KENNETT SQUARE, Pa., March 21 /PRNewswire/ -- ElderTrust (NYSE: ETT), an
equity healthcare real estate investment trust, today addressed announcements
made by Genesis Health Ventures, Inc. (NYSE: GHV) and The Multicare Companies,
a 43.6% owned consolidated subsidiary of Genesis. Each of these companies
today announced the beginning of debt restructuring discussions with the
intention of revising their capital structures. Genesis also announced that
it did not make a $3.8 million interest payment to its senior debt lenders due
March 20, 2000. Both Genesis and Multicare announced their intention not to
make interest and principal payments on senior debt and have been prohibited
by their senior lenders from making any scheduled interest payments on their
publicly traded subordinated debt. Each company cited their inability to sell
assets due to the lack of long-term care market financing and the continuing
effect of reduced Medicare payments as the causes of these actions.
"Based on discussions with management of both Genesis and Multicare, we
understand their current plan is to achieve an overall restructuring without
impacting payments by them under their lease and loan obligations to us," said
D. Lee McCreary, Jr., ElderTrust's President and Chief Executive Officer.
"However, it is not possible to predict the final outcome of any agreement
these companies may reach with their lenders." Mr. McCreary added, "While we
are hopeful that Genesis and Multicare will be able to revise their capital
structures in a manner that will improve their financial condition and permit
them to continue to meet their obligations to us, we cannot be sure that this
will be the result. We are continuing to explore the ramifications that these
announcements have on the company."
At December 31, 1999, approximately 70% of ElderTrust's consolidated
assets consisted of leases and loans secured by real estate properties where
the lessee/borrower was Genesis or entities in which Genesis has an equity
ownership interest. At December 31, 1999, loans made by ElderTrust to
wholly-owned subsidiaries of Genesis, which are secured by three assisted
living facilities currently being leased-up and guaranteed by Genesis, totaled
$15.1 million. Loans made by ElderTrust to wholly-owned subsidiaries of
Multicare, which are secured by three assisted living facilities currently
being leased-up and 20% guaranteed by Multicare, totaled $19.7 million. In
addition, ElderTrust has loaned an entity in which Genesis has a 49% interest
$4.8 million which is secured by an assisted living facility in lease-up.
This loan is guaranteed by Genesis.
Substantially all of ElderTrust's assets are encumbered by property level
mortgages or serve as security for ElderTrust's bank credit facility with
Deutsche Bank. At year-end 1999, the outstanding principal balance under the
bank credit facility was $39.7 million and matures on June 30, 2001.
Mr. McCreary also reported that, prior to the Genesis and Multicare
announcement, ElderTrust had been in discussions with Genesis and Multicare
about a possible restructuring of various transactions with Genesis and
Multicare. With respect to loans made by ElderTrust to the companies, under
terms of a tentative agreement ElderTrust would acquire the three properties
securing the Multicare loans and then lease those properties to Genesis. In
addition, the three loans to Genesis and the one loan to the 49% owned Genesis
equity investee would be due and payable on April 1, 2001. Finally, the
parties would agree that ElderTrust's obligations to purchase these assets
would be terminated.
With respect to properties under lease, the tentative agreement calls for
ElderTrust to exchange one property currently under lease for the
tenant-funded leasehold improvements at a second property. In addition, two
leases subject to percentage rent arrangements would be restructured to
require minimum rents. Genesis is the lessee with respect to each of these
properties.
The parties are continuing these discussions and any restructuring is
subject to approval by the Boards of ElderTrust, Genesis and Multicare and by
each company's principal lenders. As such, no assurance can be given that the
tentative agreement will be completed.
ElderTrust is a real estate investment trust that invests in real estate
properties used in the healthcare services industry, principally along the
East Coast of the United States. Since commencing operations in January 1998,
the Company has acquired direct and indirect equity interests in a portfolio
of 31 buildings and has $49 million in loans outstanding for construction and
term financing on eight additional healthcare facilities.
Certain matters discussed within this press release may be deemed to be
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although ElderTrust believes the expectations
reflected in such forward-looking statements are reasonable assumptions, it
can give no assurance that its expectations will be attained. Factors that
could cause actual results to differ materially from ElderTrust's expectations
include the ability of Genesis and Multicare to restructure their operations,
real estate conditions, the Company's ability to refinance its existing bank
credit facility when it matures in June 2001, changes in the economic
conditions and other risks detailed from time to time in the Company's SEC
reports and filings. The Company assumes no obligation to update or
supplement forward-looking statements that become untrue because of subsequent
events.
For more information on ElderTrust via fax at no charge, please dial
1-800-PRO-INFO and enter ticker symbol ETT, or visit ElderTrust's web site at
http://www.eldertrust.com .
SOURCE ElderTrust
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Related links:
http://www.eldertrust.com
CONTACT:
D. Lee McCreary, Jr., President and Chief
Executive Officer of ElderTrust, 610-925-4200
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