SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 2)*
Sylvan Learning Systems, Inc.
---------------------------------
(Name of Issuer)
Common Stock, par value $0.01 per share
-------------------------------------------
(Title of Class of Securities)
871399101
--------------------------------------------
(CUSIP Number)
Michael D. Weiner
Apollo Management IV, L.P.
1999 Avenue of the Stars, Suite 1900
(310) 201-4100
-----------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 10, 2003
--------------------------------------------------------
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box: / /
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.ss.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 10 Pages)
CUSIP No. 871399101 SCHEDULE 13D/A
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Investment Fund IV, L.P.
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
4,816,587 shares of Common
NUMBER OF SHARES Stock (see Item 5 below)
BENEFICIALLY OWNED --------------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 5,084,207 shares of Common
WITH Stock (see Item 5 below)
--------------------------------------
9 SOLE DISPOSITIVE POWER
4,816,587 shares of Common
Stock (see Item 5 below)
--------------------------------------
10 SHARED DISPOSITIVE POWER
5,084,207 shares of Common
Stock (see Item 5 below)
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,816,587 shares of Common Stock (see Item 5 below)
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / X /
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.6% (see Item 5 below)
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
CUSIP No. 871399101 SCHEDULE 13D/A
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Overseas Partners IV, L.P.
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
267,620 shares of Common Stock
NUMBER OF SHARES (see Item 5 below)
BENEFICIALLY OWNED ------------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 5,084,207 shares of Common
WITH Stock (see Item 5 below)
------------------------------------
9 SOLE DISPOSITIVE POWER
267,620 shares of Common Stock
(see Item 5 below)
------------------------------------
10 SHARED DISPOSITIVE POWER
5,084,207 shares of Common
Stock (see Item 5 below)
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
267,620 shares of Common Stock (see Item 5 below)
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /X/
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6% (see Item 5 below)
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
CUSIP No. 871399101 SCHEDULE 13D/A
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Advisors IV, L.P.
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
0 shares of Common Stock
NUMBER OF SHARES (see Item 5 below)
BENEFICIALLY OWNED -------------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 5,084,207 shares of Common
WITH Stock (see Item 5 below)
-------------------------------------
9 SOLE DISPOSITIVE POWER
0 shares of Common Stock
(see Item 5 below)
------------------------------------
10 SHARED DISPOSITIVE POWER
5,084,207 shares of Common
Stock (see Item 5 below)
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,084,207 shares of Common Stock (see Item 5 below)
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.2% (see Item 5 below)
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
CUSIP No. 871399101 SCHEDULE 13D/A
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Management IV, L.P.
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
0 shares of Common Stock
NUMBER OF SHARES (see Item 5 below)
BENEFICIALLY OWNED -----------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 5,084,207 shares of Common
WITH Stock (see Item 5 below)
-----------------------------------
9 SOLE DISPOSITIVE POWER
0 shares of Common Stock
(see Item 5 below)
-----------------------------------
10 SHARED DISPOSITIVE POWER
5,084,207 shares of Common
Stock (see Item 5 below)
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,084,207 shares of Common Stock (see Item 5 below)
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.2% (see Item 5 below)
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
CUSIP No. 871399101 SCHEDULE 13D/A
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Sylvan, LLC
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
4,816,587 shares of Common
NUMBER OF SHARES Stock (see Item 5 below)
BENEFICIALLY OWNED -----------------------------------
BY EACH 8 SHARED VOTING POWER
REPORTING PERSON 5,084,207 shares of Common
WITH Stock (see Item 5 below)
-----------------------------------
9 SOLE DISPOSITIVE POWER
4,816,587 shares of Common
Stock (see Item 5 below)
-----------------------------------
10 SHARED DISPOSITIVE POWER
5,084,207 shares of Common
Stock (see Item 5 below)
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,816,587 shares of Common Stock (see Item 5 below)
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES /X/
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.6% (see Item 5 below)
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
CUSIP No. 871399101 SCHEDULE 13D/A
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apollo Sylvan II, LLC
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
267,620 shares of Common Stock
(see Item 5 below)
NUMBER OF SHARES -------------------------------------
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH 5,084,207 shares of Common
REPORTING PERSON Stock (see Item 5 below)
WITH -------------------------------------
9 SOLE DISPOSITIVE POWER
267,620 shares of Common
Stock (see Item 5 below)
-------------------------------------
10 SHARED DISPOSITIVE POWER
5,084,207 shares of Common
Stock (see Item 5 below)
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
267,620 shares of Common Stock (see Item 5 below)
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /X/
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6% (see Item 5 below)
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
CUSIP No. 871399101 SCHEDULE 13D/A
-------------------------------------------------------------------------------
This Amendment No. 2 (this "Report") amends the Statement on Schedule
13D, filed with the Securities and Exchange Commission ("SEC") on March 6,
2000 (the "Initial Schedule 13D"), as amended on Schedule 13D/A, filed with
the SEC on February 20, 2003, relating to shares of common stock, $.01 par
value per share (the "Common Stock"), of Sylvan Learning Systems, Inc., a
Maryland corporation (the "Issuer"). Pursuant to Rule 13d-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended,
the undersigned hereby file this Report on behalf of Apollo Investment Fund
IV, L.P., a Delaware limited partnership ("Fund IV"), Apollo Overseas Partners
IV, L.P., an exempted limited partnership registered in the Cayman Islands
("Overseas IV"), Apollo Advisors IV, L.P. a Delaware limited partnership
("Advisors IV"), Apollo Management IV, L.P., a Delaware limited partnership
("Management IV"), Apollo Sylvan, LLC, a Delaware limited liability company
("Apollo Sylvan"), and Apollo Sylvan II, LLC, a Delaware limited liability
company ("Apollo Sylvan II"). Fund IV, Overseas IV, Advisors IV, Management
IV, Apollo Sylvan and Apollo Sylvan II are referred to collectively as the
"Reporting Persons."
Unless otherwise indicated, each capitalized term used but not
otherwise defined herein shall have the meaning assigned to such term in the
Initial Schedule 13D.
Item 4. Purpose of Transaction.
Item 4 of the Initial Schedule 13D is hereby amended and restated as
follows:
On March 10, 2003, Educate Operating Company, LLC, a Delaware limited
liability company ("Operating Company"), Educate, Inc., a Delaware corporation
("Holdings"), Apollo Sylvan, Apollo Sylvan II (collectively, the
"Purchasers"), the Issuer, Sylvan Ventures, L.L.C., a Delaware limited
liability company ("Ventures"), and Management IV entered into an Asset
Purchase Agreement (the "Asset Purchase Agreement") pursuant to which the
Issuer and Ventures agreed to sell the Issuer's K-12 educational business and
Ventures' interests in its subsidiaries, Connections Academy, Inc. and
eSylvan, Inc. (collectively, the "Targeted Businesses"). The Asset Purchase
Agreement is subject to a number of terms and conditions, including regulatory
approvals. The Purchasers were formed in connection with this transaction.
The aggregate purchase price of the Targeted Businesses is valued
between $275,000,000 and $300,000,000. As part of the consideration for the
purchase of the Targeted Businesses, the Purchasers shall deliver to the
Issuer an amount of the Issuer's 5% Convertible Subordinated Debentures due
2010 (the "Convertible Debentures"), otherwise held by the Purchasers, with a
Debenture Value (as defined in the Asset Purchase Agreement) of $72,450,000.
Such amount may be reduced if the Purchasers pay a greater portion of the
consideration in cash in lieu of the surrender of Convertible Debentures. The
Debenture Value is calculated in accordance with the Asset Purchase Agreement,
and is generally based upon the greater of $19 per underlying share and the
average closing price for the 15 trading days preceding the closing.
Pursuant to a Purchase Agreement, dated as of February 23, 2000, by
and among Fund IV, Overseas IV and the Issuer, Fund IV and Overseas IV
purchased an aggregate of $80 million principal amount of the Convertible
Debentures. Concurrently therewith, the Issuer and Management IV, on behalf of
Fund IV and Overseas IV (the "Apollo Entities"), entered into an Investors
Agreement (the "Investors Agreement"), generally providing for transfer
restrictions on the Convertible Debentures, nomination rights for two board
designees, restrictions on purchases of voting securities of the Issuer and
certain corporate governance rights, and the Issuer entered into a
Registration Rights Agreement granting certain registration rights to the
Apollo Entities. In connection with the Asset Purchase Agreement, the Apollo
Entities and the Issuer have agreed to amend certain provisions of the
Investors Agreement (the "Investors Amendment"). With the exceptions of an
amended right of the Apollo Entities to nominate one person to the board of
directors of Issuer as long as the Apollo Entities own, directly or upon
conversion of the Convertible Debentures, at least 1,000,000 shares of Common
Stock, and amendments regarding the restrictions on the purchase of voting
securities of the Issuer, the Investors Amendment will eliminate all of the
remaining covenants contained in the Investors Agreement. If the Asset
Purchase Agreement is terminated under certain circumstances, the Apollo
Entities shall have the right to sell their interest in Ventures to the Issuer
for an amount equal to approximately $46,000,000 (plus any capital
contributions made by the Apollo Entities after the date of the Asset Purchase
Agreement). This payment may be made, at the election of the Apollo Entities,
in cash or in Common Stock of the Issuer based upon the average of the daily
closing prices (as quoted on the NASDAQ Stock Market) per share of the Common
Stock for the 15 consecutive trading days immediately prior to the date the
Apollo Entities make their payment election. In connection with the Asset
Purchase Agreement, each of Fund IV and Overseas IV transferred its ownership
of Convertible Debentures to Apollo Sylvan and Apollo Sylvan II, respectively.
Item 5. Interest in Securities of the Issuer.
Part (a) of Item 5 of the Initial Schedule 13D is hereby amended and
restated as follows:
(a) The calculations included herein are based on a total of
45,408,085 shares of Common Stock outstanding as of the date of this Report
(40,323,878 shares of Common Stock outstanding as of November 5, 2002, as last
reported by the Issuer in its Form 10-Q filed with the SEC on November 12,
2002, which shares do not include convertible securities, plus 5,084,207
shares of Common Stock issuable to the Reporting Persons upon conversion of
the Convertible Debentures). The Reporting Persons, by reason of their
ownership, have beneficial ownership of an aggregate of 5,084,207 shares of
Common Stock, representing approximately 11% of the outstanding shares of
Common Stock. Upon consummation of the transaction contemplated in the Asset
Purchase Agreement, including the delivery of the Convertible Debentures to
the Issuer, the Reporting Persons will individually and collectively have
beneficial ownership of less than 5% of the shares of Common Stock.
Item 7. Materials to Be Filed as Exhibits.
Exhibit 1 Asset Purchase Agreement, dated as of March 10, 2003, by and
among Educate Operating Company, LLC, Apollo Sylvan, LLC, Apollo
Sylvan II, LLC, Educate, Inc., Sylvan Learning Systems, Inc. and
Sylvan Ventures, L.L.C. (and only with respect to Section 5.22,
Apollo Management IV, L.P.)
Exhibit 2 Form of First Amendment to the Investors Agreement dated as of
February 23, 2000, by and between Sylvan Learning Systems, Inc.
and Apollo Management IV, L.P.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: March 11, 2003
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors IV, L.P., its General Partner
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
---------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors IV, L.P., its Managing General Partner
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-----------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO ADVISORS IV, L.P.
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
----------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO MANAGEMENT IV, L.P.
By: AIM Management IV, Inc.
By: /s/ Michael D. Weiner
---------------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO SYLVAN, LLC
By: /s/ Michael D. Weiner
------------------------------------
Name: Michael D. Weiner
Title: Vice President and Secretary
APOLLO SYLVAN II, LLC
By: /s/ Michael D. Weiner
-----------------------------------
Name: Michael D. Weiner
Title: Vice President and Secretary