re : MHCA.OB (Mariner Health) - $6.17
News out - company is divesting florida operations (20 facilities) for $92m. Strategically this makes sense too because after the divesture, Mariner's operations are mostly in Texas where tort reform (medical liability !) is very high on the political agenda .. Company will partially redeem it's $200m senior indebtedness with the proceeds..
Mariner Health Care Announces Agreement to Divest Florida Facilities - Wednesday August 20, 8:33 am ET
ATLANTA, Aug. 20 -- Mariner Health Care, Inc. (OTC Bulletin Board: MHCA - News; "Mariner") announced today that it has entered into a definitive agreement, with an affiliate (the "Purchaser") of Formation Capital, LLC and Longwing Real Estate Ventures, LLC, to divest 20 of its Florida skilled nursing facilities ("SNFs"). Under the agreement, the Purchaser will acquire the real estate and certain personal property- related to the 20 SNFs. Mariner will receive approximately $92 million as consideration for the 20 facilities.
The purchase price is comprised of approximately $78 million in gross cash proceeds and a $14 million, five-year subordinated promissory note. Mariner expects the net cash proceeds, after transaction costs and retirement of certain mortgage debt, to approximate $65 million, which will be used to reduce its outstanding senior term loan balance. The current outstanding balance under the Mariner senior debt is approximately $209 million.
The Purchaser will lease the 20 Florida SNFs to an affiliate of Sovereign Healthcare Holdings LLC ("Sovereign"), which will operate the SNFs. Sovereign is a recently formed entity involving Mr. William Krystopowicz, President of the newly formed operating entity, Mr. Darrel Hager, who currently serves as President of Mariner's Florida subsidiary, and Mr. John Notermann, Executive Vice President and Chief Financial Officer of Sovereign. The 20 SNFs have 2,502 licensed beds.
Mariner's Chief Executive Officer, Chris Winkle, commented, "This transaction affords us the opportunity to substantially reduce our exposure to liability insurance costs and litigation risks in the state of Florida and at the same time de-leverage the company."
The consummation of the proposed transaction is expected to occur on or about September 30, 2003, subject to satisfaction of customary closing conditions, including but not limited to, regulatory, governmental and bank approvals.
Mariner is headquartered in Atlanta, Georgia, and operates over 290 skilled nursing and assisted living facilities as well as 12 long-term acute care hospitals representing approximately 38,000 beds across the country.
Formation Capital, LLC, is an Atlanta, Georgia-based investor and owner of senior housing properties. Longwing Real Estate Ventures, LLC, is a New York private investment company.
Contacts: Mariner Health Care, Inc. Formation Capital, LLC
Boyd Gentry Arnold Whitman
Senior Vice President and Treasurer Chief Executive Officer
678-443-6872 770-754-9660 |
