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HILLHAVEN ANNOUNCES PLANS FOR MAJOR DEBT RESTRUCTURING PREFERRED STOCK ISSUANCE AND ACQUISITION OF NURSING CENTERS

 TACOMA, Wash., June 23 /PRNewswire/ -- Company Plans Major Debt Restructuring of $400 Million Bank Financing; Incurrence of $175 Million of Senior Subordinated Debt; Issuance of $120 Million Preferred Stock; Acquisition of 23 Nursing Centers for $112 Million.
 The Hillhaven Corp. (AMEX: HIL) today announced that it is undertaking a major debt restructuring and nursing center acquisition. The transactions will significantly change the financial relationship between Hillhaven and National Medical Enterprises Inc. (NYSE: NME).
 Hillhaven is negotiating with several banks to provide up to $400 million of commercial bank financing. This financing will have a five- to seven-year maturity. Hillhaven also plans to incur approximately $175 million of senior subordinated debt.
 Hillhaven will issue $120 million in Series D preferred stock to NME in exchange for $63 million in cash and $57 million in debt reductions. The preferred stock will be non-voting, and will initially accrue a cumulative, payable-in-kind dividend at 6.5 percent.
 Additionally, Hillhaven will acquire 23 nursing centers currently leased from NME for $112 million, a $24-million discount from the established purchase option prices.
 The result of the debt restructuring and the sale of preferred stock enables the company to purchase the 23 nursing centers, repay notes to NME of $92 million, repay debt guaranteed by NME of $266 million, and replace NME as guarantor on other obligations of $140 million. These transactions will also release NME from further financing obligations to Hillhaven.
 Bruce L. Busby, Hillhaven's chief executive officer, said the program furthers Hillhaven's initiative of becoming financially independent. "Upon the completion of these transactions, we will have acquired all 115 nursing centers originally leased from NME, retired all debt due to NME and obtained significant financing independent of NME's guarantee." Busby continued, "NME continues to be our largest shareholder and is supportive of our goal of increasing shareholder value."
 Busby described the actions as "a significant step toward improving the financial position of Hillhaven by enhancing the terms and maturity of our debt and by substantially increasing Hillhaven's stockholders' equity without dilution to the existing holders of our common stock."
 Completion of the transactions is subject to a number of conditions, including final approval by the board of directors of NME and the receipt of certain governmental and regulatory approvals. Each aspect of the transaction is conditioned upon completion of the entire transaction. Hillhaven anticipates completion within 90 days.
 Hillhaven is one of the nation's largest diversified health care providers, operating over 400 nursing centers, retirement housing communities and pharmacy outlets in 38 states.
 -0- 6/23/93
 /CONTACT: Tim Carroll of Hillhaven, 206-572-4901/
 (HIL NME)


CO: The Hillhaven Corp.; National Medical Enterprises Inc. ST: Washington IN: HEA SU: RCN

SW-JH -- SE002 -- 4863 06/23/93 08:35 EDT
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Publication:PR Newswire
Date:Jun 23, 1993
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