Genesis Healthcare, Inc. (NYSE:GEN) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k
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Genesis Healthcare, Inc. (NYSE:GEN) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01Entry into a Material Definitive Agreement

On December 22, 2016, Genesis Healthcare, Inc. (the Company)
completed a restructuring of its real estate bridge loans that
are payable to Welltower Inc. (Welltower) to which it split the
two existing bridge loans into four separate loans, each
evidenced by amended and restated and/or amended, restated and
consolidated loan agreements.Prior to such restructuring, the
Company had the following bridge loans with Welltower:

1.

Skilled Real Estate Bridge Loan: The Company had entered
into a real estate bridge loan dated February 2, 2015 in
the original principal amount of $360.0 million in
connection with the Companys combination with Skilled
Healthcare Group, Inc. (the Skilled Real Estate Bridge
Loan). The Skilled Real Estate Bridge Loan was secured by
a mortgage lien on the real property of 67 facilities and
a second lien on certain receivables of the operators of
such facilities.The Skilled Real Estate Bridge Loan was
subject to a 24-month term with two extension options of
90 days each followed by one extension option of 180
days.The loan accrued interest at a rate equal to LIBOR,
plus 6.75%, plus an additional margin that ranged up to
7.50% based on the aggregate number of days the Skilled
Real Estate Bridge Loan was outstanding.The interest rate
was also subject to a LIBOR interest rate floor of
0.5%.The Skilled Real Estate Bridge Loan bore interest of
12.78% at September30,2016 and the principal balance
outstanding as of December 22, 2016 was $160.7 million.

2.

Revera Real Estate Bridge Loan: The Company had entered
into a real estate bridge loan dated December 1, 2015,
with an additional draw on September 1, 2016, in the
original aggregate principal amount of $171.1 million in
connection with the Companys purchase of 20 nursing
facilities from Revera Inc. (the Revera Real Estate
Bridge Loan). The Revera Real Estate Bridge Loan was
secured by a mortgage lien on the real property of the 20
facilities.The Revera Real Estate Bridge Loan was subject
to a 24-month term, reset effective September 1, 2016,
with two extension options of 90 days each and accrued
interest at a rate equal to LIBOR, plus 6.75%, plus an
additional margin that ranged up to 7.00% based on the
aggregate number of days the Revera Real Estate Bridge
Loan was outstanding, plus 0.25% multiplied by the result
of dividing the number of percentage points by which the
loan-to-value ratio, defined as the ratio, expressed as a
percentage, of (i) the outstanding principal balance to
(ii) the total appraised value of the facilities as of
the closing date, exceeds 75% by five.The interest rate
was also subject to a LIBOR interest rate floor of
0.5%.The Revera Real Estate Bridge Loan bore interest of
9.53% at September 30,2016 and the principal balance
outstanding as of December 22, 2016 was $156.3 million.

Upon completion of the restructuring, the Company and Welltower
are now parties to the four separate loans described below, which
loans have an aggregate principal amount equal to the outstanding
aggregate principal amount of the prior loans.Each of the revised
loans is deemed effective as of October 1, 2016. Each loan has an
interest rate of 10.0% per year through January 1, 2018 (the
Initial Rate Increase Date). The interest rate for each loan will
escalate by 25 basis points per year on each anniversary of the
Initial Rate Increase Date until the loans mature on January 1,
2022.

1.

Amended and Restated Loan (A-1): A real estate loan in
the principal amount of $9.0 (the A-1 Loan). The A-1 Loan
is secured by a mortgage lien on the real property of
three facilities that the Company is currently seeking to
sell and a second lien on certain receivables of the
operators of such facilities.

2.

Amended and Restated Loan (A-2): A real estate loan in
the principal amount of $103.6 (the A-2 Loan). The A-2
Loan is secured by a mortgage lien on the real property
of 13 facilities in the state of Texas and a second lien
on certain receivables of the operators of such
facilities.

3.

Consolidated, Amended and Restated Loan: A real estate
loan in the principal amount of $138.6 (the Consolidated
Loan). The Consolidated Loan is secured by a mortgage
lien on the real property of 18 facilities and a second
lien on certain receivables of the operators of six of
such facilities.

2

4.

Amended and Restated Loan (B-1):A real estate loan in
the principal amount of $65.8 (the B-1 Loan). The B-1
Loan is secured by a mortgage lien on the real property
of 11 facilities that were acquired from Revera Inc.
and which the Company is seeking to refinance through
HUD.

The Company has guaranteed the full payment of such revised
loans.

Item3.02.

Unregistered Sales of Equity Securities.

As previously announced by the Company, on December 23, 2016,
the Company entered into a lease with a new landlord for 28 of
its skilled nursing facilities that the Company previously
leased from Welltower. On December 23, 2016, Welltower sold the
real estate of the 28 facilities to a joint venture among
Welltower, Cindat Capital Management Ltd., and Union Life
Insurance Co., Ltd. (Cindat). The Company will continue to
operate the facilities to its new lease with affiliates of
Cindat and there will be no change in the operations of these
facilities. The 28 facilities had been included in the Companys
master lease with Welltower and were historically subject to
3.4% annual escalators, which were scheduled to decrease to
2.9% annual escalators effective April 1, 2017. Under the new
lease, the 28 properties initial annual rent is reduced by
approximately 5% to $54.5 million and the annual escalators
decrease to 2.0%. The more favorable lease terms are expected
to reduce the Companys cumulative rent obligations by $143.0
million through January 2032. As part of the transaction, and
in consideration for the more favorable lease terms, on
December 23, 2016, the Company issued $23.7 million principal
amount notes due 2021 (the Notes) to Welltower and its
affiliates. The Notes include a $12.0 million principal amount
loan which is convertible into 3.0 million shares of the
Companys Class A Common Stock at $4.00 per share and a $11.7
million principal amount loan which is substantially similar to
the note delivered by the Company to Welltower in November 2016
in connection with the lease transaction involving a joint
venture formed by affiliates of Lindsay Goldberg LLC and
affiliates of Omega Healthcare Investors, Inc.The convertible
Note is subject to adjustment to the terms of the Note, and it
may be converted by the holder at any time after the two-year
anniversary of its issuance. The Company is required to
repurchase the Notes at the request of the holder upon the
occurrence of a Fundamental Change (as defined in the Notes).
The convertible Note bears a cash interest rate of 3.00% per
annum and a payment-in-kind interest rate of 3.00% per annum
while the non-convertible Note bears a cash interest rate of
3.00% per annum and a payment-in-kind interest rate of 7.00%
per annum.

The convertible Note was issued in a transaction exempt from
the registration requirement of the Securities Act of 1933 to
Section4(a)(2) thereof and Regulation D promulgated thereunder.

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About Genesis Healthcare, Inc. (NYSE:GEN)

Genesis Healthcare, Inc., formerly Skilled Healthcare Group, Inc., is a holding company that provides post-acute care. The Company operates through three segments: inpatient services, which includes the operation of skilled nursing facilities and assisted or senior living facilities; rehabilitation therapy services, which includes its integrated and third-party rehabilitation and respiratory therapy services, and all other services, including physician services and other healthcare related services. It offers inpatient services through its network of over 500 skilled nursing and assisted/senior living facilities in 34 states, consisting of over 475 skilled nursing facilities and over 35 stand-alone assisted/senior living facilities. Its skilled nursing and assisted/senior living facilities have over 61,000 licensed beds, with its states of operation in California, Maryland, Massachusetts, New Jersey, and Pennsylvania.

Genesis Healthcare, Inc. (NYSE:GEN) Recent Trading Information

Genesis Healthcare, Inc. (NYSE:GEN) closed its last trading session up +0.05 at 4.14 with 201,362 shares trading hands.