BEV Beverly Enterprises

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

Copyright