Alterra Healthcare Corporation: Creditors Committee Motion Not Expected to Delay Reorganization Process.

Business Editors

MILWAUKEE--(BUSINESS WIRE)--July 7, 2003

Alterra Healthcare Corporation (OTCBB:ATHC) announced today that a motion to appoint a Chapter 11 trustee in its bankruptcy case has been filed by the Official Committee of Unsecured Creditors. The Creditors Committee's motion alleges that the current sales process is inadequate and seeks the appointment of a Chapter 11 trustee for the limited purpose of reviewing alternative restructuring proposals to determine the best restructuring plan for creditors.

Management of Alterra believes the motion to appoint a trustee is without merit and ignores fundamental facts in the Chapter 11 case. The Company intends to vigorously oppose the motion, and does not expect this motion to interfere with the Company's plans to complete its restructuring in a timely manner in the second half of 2003.

"We commenced a comprehensive open-market process in March 2003 designed to raise equity capital to facilitate Alterra's emergence from bankruptcy as a stable and viable company," stated Company President Mark Ohlendorf. "This process is being conducted in accordance with bidding procedures approved by the Bankruptcy Court and consented to by the Creditors Committee. With the active participation of the Creditors Committee, this process has been designed to solicit and identify the highest and best proposal for a transaction to address the capital and liquidity needs of Alterra as we emerge from Chapter 11. Furthermore, while we will continue to consider input offered by our Creditors Committee in completing our restructuring, we must focus on the interests of all creditors and stakeholders in the Company, including our senior capital structure constituents, our residents and their families, our venders and our employees," noted Mr. Ohlendorf.

A hearing on the Creditors Committee's motion is scheduled for August 6, 2003. As previously announced and in accordance with the Bankruptcy Court approved bidding procedures, an auction for an exit equity investment transaction will be held on July 17, 2003, and a hearing to approve the successful "highest and best" bid is scheduled for July 23, 2003.

About Alterra

Alterra offers supportive and selected healthcare services to our nation's frail elderly and is the nation's largest operator of freestanding Alzheimer's/memory care residences. Alterra currently is operating in 24 states.

Forward-Looking Statements

Certain of the information contained herein should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to certain current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company's operations and business environment which may cause the actual results of the Company to be materially different from any future results expressed or implied in such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the Company to satisfy its operating and capital needs during the pendency of its bankruptcy case; the Company's ability to successfully negotiate necessary modifications and amendments with its secured lenders and lessors; the Company's ability to access financing needed to refinance significant pending debt maturities; the ability of the Company to continue as a going concern; the ability of the Company to develop, prosecute, confirm and consummate a Chapter 11 plan of reorganization; the Company's ability to identify and consummate a liquidity transaction in connection with its bankruptcy case providing net proceeds in amounts necessary to effectively address the projected capital and liquidity needs of the Company; risks associated with third parties seeking and obtaining court approval for the appointment of a Chapter 11 trustee or to convert the Company's bankruptcy case to a Chapter 7 liquidation; the potential adverse impact of the Company's Chapter 11 filing on the Company's relationships with its residents, vendors and employees; competition and the ability of the Company to attract private pay residents to its residences; the Company's ability to fund and maintain self insurance programs at levels necessary to address potential liability claims and satisfy the requirements of lenders and lessors; government legislation and regulation; and other risks and uncertainties as may be set forth from time to time in the Company's reports filed with the Securities and Exchange Commission