American Retirement Corporation Completes Additional Refinancings and Discusses Refinancing Plan.Business Editors NASHVILLE, Tenn.--(BUSINESS WIRE)--April 1, 2002 American Retirement Corporation (NYSE NYSE See: New York Stock Exchange :ACR See riser card. ) today announced the completion of several transactions comprising components of its refinancing effort. The Company recently completed two sale and leaseback sale and leaseback The sale of a fixed asset that is then leased by the former owner from the new owner. A sale and leaseback permits a firm to withdraw its equity in an asset without giving up use of the asset. Also called leaseback. transactions including six of its senior living communities. Sale and Lease-backs Sale and lease-back Sale of an existing asset to a financial institution that then leases it back to the user. Related: Lease. In the past two weeks, the Company completed two sale and leaseback transactions involving six communities producing gross proceeds of $91.1 million. The first transaction was for a community with 90 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. units and 90 skilled nursing units located in Denver, Colorado. Additionally, the Company completed a second sale and leaseback transaction that included five communities. These communities included a 298-unit congregate care community in Jacksonville, Florida “Jacksonville” redirects here. For other uses, see Jacksonville (disambiguation). Jacksonville is the largest city in the state of Florida and the county seat of Duval County. , a 244-unit continuing care continuing care a professional convention that a veterinarian who is treating an animal is obliged to continue treating that case unless an arrangement is made with its custodian to transfer the care to another practitioner or to a specialist. retirement center in Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , and three free-standing assisted living communities in Delray Beach, Florida Delray Beach is a city in Palm Beach County, Florida, USA. As of the 2000 census, the city had a total population of 60,020. As of 2004, the population estimated by the U.S. Census Bureau is 64,150. , Cleveland, Ohio and San Antonio, Texas “San Antonio” redirects here. For other uses, see San Antonio (disambiguation). San Antonio is the second most populous city in Texas, the third most populous metropolitan area in Texas, and is the seventh most populous city in the United States. As of the 2006 U.S. . The Company contemporaneously leased the properties back from the buyers for terms of 15 years, with two additional extensions available at the Company's option. The Company has either the right to repurchase or has a right of first refusal Right of First Refusal In general, the right of a person or company to purchase something before the offering is made available to others. Notes: For example, a football team may have the right of first refusal on a player's contract. with respect to certain of these communities. The aggregate gross proceeds for these two transactions were approximately $91.1 million (up to $101.9 million including certain earn-out provisions that are dependent upon the future performance of the communities). The Company used a portion of the proceeds from these two transactions to repay $68.1 million of mortgage financing debt that were scheduled to mature during 2002. The remaining $23.0 million in gross proceeds were available to fund transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). and general capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Refinancing Plan As disclosed in the Company's filings with the Securities and Exchange Commission today, the Company has explored a wide range of asset and corporate level financing alternatives in order to address the Company's debt maturities in 2002. As of January 1, 2002, the Company had total scheduled debt maturities during 2002 of $371.7 million, which included $238.8 million of mortgage debt and $132.9 million of 5 3/4% Convertible Subordinated Debentures due October 1, 2002 (the "Debentures"). In order to satisfy or extend these obligations, the Company has developed a refinancing (the "Refinancing Plan"), which includes extensions of existing debt agreements, refinancings of existing mortgage facilities, new mortgage financings, sale lease-back arrangements, and a mezzanine financing Mezzanine Financing A hybrid of debt and equity financing. Mezzanine financing is typically used to finance the expansion of existing companies, and it is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the arrangement. As part of its Refinancing Plan, the Company intends to extend the maturity dates of substantially all of its remaining credit facilities to January 2004 or later. The Company believes that, if consummated as currently planned, the Refinancing Plan will allow the Company to address all of its scheduled debt maturities during 2002. Refinancing Plan Update Pursuant to its Refinancing Plan, the Company has consummated 14 sale lease-back and other capital raising transactions since November 1, 2001, raising gross proceeds of $193.2 million, $165.9 million of which was used to repay mortgage debts ($89 million of which were scheduled to mature in 2002) and fund escrow and transactions costs Transactions costs The time, effort, and money necessary, including such things as commission fees and the cost of physically moving the asset from seller to buyer. Transcations costs should also include the bid/ask spread as well as price impact costs (for example a large sell . The remaining net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $27.3 million will be used to satisfy the Company's general capital requirements. In addition to these recently completed transactions, the Company has either executed term sheets or is in advanced discussions with several different parties relating to the refinancing or sale lease-back of an additional 11 senior living communities. If completed on the terms being considered, these proposed transactions would generate additional gross proceeds to the Company of approximately $181.5 million and would address substantially all of the Company's remaining mortgage debts due to mature in 2002. These transactions and discussions are in various stages and in certain instances are non-binding. All of these transactions will be subject to conditions and approvals that must be satisfied. If the foregoing transactions are consummated as currently contemplated, the Debentures will be the Company's primary remaining outstanding debt obligation maturing in 2002. In order to address the maturity of the Debentures by or before October 2002, the Company has entered into a non-binding letter of intent with a third-party that will provide the Company with approximately $125.0 million of term mezzanine financing involving certain of its Retirement Centers. The Company intends to use the net proceeds from this transaction, together with the net proceeds generated by the transactions described above, to address the outstanding Debentures and fund working capital. The letter of intent regarding this transaction is preliminary and non-binding, and is subject to conditions that must be satisfied prior to closing, including requisite approvals and consents. If the Company is able to reach a definitive agreement with respect to this proposed mezzanine financing, the transaction is expected to close during the second or third quarter of 2002. "We have been working diligently to consummate our Refinancing Plan and have committed extensive resources, both internally and externally, to facilitate the execution phase of our plan. We are pleased with the cooperation of those involved and are making progress in our efforts to deal with our maturing obligations as evidenced by the completion of multiple financing transactions," said Bill Sheriff, Chairman and Chief Executive Officer of the Company. "We continue to be dedicated to serving our residents' and our shareholders' best interests, while dealing with all of our obligations." Further Information The Company's Refinancing Plan is described in greater detail in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , which was filed with the Securities and Exchange Commission on March 29, 2002. The Company will also file on April 1, 2002 a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. with the Securities and Exchange Commission, which includes supplemental information relating to the fourth quarter 2001 results. Company Profile American Retirement Corporation offers a broad range of care and services to seniors, including independent living, assisted living, skilled nursing and Alzheimer's care. The Company currently operates 65 senior living communities in 14 states with an aggregate capacity for approximately 14,300 residents. The Company's strategy is to develop senior living networks in major metropolitan regions. These networks are comprised of large continuing care retirement communities and free-standing assisted living residences located in the same markets. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release and statements made by or on behalf of the Company relating hereto here·to adv. To this document, matter, or proposition. hereto Adverb Formal or law to this place, matter, or document Adv. 1. , including all statements concerning the Company's Refinancing Plan and its various components (including proposed debt financings, proposed sale and leaseback transactions, and the proposed mezzanine financing), may be deemed to constitute forward-looking information made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements may be affected by certain risks and uncertainties, including the Company's ability to consummate its refinancing efforts, adverse developments in the financial markets or the senior living industry that may negatively impact the Company's proposed transactions and financings, the Company's ability to comply with the covenants contained in its debt instruments, the Company's significant leverage, and the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2001 under the caption "Risk Factors" and in the Company's other filings with the Securities and Exchange Commission. The Company's ability to complete its proposed transactions and financings is subject to numerous uncertainties and conditions that are not within the Company's control. The Company's agreements with respect to the proposed transactions and financings are non-binding and there can be no assurance that the Company will be able to enter into definitive agreements and complete the proposed transactions and financings. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company's actual results could differ materially from such forward-looking statements and there can be no assurance that the Company will able to refinance or repay its debt obligations (including the Company's Convertible Debentures) when they come due. The Company does not undertake any obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion