the higher end of UHS’s forecasted Adjusted EBITDA range.)

TRANSACTION DETAILS

Consideration

The consideration to be paid to holders of equity interests in UHS will be approximately $1.58 billion, subject to certain adjustments contained in the Merger Agreement, including reduction for indebtedness and certain transaction expenses and subject to a working capital adjustment. The purchase price will be paid in a combination of stock and cash consideration.

The stock consideration will consist of a number of newly issued shares of Agiliti’s common stock approximately equal to $335.0 million (the “Maximum Stock Consideration Amount”) divided by $10.00. The amount of stock consideration may be decreased (and cash consideration increased) to the extent of cash available following cash payments required by the Merger Agreement, including payments to any FSAC public stockholders electing redemption of their FSAC Class A common stock.

The remainder of the merger consideration will be paid in cash.

Current amount held in trust as of the most recent 10-Q filing: $462.1 million

OWNERSHIP

Assuming no redemptions by FSAC’s public stockholders:

• THL Agiliti (an affiliate of the FS Sponsor) will own approximately 30% of Agiliti’s outstanding common stock following the merger and private placement, including FS Sponsor’s existing founder shares and the shares purchased in the private placement.
• Irving Place Capital Management and the other former stockholders of UHS will retain an ownership interest of approximately 22%.
• Current public stockholders of FSAC will own approximately 43% of Agiliti’s outstanding common stock

Private Placement

On August 13, 2018, concurrently with the entry into the Merger Agreement, FSAC and Agiliti entered into subscription agreements with certain institutional investors and with THL Agiliti, pursuant to which the investors have agreed to purchase in the aggregate $250.0 million in shares of Class A common stock of FSAC at a purchase price of $10.00 per share on a private placement basis.

• FSAC has agreed to sell to certain institutional investors, $50.0 million in shares of Class A common stock of FSAC at a price of $10.00 per share
• FSAC and Agiliti entered into a subscription agreement with THL Agiliti (an affiliate of FS Sponsor, LLC (the “Sponsor”)) to purchase $200.0 million in shares of Class A common stock of FSAC at a price of $10.00 per share

Debt Financing

JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc., KeyBanc Capital Markets Inc. and KeyBank National Association to provide debt financing for senior secured credit facilities comprised of:

• $660.0 million delayed draw first lien term loan facility
• $150.0 million first lien revolving credit facility

Advisors

• J.P. Morgan Securities LLC acted as financial advisor and Weil, Gotshal & Manges LLP acted as legal counsel to UHS.
• Citigroup Global Markets Inc. acted as financial advisor, capital markets advisor and placement agent and Kirkland & Ellis LLP acted as legal counsel to FSAC.
• BofA Merrill Lynch acted as capital markets advisor and placement agent in connection with the private placement.
• Debt financing will be provided by JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc., and KeyBanc Capital Markets Inc.