Arkansas Advocates for Nursing Home Residents: Beverly Sale Stalls Amid Growing Public Concern
24 September 2005 - 3:15PM
PR Newswire (US)
Sale of Nation's Second-Largest Nursing Home Chain to Investors
with Shaky Track Record Prompts Alarm LITTLE ROCK, Ark., Sept. 24
/PRNewswire/ -- The following release is issued by Arkansas
Advocates for Nursing Home Residents. The $1.9 billion sale of
Beverly Enterprises, Inc. (NYSE:BEV) to a group of real estate
investors has stalled over escalating alarm expressed by public
officials and nursing home resident advocates over how the deal
might affect care for the company's 37,000 nursing home patients
nationwide. Nancy Allison, president of Arkansas Advocates for
Nursing Home Residents (AANHR), said Friday she received
information that the pending transaction had been delayed because
"equity partners were getting cold feet." She declined to disclose
her source. After missing a Thursday deadline to secure financing,
Beverly announced in a press release Friday it had amended its
agreement with North American Senior Care (NASC), Inc., to allow
the real estate venture more time to raise money. "I have been
concerned from the outset that this group of investors, based on
their track record, may not be able to meet their obligations to
provide adequate care to the tens of thousands of nursing home
residents that are part of this deal," Allison said. AANHR,
Arkansas State Sen. Stephen Bright, R-Maumelle, and U.S. Sen. Mark
Pryor, D-AR, began raising questions about the BEI sale after
learning that NASC's investors were also behind the 2004 purchase
of Mariner Health Care. Since the sale, Mariner has been hit with
lawsuits in several states from creditors who allege Mariner is not
paying its bills and the company is insolvent. Bright and Pryor
have asked the U.S. Department of Health and Human Services Office
of the Inspector General to review their concerns, which include
whether Beverly's corporate integrity agreement with the department
-- which sets certain standards of care -- will transfer to a new
buyer. Bright has scheduled another legislative hearing for Oct.
25. Beverly officials have said they will attend. On Aug. 31, NASC
agreed to buy Beverly, the nation's second largest nursing home
chain, for $1.9 billion. Funding was to come from $350 in equity
partners, $1.325 billion in debt financing from Wachovia Bank and
$550 million in operating loans from CapitalSource Financing LLC.
Mariner sold for $1.05 billion in December to National Senior Care,
solely owned by Harry Grunstein, a New York real estate investor.
According to court testimony, Grunstein sold Mariner's assets to
cover the costs of the acquisition. The company is now worth $5
million to $12 million, according to its chief financial officer.
According to Steve Monroe, editor of SeniorCare Investor, the
proposed buy-out, as structured, is so debt-heavy it will require a
selling of the assets. Cost of the Beverly acquisition is "higher
than any average price paid per bed in the history of the nursing
home acquisition market," he wrote in an August column. "If history
repeats itself, jobs will be lost and assets will be sold." Beverly
operates 354 skilled nursing facilities, 18 assisted living
centers, 64 hospice and home health centers. Its businesses are
Beverly Heathcare, Aegis Therapies, AsseraCare, Aedon Staffing and
Ceres. Beverly owns facilities in Alabama, Arkansas, California
Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky,
Massachusetts, Maryland, Minnesota, Missouri, Mississippi, North
Carolina, Nebraska, New Jersey, Ohio, Pennsylvania, South Dakota,
Tennessee, Virginia, Wisconsin and West Virginia. Contact: Nancy
Allison, 501-327-3152 Arkansas Advocates for Nursing Home Residence
DATASOURCE: Arkansas Advocates for Nursing Home Residents CONTACT:
Nancy Allison of Arkansas Advocates for Nursing Home Residence,
+1-501-327-3152
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