Kindred is a Louisville-based owner-operator of transitional hospitals, skilled nursing centers, home care, hospice, assisted living and other medical services. The company has been working toward an exit of its skilled nursing business since it posted a $671.3 million loss during third-quarter 2016.
The price includes the $700 million that will immediately go to Ventas as part of a previously announced deal. Ventas (NYSE: VTR), one of the largest healthcare REITs in the country, will turn over its ownership of 36 Kindred-operated facilities to BM Eagle Holdings, leaving Kindred with a total value of $210 million.
BM Eagle Holdings is a joint venture led by affiliates of BlueMountain Capital Management. The Kindred portfolio spans 18 states and includes 89 nursing centers with 11,308 licensed beds and seven assisted living facilities with 380 licensed beds. The buyer did not disclose plans for the future operations of the portfolio.
The deal will reduce Kindred’s annual rent expense by approximately $88 million, annual capital expenditures by approximately $30 million, and interest payments by approximately $18 million, according to the company.
“The exit and sale of our nursing center operations significantly enhances shareholder value, shifts attention to our higher margin and faster growing businesses and advances our efforts to transform Kindred’s strategy,” says Benjamin Breier, president and CEO of Kindred. “Upon completion of this transaction, we believe Kindred’s capital structure, leverage profile and operating performance will all be markedly improved.”
Guggenheim Securities is acting as financial advisor to Kindred. Polsinelli PC is acting as legal advisor and Cleary Gottlieb Steen & Hamilton LLP is acting as special counsel to Kindred.
Kindred expects the transaction to close in phases, with the entire deal closing before the end of 2017.
Kindred’s stock price closed at $11.70 per share on Monday, July 3, up from $10.69 one year prior. Over the past two years, the stock has traded as low as $5.95 on Nov. 8, 2016, and as high as $23.26 on Aug. 10, 2015.
— Jeff Shaw