$50 Million for Sunrise Senior Living, Inc. (NYSE:SRZ) - Image via Wikipedia
MCLEAN, Va., Aug. 31 — Sunrise Senior Living, Inc. (NYSE:SRZ) announced today that it has entered into a settlement and restructuring agreement with HCP, Inc. and certain of its affiliates to, among other things, transition Sunrise from management of 27 HCP-owned senior living communities for an aggregate cash payment of $50 million to Sunrise, and to settle the lawsuits between the Company and HCP pending in Virginia and Delaware.
In connection with the settlement and restructuring agreement, Sunrise made a $15 million principal repayment of its bank credit facility and entered into a 14th amendment to its credit agreement extending the maturity date to December 2, 2011. Outstanding consolidated debt under the Company’s bank credit facility after the $15 million payment is $8.4 million, down from $95 million at December 31, 2008.
In addition, Sunrise announced today that it had completed the previously announced sale of eight of the Company’s nine German assisted living facilities to GHS Pflegeresidenzen Grundstucks GmbH and Prudential Real Estate Investors (operating on behalf of investors in a fund managed by its Munich-based business, TMW Pramerica Property Investment GmbH).
“We are very pleased with the agreement with HCP as it brings Sunrise additional capital that will be used to fulfill many of our financial obligations – and it puts to rest the HCP litigation while paving a path toward a new, positive relationship,” said Mark Ordan, Sunrise’s chief executive officer.
“These are two very important steps that strengthen Sunrise. We have stated our need to refinance the company, and this deal goes a long way toward that goal. While we continue to pursue balance sheet-enhancing transactions, including asset sales, we do not foresee a need to sell additional community management portfolios. We are, of course, also pleased to complete the previously announced sale of eight German communities to Pramerica.”
Under the settlement agreement, Sunrise received $40 million on August 31, 2010, the effective date of the agreement, and expects to receive $10 million in subsequent installments payable on the earlier of the completion of transitioning, on a portfolio-by-portfolio basis, the 27 senior living communities to a new manager or, subject to Sunrise’s compliance with certain transition obligations, 12 months after the effective date.
It is Sunrise’s understanding that Emeritus Corporation will assume management of many of the transitioning communities.
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