Alterra Healthcare Announces Closing of $30 Million Equity-Linked Financing; Reports Second Quarter Ended June 2000; Provides Update On Strategic Initiatives.Business Editors MILWAUKEE--(BUSINESS WIRE)--Aug. 10, 2000 Alterra Healthcare Corporation (AMEX AMEX See: American Stock Exchange : ALI Ali (älē`) (Ali ibn Abu Talib), 598?–661, 4th caliph (656–61). The debate over his right to the caliphate caused a major split in Islam into Sunni and Shiite branches, and he is regarded by the Shiites as the first Imam, or leader: ), the nation's largest and one of the most experienced assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. providers, reported revenues of $112.0 million for the three-month period ending June June: see month. 30, 2000, a 21.9% increase over revenues of $91.9 million for the same quarter last year. At quarter end the Company operated or managed 471 residences with a total capacity to serve 21,761 residents. The Company also reported on its progress to date on multiple initiatives including strengthening its balance sheet, reducing its overhead and the sale of non-strategic assets. Equity-linked Financing As previously announced, on May 31, 2000 Alterra completed a financing transaction in which it issued $173.0 million of convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. and convertible preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. to several investors. The securities issued are convertible at $4.00 per share, bear a 9.75% semi-annual payment-in-kind ("PIK PIK See: Payment-in-kind bond PIK See payment-in-kind security (PIK). ") coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer or dividend and have a seven year maturity. The Company may call the securities at any time after three years if the trading price Trading price The price at which a security is currently selling. of the Company's common stock averages at least $8.00 for the preceding 30 trading day In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. period. The Company had the option to issue an additional $29.9 million of these debentures within 180 days following the May 31, 2000, closing date. The Company used the proceeds from this initial closing to: (i) repay $48.3 million of bridge loans previously funded by an affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: group who participated as investors in the transaction; (ii) retire $41.4 million of existing convertible debt; (iii) acquire the equity interest in 14 residences (618 resident capacity) previously managed by the Company for $21.0 million; (iv) acquire a 60% ownership interest in the operations of 26 residences (2,159 resident capacity) for $14.7 million; (v) repay $5.0 million of short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. ; and (vi) provide funds for working capital including the completion of construction of certain of the Company's residences. In the second quarter, the Company recorded an extraordinary after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $8.5 million (or $0.39 per share) related to the retirement of the $41.4 million existing convertible debt. Also related to the closing of this transaction, the Company established a reserve of $1.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($1.1 million net of tax, or $0.05 per share) related to a note assumed in the acquisition of the equity interests in the 14 residences. On August 10, 2000, the Company exercised its option and sold an additional $29.9 million of convertible debentures thereby increasing the overall financing transaction to a total of $203.0 million. The securities were sold to The Toronto-Dominion Bank The Toronto-Dominion Bank (TD) (TSX: TD NYSE: TD TYO: 8640 ) is a bank headquartered in Toronto, Ontario, Canada. It is one of Canada's Big Five banks, being the second largest bank in the country by assets and market capitalization. , one of the ten largest banks in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. with assets in excess of $115 billion. TD Capital Group Limited, the merchant banking arm of The Toronto-Dominion Bank, assisted the investor in making this investment. The Company anticipates using the additional cash proceeds from the Toronto-Dominion investment for general corporate purposes, including completing construction of the Company's remaining unopened residences and repurchasing, in open market or privately negotiated transactions, a portion of the Company's outstanding 5.25% convertible subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before due December December: see month. 2002. Bill Lasky Las·ky , Jesse Louis 1880-1958. American motion-picture producer who helped found Paramount studios (1933). The pictures he produced include Sergeant York (1941) and The Great Caruso (1951). , Alterra's President and Chief Executive Officer stated, "We are pleased to have completed this significant capital raising transaction and we now look forward to focusing our efforts on stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. our core residence portfolio. We are very pleased to add Toronto-Dominion to our distinguished investor group. They bring extensive industry and capital markets experience to the Company." Lasky continued, "In addition, the Company is also pleased to announce the appointments of Mr. Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. Tubergen as Chairman of the Board and Mr. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. Haveman as Vice-Chairman vice-chairman n → vicepresidente m vice-chairman vice irreg n → vice-président(e) vice-chairman vice- n of the Board. Both Messrs. Tubergen and Haveman have been significant long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholders and investors with the Company and in their capacities as directors have had active involvement with the Company since 1995. We are looking forward to their continuing support and guidance." Natalie Natalie may refer to:
Overhead Reduction Efforts During the second quarter, the Company initiated a comprehensive plan to reduce its corporate infrastructure in a manner consistent with its reduced development activity and focus on residence operations. In conjunction with such activities, the Company recorded a non-recurring pre-tax charge of $3.3 million ($2.0 million net of tax, or $0.09 per share) during the second quarter. Asset Disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of Plan In addition, during the second quarter, the Company's Board of Directors also adopted an asset disposition plan which calls for the sale of 31 operating assisted living residences (837 resident capacity), five assisted living residences under construction (390 resident capacity) and 33 parcels of land which the Company no longer intends to develop. Properties included in the asset disposition plan were identified based on an assessment of a variety of factors including geographic location, residence size and actual or projected return on invested capital. The Company recorded a pre-tax charge of $12.1 million ($7.5 million net of tax, or $0.34 per share) relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc anticipated losses on certain of its dispositions. The Company anticipates that the assets held for sale will be sold over the next six to twelve months. Although no assurance can be given that these asset dispositions will ultimately occur as currently projected, the Company estimates that the aggregate proceeds from these asset sales could total approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $105.0 million, of which approximately $55.0 million would be used to retire secured mortgage and lease financing obligations, and $45.0 million of which would represent net cash proceeds to the Company. Operating and Financial Results For the three months ended June 30, 2000, the Company reported revenues of $112.0 million, an increase of 21.9% and 5.1% over revenues for the quarters ended June 30, 1999 and March 31, 2000, respectively. For the quarter ended June 30, 2000, the Company reported a net loss of $21.6 million, or $0.98 per share before the extraordinary gain on the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. As previously discussed, the loss for the quarter includes the pre-tax effect of $3.3 million ($2.0 million net of tax, or $0.09 per share) of non-recurring general and administrative expenses principally related to restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). the Company's overhead, $1.8 million ($1.1 million net of tax, or $0.05 per share) related to the establishment of a reserve on an assumed note and a charge of $12.1 million ($7.5 million net of tax, or $0.34 per share) related to the implementation of the Company's asset disposition plan. Excluding the impact of these non-recurring charges and expenses, the Company reported a pre-tax loss of $10.9 million for the quarter (a loss of $6.8 million net of tax benefit, or $0.50 per share). This compares to revenues of $91.9 million and net income of $4.8 million, or $0.22 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share (fully taxed) before the effect of a change in accounting principle, on 22.3 million weighted average common shares outstanding for the comparable period in 1999. Stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. Residence Results For the quarter ended June 30, 2000, the Company operated 372 stabilized residences with a resident capacity of 16,558. These residences had an average occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy for the quarter of 89%. For the three months ended June 30, 2000, these residences achieved revenues of $104.9 million and had an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of $37.4 million or 36%. The Company defines stabilized residences as those that have reached 95% occupancy or have been open for 12 months as of the beginning of the reporting period. Weighted average occupancy for all residences -- both stable and in lease-up -- was 81% for the quarter ended June 30, 2000, an overall occupancy increase of 1% from the quarter ended March 31, 2000. Same Residence Results The Company operated 254 residences that were stabilized for the entire second quarter of 1999 and 2000. For these residences with a capacity to serve 10,901 residents, revenues for the three months ended June 30, 2000, were $73.4 million, a 4.8% increase over revenues of $70.0 million for the comparable period in 1999. These residences produced operating margins of 37% and had average occupancy of 91% for the three-month period ended June 30, 2000. Residence Development In the second quarter of 2000 the Company added six operating residences. As a result, the Company's net resident capacity increased during the second quarter by 235, resulting in 471 operating and managed residences with a resident capacity of 21,761 at the end of the second quarter. As of June 30, 2000, and excluding the five construction properties currently held for sale, the Company has 23 residences under construction with a capacity to serve 1,073 residents. The Company estimates the future cost of completing the construction of these 23 residences to be approximately $30.0 to $35.0 million and the cost to complete the five residences held for sale to be approximately $8.0 to $10.0 million. The Company anticipates that these construction expenditures will be funded from the Company's working capital, current outstanding bank commitments, and the proceeds of the recently completed equity-linked transaction. The Company reported that it is engaged in the negotiation of definitive credit agreements with a lender related to a $45.0 million secured debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay of 13 assisted living residences, 11 of which are presently not financed. Although no assurances can be given that this financing will close, the Company expects that the initial closing under this financing arrangement will close in the third quarter of 2000. Alterra offers supportive supportive adjective Pertaining to a Pt management philosophy in which only the Sx of a particular condition are treated; supportive measures are often taken when no specific and/or effective therapy is available or accessible–eg, viral meningitis, or and selected health care services to our nation's frail elderly frail elderly, n.pl older persons (usually over the age of 75 years) who are afflicted with physical or mental disabilities that may interfere with the ability to independently perform activities of daily living. and is the nation's largest operator of freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. Alzheimer's/ memory care residences. Alterra currently operates in 28 states. The Company's common stock is traded on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. under the symbol "ALI." The statements in this release relating to matters that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on management's beliefs and assumptions using currently available information. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will prove to be correct. Such statements involve a number of risks and uncertainties, including, but not limited to, substantial debt and operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. payment obligations, operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. associated with new residences, the need for additional financing and liquidity, the Company's ability to implement its new strategic initiatives and improve cash flow, development and construction risks, risks associated with acquisitions, risks associated with dispositions, competition, governmental regulation and other risks and uncertainties detailed in the reports filed by the Company with the Securities and Exchange Commission. Should one or more of these risks materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. (or the consequences of such a development worsen wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. worsen Verb to make or become worse worsening adjn ), or should the underlying assumptions prove incorrect, actual results could differ materially from those forecasted or expected. The Company assumes no duty to publicly update such statements.
Alterra Healthcare Corporation and Subsidiaries Condensed
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Per Share Data)
===============================================
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999(1)
------------ ------------ ------------- --------------
Revenue:
Resident service
fees $108,082 $84,344 $209,527 $161,466
Other 3,957 7,576 9,068 13,345
------- ------ ------- -------
Operating
revenue 112,039 91,920 218,595 174,811
Operating
expenses:
Residence
operations 72,309 52,497 138,495 99,596
Lease expense 20,592 15,971 40,839 30,430
Lease income (8,334) (4,937) (17,063) (9,826)
General and
administrative 16,209 9,280 27,185 18,898
Loss on
disposal (2) 12,054 --- 12,054 ---
Depreciation and
amortization 8,624 4,525 16,293 8,550
------- ------ ------- -------
Total operating
expenses 121,454 77,336 217,803 147,648
Operating (loss)
income (9,415) 14,584 792 27,163
Other income (expense):
Interest expense,
net (20,325) (7,611) (37,243) (14,075)
PIK interest (1,411) --- (1,411) ---
Equity in losses
of unconsolidated
affiliates (3,132) (152) (5,508) (70)
Minority interest in
losses of
consolidated
subsidiaries 360 983 869 3,278
------- ------ ------- -------
Total other expense,
net (24,508) (6,780) (43,293) (10,867)
(Loss) income before income taxes,
extraordinary gain and
cumulative effect of a change
in accounting
principle (33,923) 7,804 (42,501) 16,296
Income tax benefit
(expense) 12,355 (2,966) 15,615 (6,193)
------- ------ ------- -------
(Loss) income before extraordinary
gain and cumulative effect
of a change in
accounting
principle (21,568) 4,838 (26,886) 10,103
Extraordinary gain on the early
extinguishment of debt,
net of tax expense of
$5,232 8,536 --- 8,536 ---
Cumulative effect of a change in
accounting principle, net of tax
benefit of
$2,409 --- --- --- (3,837)
Net (loss)
income $(13,032) $4,838 $(18,350) $6,266
================================================
Income per common share before extraordinary item and cumulative
effect of a change in accounting principle:
Basic $(0.98) $ 0.22 $(1.22) $0.46
================================================
Diluted $(0.98) $ 0.22 $(1.22) $0.45
================================================
Net income per common share:
Basic $(0.59) $ 0.22 $(0.83) $0.28
================================================
Diluted $(0.59) $ 0.22 $(0.83) $0.28
================================================
Weighted average common shares outstanding:
Basic 22,110 22,085 22,107 22,080
================================================
Diluted 22,110 22,345 22,107 22,442
================================================
(1) The six-month period ended June 30, 1999 includes $1.8 million in
general and administrative costs related to the write-off of
existing signage and other expenses associated with the name change
from Alternative Living Services, Inc. to Alterra Healthcare
Corporation.
(2) Denotes one-time item.
Alterra Healthcare Corporation and Subsidiaries Condensed
Consolidated Balance Sheets (Unaudited)
(In Thousands)
June 30, December 31,
2000 1999
------------------- ------------------
Assets
Cash $ 28,784 $ 18,728
Assets held for sale 70,912 ---
Other current assets 56,793 90,501
------------------- ------------------
Current assets 156,489 109,229
------------------- ------------------
Land 87,255 70,916
Building and improvements 777,416 656,267
Furniture, fixtures and
equipment 94,002 84,941
Construction in progress 64,787 92,741
------------------- ------------------
Total property and equipment 1,023,460 904,865
Less: accumulated
depreciation (55,573) (41,702)
------------------- ------------------
Property and equipment, net 967,887 863,163
Other assets 123,436 89,005
------------------- ------------------
Total assets $1,247,812 $1,061,397
=================== ==================
Liabilities and Stockholders' Equity
Current liabilities $ 111,328 $ 103,777
Convertible debt 355,269 228,600
Long-term obligations,
less current installments 633,071 563,072
Deferred gain on sale and other 6,888 11,592
Minority interest 4,373 3,713
Redeemable preferred stock 4,566 ---
------------------- ------------------
Stockholders' equity 132,317 150,643
------------------- ------------------
Total liabilities and
stockholders' equity $1,247,812 $1,061,397
=================== ==================
Alterra Healthcare Corporation and Subsidiaries Selected Finanical
Information for Second Quarter 2000 (Unaudited)
Quarter ended Quarter ended
June 30, June 30,
2000 1999
------------------- ------------------
Stabilized residence results:
Number of residences 372 254
Number of beds 16,558 10,901
Average occupancy 89% 92%
Revenues $104.9 million $70.0 million
Operating margin 36% 39%
Same store resident results:
Number of residences 254 150
Number of beds 10,901 6,332
Average occupancy 91% 94%
Revenues $73.4 million $39.5 million
Operating margin 37% 41%
Average rates:
Assisted living residences $2,328 $2,109
Memory care residences 3,306 2,981
Total residences $2,556 $2,345
Average occupancy percentages:
Stabilized residences 89% 92%
Leaseup residences (including
unconsolidated entities) 57% 54%
Total residences (including
unconsolidated entities) 81% 81%
Residences opened during period:
Residences opened 6 20
Capacity added 235 1,072
Capacity:
Capacity owned 11,378 6,439
Capacity leased 10,293 9,996
Capacity managed 90 478
End of period construction and development
(excluding assets held for sale):
Residences under construction
or development 23 133
Capacity under construction or
development 1,073 5,531
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