Fortress Investment (FIG) SC 13DATI Physical Therapy / Fortress Investment ownership change

Fortress Acquisition Sponsor II LLC, a Delaware limited liability company (“Sponsor”), filed a Schedule 13G with the U.S. Securities and Exchange Commission (the “SEC”) on February 12, 2021, pursuant to Rule 13d-l(d) of the Securities Exchange Act of 1934, as amended, with respect to shares of Common Stock (as defined in Item 1 herein) and is filing this Schedule 13D (this “Schedule 13D”) jointly with the other reporting persons in connection with the consummation of the Business Combination and the Transfer Agreement described in Item 4 herein.

This Schedule 13D relates to the Class A Common Stock, par value $0.0001 per share (“Common Stock”), of ATI Physical Therapy, Inc. (formerly known as Fortress Value Acquisition Corp. II (“FAII”)), a Delaware corporation (the “Issuer”). The principal executive offices of the Issuer are located at 790 Remington Boulevard, Bolingbrook, Illinois 60440.

Sponsor, Cayman GP, Hybrid GP, FIG LLC, FOE I, FIG Corp. and Fortress are collectively referred to herein as the “Reporting Persons.”

The information set forth in Item 4 of this Schedule 13D is incorporated by reference in its entirety into this Item 3.

The Reporting Persons hold the securities of the Issuer for investment purposes.

The Issuer was formed as a blank check company, incorporated for the purpose of effecting a business combination with one or more businesses. On June 15, 2020, Sponsor purchased an aggregate of 8,625,000 shares of Class F common stock, par value $0.0001 per share, of FAII (the “Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.003 per share, pursuant to a Securities Subscription Agreement by and between Sponsor and FAII, dated as of June 15, 2020. Prior to such time, FAII had no assets, tangible or intangible. In August 2020, prior to the closing of the Issuer’s initial public offering, Sponsor transferred a total of 100,000 Founder Shares to four independent directors of FAII for the same per-share price initially paid by Sponsor. On August 14, 2020, the Issuer completed its initial public offering. On June 16, 2021, the Issuer consummated the previously announced business combination, as contemplated by the Agreement and Plan of Merger, dated February 21, 2021 (the “Merger Agreement”), by and among FAII, FVAC Merger Corp. II, a direct, wholly-owned subsidiary of FAII (“Merger Sub”), and Wilco Holdco, Inc., a Delaware corporation (“Wilco”), and described in the Issuer’s Current Report on Form 8-K filed with the SEC on June 23, 2021. The Merger Agreement provided for, among other things, the merger of Merger Sub with and into Wilco, with Wilco being the surviving corporation (together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with the foregoing, the Issuer changed its name from “Fortress Value Acquisition Corp. II” to “ATI Physical Therapy, Inc.” Unless the context otherwise requires, in this Schedule 13D, the “Issuer” refers to FAII prior to the closing of the Business Combination (the “Closing”) and to the combined company and its subsidiaries following the Closing.

Prior to the Closing, Principal Holdings I LP, a Delaware limited partnership (“Transferor”), held all outstanding membership interests in Sponsor, and Sponsor was managed by its board of managers. Immediately prior to the Closing, Transferor transferred and assigned to the Funds all of Transferor’s right, title and interest in Sponsor for good and valuable consideration pursuant to the Transfer and Assignment Agreement (the “Transfer Agreement”), dated as of February 21, 2021, by and among Transferor and the Funds. As a result, the Reporting Persons (other than Sponsor) acquired beneficial ownership of the securities held by the Sponsor on June 16, 2021.

Immediately prior to the Closing, Sponsor purchased 7,500,000 shares of Common Stock in a private placement at a price of $10.00 per share (the “PIPE Investment”) pursuant to a subscription agreement, dated as of February 21, 2021 (the “Subscription Agreement”), by and between the Issuer and Sponsor. The funds used by Sponsor to purchase such shares were funded from capital contributions from controlled affiliates of Fortress.

The Subscription Agreement provides for certain registration rights with respect to the shares purchased in the PIPE Investment. The material terms of the Subscription Agreement are described in the section of the Issuer’s definitive proxy statement on Schedule 14A filed with the SEC on May 14, 2021 (the “Proxy Statement”), titled “Related Agreements—Subscription Agreements” beginning on page 129, which is incorporated herein by reference.

The foregoing description of the Subscription Agreement, including the description in the Proxy Statement referenced above, does not purport to be complete and is subject to and qualified in its entirety by the full text of the form of Subscription Agreement, included as Exhibit 10.1 to the Issuer’s Current Report on Form 8-K, filed with the SEC on February 22, 2021.

Pursuant to the Parent Sponsor Letter Agreement, dated as of February 21, 2021 (the “Sponsor Letter Agreement”), by and among FAII, Sponsor and certain other former holders of Founder Shares, Sponsor agreed to, among other things, certain restrictions on the Common Stock issued to Sponsor upon the conversion of its Founder Shares and to restrictions on its private placement warrants (the “Warrants”) following the Closing.

Upon the Closing, all outstanding Founder Shares, including the 8,525,000 shares held by Sponsor, automatically converted into an equal number of shares of Common Stock, in accordance with the Amended and Restated Certificate of Incorporation of FAII. Such shares of Common Stock became subject to certain vesting and forfeiture provisions set forth in the Sponsor Letter Agreement, as follows: (i) 33.33% of such shares vest at such time as a $12.00 Common Share Price (as defined below) is achieved on or before the date that is ten years after the Closing Date; (ii) 33.33% of such shares vest at such time as a $14.00 Common Share Price is achieved on or before the date that is ten years after the Closing Date; and (iii) 33.34% of such shares vest at such time as a $16.00 Common Share Price is achieved on or before the date that is ten years after the Closing Date. The applicable “Common Share Price” will be considered achieved only when the volume-weighted average price equals or exceeds the applicable threshold for at least five days out of a period of ten consecutive trading days ending on the trading day immediately prior to the date of determination.

In addition, Sponsor transferred and surrendered to the Issuer for no consideration 2,966,667 of its 5,933,333 Warrants, resulting in such warrants being cancelled and no longer outstanding. Each Warrant is exercisable to purchase one share of Common Stock at $11.50 per share, subject to adjustment and to certain restrictions, and expires five years after the date of the Closing or earlier upon redemption or liquidation. The material terms of the Sponsor Letter Agreement are described in the section of the Proxy Statement titled “Related Agreements—Parent Sponsor Letter Agreement” beginning on page 128, which is incorporated herein by reference.

The foregoing description of the Sponsor Letter Agreement, including the description in the Proxy Statement referenced above, does not purport to be complete and is subject to and qualified in its entirety by the full text of the Sponsor Letter Agreement, included as Exhibit 10.2 to the Issuer’s Current Report on Form 8-K, filed with the SEC on February 22, 2021.

Other than as described in Items 3 and 6, none of the Reporting Persons nor, to the best of their knowledge, any of the Covered Persons listed in Annex A currently has any plans or proposals that relate to, or would result in, any of the matters listed in Item 6 of Schedule 13D, although the Reporting Persons may, at any time and from time to time, review or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto.

The information contained in rows 7, 8, 9, 10, 11 and 13 on the cover pages of this Schedule 13D is incorporated by reference in its entirety into this Item 5.

All percentages of Common Stock outstanding contained herein are based on 207,282,536 shares of Common Stock outstanding, as of June 16, 2021, as disclosed in the Issuer’s Current Report on Form 8-K, filed on June 23, 2021.

The beneficial ownership of an aggregate of 16,025,000 shares of Common Stock reported herein, as described in Item 2 herein: (i) includes (a) 7,500,000 shares of Common Stock acquired in the private placement and (b) 8,525,000 shares of Common Stock that are unvested and subject to certain vesting and forfeiture provisions set forth in the Sponsor Letter Agreement; and (ii) excludes 2,966,666 shares of Common Stock issuable upon the exercise of 2,966,666 Warrants held directly by Sponsor after surrendering 2,966,667 Warrants immediately prior to the Closing.

Concurrently with the execution of the Merger Agreement, Sponsor, the Issuer and certain other holders of securities of the Issuer (together with Sponsor, the “A&R RRA Parties”) entered into an Amended and Restated Registration Rights Agreement, dated as of February 21, 2021 (as amended on June 16, 2021, the “Registration Rights Agreement”), which became effective upon the Closing. Pursuant to the terms of the Registration Rights Agreement, the Issuer agreed, among other things, to provide to Sponsor and other A&R RRA Parties certain registration rights, including customary “piggy-back” registration rights in respect of certain shares of Common Stock and certain other equity securities of the Issuer that are held by the parties to the agreement from time to time. The material terms of the Registration Rights Agreement are described in the section of the Proxy Statement titled “Related Agreements—Amended and Restated Registration Rights Agreement” on page 130, which is incorporated herein by reference.

The foregoing description of the Registration Rights Agreement, including the description in the Proxy Statement referenced above, does not purport to be complete and is subject to and qualified in its entirety by the full text of the Registration Rights Agreement, included as Exhibit 10.4 to the Issuer’s Current Report on Form 8-K filed with the SEC on February 22, 2021, and the First Amendment to the Registration Rights Agreement, dated as of June 16, 2021, by and among the Issuer, Sponsor and the other parties thereto, included as Exhibit 10.5 to the Issuer’s Current Report on Form 8-K, filed with the SEC on June 23, 2021.

Other than as described herein, none of the Reporting Persons is a party to any contracts, arrangements or understandings or has any relationships with respect to any securities of the Issuer.

After reasonable inquiry and to the best of each of the undersigned’s knowledge and belief, each of the undersigned, severally and not jointly, certifies that the information set forth in this statement is true, complete and correct.