Kindred Healthcare, Inc. (Kindred or the Company) announced that it has completed additional transaction closings (the Closings) related to its previously announced agreement with BM Eagle Holdings a joint venture led by affiliates of BlueMountain Capital Management (BlueMountain), to sell the Company’s skilled nursing facility business.
Since October 1, 2017, the Closings included 12 skilled nursing facilities and one assisted living facility. Sale proceeds from the Closings aggregated approximately $31 million. To date, the Company has completed the sale of 80 skilled nursing facilities and five assisted living facilities for aggregate proceeds of approximately $658 million.
Kindred also announced that it has reached an agreement with BlueMountain and the relevant landlord to close five leased facilities in Massachusetts. None of the original purchase price with BlueMountain was allocated to these five facilities. The Company has transferred the day-to-day operations of these facilities to a third party and expects the closing of these facilities will be completed in the second quarter of 2018. In addition to these five facilities, the Company continues to make progress on the sale of its remaining five skilled nursing facilities and one assisted living facility.
Certain of these remaining six facilities are likely to be sold outside of the definitive agreement with BlueMountain, because in some cases other parties have exercised rights of first refusal or similar rights to purchase. Kindred expects approximately $27 million of additional net proceeds from the sales of the remaining facilities. The completion of the remainder of the sales are subject to final documentation and customary conditions to closing, including the receipt of all licensure, regulatory and other approvals. Kindred expects that the remainder of the closings will occur as regulatory and other approvals are received over the remainder of 2017 and through the first half of 2018. In addition, the Company has for sale a parcel of real property and various certificates of need related to its skilled nursing facility business that it estimates will generate additional proceeds ranging from $7 million to $10 million.
Benjamin A. Breier, President and Chief Executive Officer of Kindred, commented, “We have substantially completed the divestiture of our skilled nursing facility business and continue to make steady progress on the sale of a few remaining facilities. We continue to believe that the sale of our skilled nursing facility business will significantly enhance shareholder value, enable us to sharpen our focus on higher margin and faster growing businesses, and further advance our efforts to transform Kindred.”
Mr. Breier continued, “On behalf of the Kindred Board of Directors and management team, I thank all of our caregivers for their hard work to facilitate another smooth transfer process. We appreciate and respect their dedication to our patients, residents and their families.”
As previously disclosed, the sale of the Company’s skilled nursing facility portfolio to BlueMountain included 89 nursing centers and seven assisted living facilities in 18 states. Thirty-six of these skilled nursing facilities (the Ventas Properties) were or continue to be leased from Ventas (Ventas) and Kindred has an option to acquire the real estate of the Ventas Properties for an aggregate consideration of $700 million. As Kindred closes on the sale of the Ventas Properties, Kindred will pay to Ventas the allocable portion of the $700 million purchase price for the Ventas Properties and the real estate for the applicable Ventas Property will be conveyed to BlueMountain or another designee. In connection with the Closings described above, Kindred paid approximately $77 million to Ventas for five Ventas Properties that were included in the Closings. To date, the Company has paid in aggregate approximately $647 million to Ventas for the Ventas Properties involved in all of the completed closings.
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