Sunrise Announces Eleventh Amendment to Bank Credit Facility
MCLEAN, Va., March 23 /PRNewswire/ — Sunrise Senior Living, Inc. (NYSE: SRZ) today announced it has agreed with its lenders to an eleventh amendment to its Bank Credit Facility, further waiving compliance with certain financial covenants until April 30, 2009. The purpose of this eleventh amendment is, among other things, to provide the Company and its lenders with an additional period of time to negotiate the terms of a twelfth amendment to the Company’s Bank Credit Facility that would comprehensively address any remaining issues between the parties with respect to the Bank Credit Facility through the current stated maturity date of December 2, 2009. The common desired objective is to execute such twelfth amendment prior to the close of business on April 30, 2009.
"We are pleased that our bank line group has extended us this additional time. We have announced previously that we are working to reach negotiated settlements with our lenders to preserve our liquidity," said Mark Ordan, Sunrise’s chief executive officer. "While the outcome of our efforts remains uncertain, we believe this extension is very beneficial to this process."
The Company’s Bank Credit Facility contains various financial covenants and restrictions, including provisions that require the Company to meet certain financial tests. The eleventh amendment to the Bank Credit Facility suspends the applicability of such covenants through April 29, 2009. Based on revised cash flow forecasts as well as a result of the cash proceeds from the March 18, 2009 sale of the Company’s Greystone subsidiary described below, Sunrise currently expects that its cash balances and expected cash flow will be sufficient to operate the Company and meet its obligations through April 30, 2009. However, Sunrise does not expect to be in compliance with the financial covenants in the Credit Agreement on April 30, 2009, which is the day following the date on which the waiver of certain financial covenants set forth in the Credit Agreement expires.
As previously disclosed, the Company is seeking to restructure its Bank Credit Facility and is exploring other potential sources of capital with other third parties. Additional financing resources will be required to refinance existing indebtedness that comes due within the next 12 months. Also as previously disclosed, the Company is in the process of seeking waivers and discussing a comprehensive restructuring plan with the lenders to its German communities, the lender to the Fountains portfolio, the Company’s venture partner in the Fountains portfolio and certain other lenders. The Company believes it is in the best interests of all of its creditors to grant such waivers or reach negotiated settlements with Sunrise to enable the Company to continue operating. However, there can be no assurance that such waivers will be received or such settlements will be reached.
Today, the Company also announced that, on Wednesday, March 18, 2009, it completed the sale of its Greystone subsidiaries and related seed money investments in five CCRC developments to two senior Greystone executives and other investors. Sunrise had previously announced it was exploring strategic options for Greystone and would no longer provide seed capital due to poor bond financing markets. For further details on this transaction, see the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on March 11, 2009.